Author: Anthony Pompliano, Professional Capital Management; Translator: Shaw, Jinse Finance
Two days ago, I posted the following on social media platform X: "Most of the crypto industry is dead and will never come back. People will eventually realize this."
This statement resonated strongly within the industry, and that's an understatement. Yesterday, during the Consensus conference, at least fifty people came to me in person to ask for my opinion on that tweet. And after a whole day at the conference, I'm more convinced than ever that most of the crypto industry is gone and will never return to what it was before. Before proceeding with my analysis, one point needs clarification: I've been writing about Bitcoin and the entire crypto industry for nearly a decade. I'm an inherently optimistic person and sincerely hope that entrepreneurs and businesses can succeed. I can never be a bear, because I'm not a pessimist at heart. I rarely comment publicly on the industry's negative issues unless absolutely necessary, but right now, the entire industry truly needs honest criticism and sober reflection. If we dare not face reality, we cannot reshape the future. This groundwork may not convince everyone of my views, but at least I can write about these industry chaos and illusory realities with a clear conscience. First, to understand why much of the crypto industry is already defunct, we must recognize a core issue: A normal business cycle simply cannot be naturally followed in the crypto space. The typical pattern in traditional industries is: a technological breakthrough occurs first, followed by a surge of startups, of which only a small fraction truly succeed; failing companies go bankrupt and are liquidated, while the remaining capital and talent flow back to more valuable ideas and projects. In the business cycle, eliminating inferior companies and supporting superior ones are equally important. However, the crypto industry cannot complete a normal cycle for two main reasons: public blockchains almost never truly shut down; and token prices almost never go to zero. First, regarding public blockchains: as long as one or two people maintain the nodes, the entire chain can barely keep running, with almost no possibility of a complete shutdown. A blockchain that has clearly lost its ecosystem and value creates the illusion of "still alive" because it hasn't been officially shut down. The number of these **ghost blockchains** is far greater than people are willing to admit. Now let's look at tokens: Crypto tokens lack official bankruptcy liquidation mechanisms. As long as a small group of people hold onto hope, the price will never truly fall to zero. However, the token will continue to plummet, liquidity will completely dry up, and holders will be unable to exit, essentially trapped in an "asset shell." Even if exchanges delist low-liquidity tokens, most will only be marginalized and ignored. These **zombie tokens** are also rampant. **Ghost blockchains + zombie tokens** already occupy half of the crypto industry. With millions of tokens and thousands of public blockchains on the market, these two phenomena alone are enough to confirm the points made in my tweet. Does anyone truly believe that millions of crypto tokens will flourish in the future? I have serious doubts. People are simply unwilling to speak the truth, so I'll be frank and say it for them. But the problem doesn't end there. The second major crisis facing the crypto industry: fewer and fewer true believers. Once, this industry was led by a group of staunch idealists. For them, when choosing between personal gain and the vision of Bitcoin, fulfilling the industry's mission took precedence, with personal interests secondary. That era is largely over. Today, idealists are few and far between, and the industry is filled with profit-driven speculators who flock to where the highest returns are. These people only focus on short-term speculation and arbitrage, lacking any firm industry values. Without principles, one is easily swayed by trends and blindly follows every fad. The proliferation of short-lived Meme coins, the endless stream of scam coins, the normalization of market manipulation, the vicious cycle of liquidity mining yields, and the numerous speculative projects that only aim to attract attention without addressing real needs all clearly demonstrate this profit-driven mentality. Today, profit-seeking speculators far outnumber idealists, and the power in the crypto industry has fallen into the hands of those who neither understand nor agree with the industry's original vision. Finally, a clear division has emerged within the industry: a severe antagonism between investment institutions and anti-institutional groups. A common argument circulating online is that venture capital firms are all negative entities, large traditional financial institutions are harming the industry, and the crypto industry shouldn't be regulated. Such thinking is not only naive and foolish but also accelerates the decline of most aspects of the industry. In the first decade or so after Bitcoin's birth, almost all the infrastructure companies that facilitated the purchase, storage, and transfer of Bitcoin for ordinary people were backed by venture capital firms. The vast majority of leading projects and mainstream tokens in the industry also relied on early-stage venture capital incubation. Large traditional financial institutions are continuously injecting massive amounts of capital into various crypto sectors, which is one of the most noteworthy trends today. These professional and established giants are rapidly seizing market share from native crypto companies. In other words, the native crypto ecosystem is dying out, being replaced by traditional financial institutions. Not all native crypto companies will be eliminated, but the vast majority will eventually be squeezed out or acquired by established giants. Every native company that falls or is acquired means another piece of the old industry structure is disappearing. For example, Morgan Stanley just announced that it will launch Bitcoin trading on its brokerage platform E*Trade, which has 8.6 million clients, with lower transaction fees than Coinbase and Charles Schwab. What percentage of future crypto trading volume will flow to traditional brokerage platforms rather than native crypto exchanges? The answer is predictable: the scale will be substantial. Meanwhile, native crypto platforms are also aggressively expanding their business scope: adding traditional asset classes such as stocks, prediction markets, options, and commodities, all to attract new users, expand their custodial assets, and broaden their revenue streams. Furthermore, Michael Saylor mentioned yesterday that he does not rule out selling Bitcoin in the future to fund STRC project dividends. With Bitcoin prices currently high, this statement completely overturns previous market narratives. A few years ago, this view would have been considered heretical; but given the current state of the industry and the growth prospects of Strategy, it's a rational choice. The crypto industry is undergoing a shakeout, with most projects and tokens not surviving to the next cycle. But the survivors will eventually integrate into the traditional financial system, becoming an important part of it. Yesterday, attending the Consensus conference, I clearly felt a stark contrast: on one side were down-to-earth entrepreneurs and investors, focused on building infrastructure and solving real business needs; on the other side were a large number of speculators who followed the trend and were still indulging in the old dreams of 2018, clinging to fantasies that will never materialize. The old crypto era we knew is over. Personally, I believe that future value will be concentrated in four major sectors: Bitcoin, stablecoins, blockchain infrastructure, and asset tokenization. Not everything will disappear, but everyone must face reality and adjust their perceptions. Finally, to give a vivid example: yesterday, when I entered the Consensus Conference venue, I saw a huge booth with a sign that read – “Crypto Carnival”. We don't need more glamorous celebrations; we need more people to focus on building products and solving real problems. If we fail to do this, the industry's top talent will leave for other innovative fields, such as artificial intelligence, space travel, gene sequencing, autonomous driving, or defense technology. Let the business cycle naturally weed out the weak. We must eliminate inferior projects and remove them from the market to make room for the next batch of high-quality innovative ideas.
Anais
Joy
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