Analysis of the Current Situation of the crypto market: Characteristics and Challenges of the Latest bull run

Review of Market Hype Patterns

Looking at the history of the bull run in the A-shares and the crypto market, we can find some common speculation patterns. Typically, the market first speculates on assets with high certainty and high value, then shifts to hot sectors and tracks, and finally turns to more speculative targets.

The development of the crypto market has led to the emergence of new narratives and tracks, such as layer two networks, re-staking, inscriptions, and so on. These emerging fields may replace the old narratives of the previous bull run. From a market capitalization perspective, the typical order of speculation is:

Core assets ( BTC and ETH ) → High market cap → Medium market cap → Low market cap → Meme coins → NFTs and others

New Features of This Bull Run

This round of market has shown some new characteristics:

1. Insufficient liquidity of funds leads to a poor profit effect. Although ETFs have injected strong liquidity into BTC, this liquidity is hard to transmit to other tracks.

2. Core assets are rising, while other market values remain unchanged or even decline, and Meme coins are favored by hot money in the short term.

3. The flow and transmission of funds have undergone structural changes, with ETF funds primarily flowing to BTC and ETH, making it difficult to overflow layer by layer.

4. The primary market is severely affected by the secondary market. When there is insufficient capital in the secondary market, the significance of the primary market is diminished.

5. The listing of high-valued new coins further squeezes market liquidity.

6. The current status of low circulation tokens with high FDV ( and fully diluted valuation ) has sparked controversy. High FDV may lead retail investors to be unwilling to take over, instead chasing fully circulating Meme coins.

Key Issues and Impacts

1. Insufficient funds: This leads to significant differences in the profitability effects across various sectors, making it difficult to form a comprehensive bull run.

2. High FDV and low circulation: This leads to a divergence in investment preferences between retail and institutional investors.

3. Imbalance between primary and secondary markets: Weakness in the secondary market affects the performance of the primary market.

4. Investment logic needs to be adjusted: past investment strategies may no longer be applicable.

Conclusion

The crypto market is currently facing many challenges, especially the issues of insufficient funding and high valuations with low liquidity. Solving these problems may be the key to unlocking a true bull run. Investors need to closely monitor market changes and adjust their strategies in a timely manner.