The cryptocurrency market remains sluggish; where are the marginal buyers?

Original Title: Where Are the Marginal Buyers?

Original Author: Primitive Ventures

Original Compilation: Felix, PANews

Crypto Saturation and Structural Shift

This cycle has clearly shown that the market has reached saturation not only in terms of capital but also in terms of attention.

Global Google Trends data illustrates this point. Only Solana's search popularity has reached new highs. Despite the approval of ETFs, Bitcoin hitting new highs, and political discussions sparked by memes, the search popularity of Bitcoin, Ethereum, and even Dogecoin has not recovered to the peak levels of 2021.

Red: Ethereum Google search popularity  Blue: Solana Google search popularity

Blue: Bitcoin Google search popularity Red: Dogecoin Google search popularity

As attention wanes, prices have also fallen. The trading prices of most major assets remain below the highs of the previous cycle. This indicates that cryptocurrencies as an asset have reached saturation in mainstream awareness, but as a currency, they have not been widely adopted.

This duality defines the current situation. Speculation is well-known, but its actual use remains misunderstood. The next marginal buyer may not come to speculate but to build infrastructure.

Player Structure: The Game is Emptying Out

To understand why even top-down narratives cannot maintain momentum, it is essential to know who is still participating.

Source: PV internal research

Centralized exchanges (CEX), once the backbone of retail power, have gradually faded away. As the wealth effect of CEX diminishes, the influx of new users has stagnated. Worse still, many existing users have either left or turned to riskier perpetual contract trading. Meanwhile, the rise of spot ETFs has quietly siphoned off another group of potential buyers. Centralized exchanges are no longer the default entry point.

Yield farmers, typically with larger capital allocations, are increasingly looking off-chain. As on-chain yield opportunities diminish and risk-adjusted returns decline, capital is shifting towards more stable real-world income sources.

Participants in NFTs and GameFi, once the driving force behind cryptocurrency adoption culture, have now been largely marginalized. Some have turned to memecoins, but with the waning of the Trump craze, this wave seems to have peaked, leaving most participants disappointed.

Airdrop hunters, often seen as the most dedicated on-chain participants, are now openly clashing with projects over unfulfilled promises. Many cannot even cover their costs.

Across every user group, the trend is clear: participation is declining, conviction is weakening, and retail investors are leaving.

Critical Point: Conversion Stalls

The issue is not only the fatigue of the existing user base; conversion itself has also stalled.

Top CEXs serve about 400 million users (removing duplicates), but only about 10% of users convert to on-chain users (wallet users). Since 2023, the penetration rate has changed little; the industry struggles to convert users from the custodial layer.

Source: PV internal research

Meanwhile, since the peak of the 2021 bull market, traffic to mainstream exchanges has continued to decline, and even with Bitcoin hitting new highs, traffic has not recovered. Conversion channels have not expanded.

Binance traffic; Data source: Semrush

Coinbase traffic; Data source: Semrush

Worse still, the threshold of cryptocurrency awareness may have already been reached. According to a Consensys survey, 92% of respondents worldwide have heard of cryptocurrencies, and 50% claim to understand them. Awareness is no longer the issue; interest is.

Moreover, the enthusiasm curve for retail investors is flattening. In the last cycle, NFTs and Dogecoin attracted a large number of users. In this cycle, even Trump's memecoin has failed to enter the mainstream. The curiosity that once drove retail inflows is fading.

Yellow: Dogecoin Google search popularity  Blue: NFT Google search popularity  Red: Trump meme Google search popularity

Slogan: The Mirage of Momentum

The OM rally is a well-orchestrated action: shifting towards the hottest RWAs, aligning with UAE capital, forming partnerships, leveraging KOLs for promotion, and squeezing liquidity through tokenomics resets.

Source: PV internal research

But despite a 100-fold price surge, there has been no meaningful spot trading volume. OM lacks something that even the most perfect script cannot fabricate: real marginal buyers.

OM trading volume

When centralized exchanges adjust perpetual contract leverage and market makers encounter internal friction, the system collapses rapidly. A subsequent 95% drop was not due to a minting spiral or a bug, but because there were fundamentally no buyers.

OM is not an execution failure. It reflects a structural problem: in today's centralized exchanges, even a 100-fold price surge cannot stimulate new demand.

Federal Reserve Quantitative Tightening and Dollar Shortage

The structural shift in buyer behavior cannot be understood without considering macro liquidity. Since 2022, the Federal Reserve has begun to significantly reduce its balance sheet, initiating one of the most cautious quantitative tightening cycles in recent years.

The Federal Reserve's balance sheet peaked at nearly $9 trillion in the post-COVID period, greatly stimulating global risk appetite through excess liquidity. However, as inflation intensified, the Fed changed its strategy, reversing the situation by withdrawing reserves, tightening financial conditions, and curbing the loose leverage that had fueled speculation in various risk assets, including cryptocurrencies.

This tightening has not only slowed capital inflows but has also structurally limited the types of buyers that cryptocurrencies have relied on: fast-moving, risk-taking speculators.

Structural Shift: Where Might the Next Demand Arise?

If the next marginal buyers do not come from crypto-native speculators, they may emerge from structural shifts driven by policy, necessity, and real demand.

The normalization of stablecoin regulation may usher in a new phase dominated by digital dollars. In an era of rising tariffs, capital controls, and geopolitical fragmentation, cross-border capital needs faster and more discreet channels. Stablecoins, especially those aligned with U.S. interests, are poised to become practical tools of economic influence.

Moreover, in regions long overlooked by the industry, adoption is quietly rising. In parts of Africa, Latin America, and Southeast Asia, stablecoins have practical uses in remittances, savings, and cross-border trade due to unstable local currencies and a large unbanked population. These users represent the new frontier of global dollarization.

As the scale of RWAs expands, more users will participate not for speculation but to acquire real assets on-chain.

Barbell Era: This is Not a Collapse, But a Rebalancing

The scarcity of marginal buyers is not merely a cyclical low point but a structural outcome, a downstream effect of two forces:

Cryptocurrencies as an asset have captured a significant portion of global attention. The dream of getting rich overnight has lost its luster.

The dollar shortage is real. The Federal Reserve's quantitative tightening and macro tightening policies have structurally reduced the buyer base.

After experiencing all the cycles, narratives, and reshaping, cryptocurrencies are splitting into two distinctly different paths, and this divergence will only grow.

On one side is the speculative system once driven by memes, leverage, and narrative reflexivity, now gasping for breath due to liquidity withdrawal. These markets rely on continuous marginal capital inflows, and without them, even the most meticulously designed strategies cannot sustain buying pressure.

On the other side, policy-driven, utility-driven adoption is slowly but undeniably emerging. Stablecoins, compliant channels, and tokenized assets are all on the rise. Not driven by hype, but out of necessity. Not a bubble, but lasting.

What we are witnessing now is not a market crash, but a structural rebalancing.