Is the cryptocurrency market becoming like the US stock market? Where is the future of the crypto market?

Source: Talking About Li and Outside

Recently, many partners seem to have been attracted by the heat of the US and Hong Kong stock markets, as compared to the trends in the crypto market, crypto concept stocks have indeed risen quite sharply. The topic of the crypto market mirroring the US stock market may continue to be hyped for a while.

However, since I am currently no longer involved in US/Hong Kong stocks and only pay attention to some daily fundamentals, I won't delve too much into this topic. Interested partners can conduct necessary research based on the image below. As we mentioned in previous articles, the market is always full of opportunities, but it is also full of uncertainties, which is one of the reasons why most individual investors (retail investors) easily lose their way.

In terms of the crypto market, with the recent slowdown in Bitcoin's upward momentum, altcoins seem to have hit bottom again. Coupled with the excitement in the stock market next door, it feels like many people are currently pessimistic about this field, believing that the golden period for this sector has passed.

I remember seeing a statement before that any industry will go through roughly five stages of development: the technology-driven stage, the product-driven stage, the marketing-driven stage, the cost-driven stage, and the innovation-driven stage. If we apply this framework to the crypto market as a whole, we can roughly derive the following results:

Technology-Driven Stage (2008--2012): The emergence of Bitcoin and the introduction of the blockchain concept, during this period, the focus was mainly on initial innovation, with many technological inventions.

Product-Driven Stage (2013--2017): Various tokens emerged, with smart contracts represented by ETH. During this period, market competition mainly focused on product functionality, and the market entered a phase of product exploration.

Marketing-Driven Stage (2017--2021): The emergence of a crypto bull market, various concepts such as ICOs, DeFi, and NFTs began to be hyped and gained popularity. During this period, the user base began to expand, and products started to show differentiated competition.

Cost-Driven Stage (2022 to present): Major CEXs and DEXs began to compete for users, with various L1 and L2 chains flourishing (but in reality, all are focused on lowering gas fees). During this period, the crypto market began to pursue economies of scale, projects started to compete on user scale, and institutions began to study cost control… everything seems to be profit-driven.

Innovation-Driven Stage (currently in its infancy or partially occurring): During this period, the crypto industry will enter a phase of widespread adoption (with some exceptions in certain countries/regions), various policies or regulations (mainly in the US) are beginning to become relatively complete, giants are starting to monopolize (with major institutions like MicroStrategy and BlackRock entering the market), and the overall development of the industry is facing new bottlenecks (but the development trend is still slowly upward). Innovation or reform is needed to break these bottlenecks (for example, new directions like AI and RWA seem to be attempting to break some development bottlenecks in the past two years).

But regardless of what stage the market is in, there will always be opportunities; it’s just a matter of distinguishing between big opportunities and small ones, and whether we can continuously seize some of these opportunities. As for where the future of the crypto market lies, we do not know. In any case, no matter how others view it now, at least we will still remain steadfast in this field and continue to maintain a long-term optimistic outlook.

While looking to the future, we continue to focus on the present. Based on the current situation, the main reasons for the stagnation of the crypto market and the unclear short-term trends include:

1) Tensions in certain countries/regions (such as the local war between Iran and Israel)

In previous articles, we speculated that Bitcoin might continue to attempt to approach or break its historical high in June, but the armed conflict in the Middle East has acted as a black swan, impacting the market. However, we will still retain the viewpoint from our earlier article (June 15): if the situation continues to spiral out of control, it is possible that the market will experience significant volatility in the short term.

However, based on the outcomes of previous conflicts between Iran and Israel, coupled with the current military threats and interventions from the US, the probability of a full-scale war in the Middle East is low. It seems that Iran is more about rhetoric (lacking strength), and as long as the US asks Israel to exercise some restraint, both sides can find a way out, and it is likely to end with "peace talks."

If the new Middle East crisis can be declared over in stages, then Bitcoin may continue to rebound and attempt to break new highs again. Of course, we do not rule out the possibility of other countries/regions experiencing similar black swan events that could continue to impact the market, as geopolitical issues can indeed serve as an effective catalyst for deleveraging.

2) Uncertainties in the Federal Reserve's interest rate policy

From Powell's latest statements (on June 25, the first day of Powell's congressional hearing), regarding the issue of interest rate cuts, he hinted during the Q&A session that (the Fed) officials are more likely to wait until at least the September meeting to see whether tariff-driven price increases are lower than expected before resuming rate cuts.

In simpler terms, this seems to mean: the Federal Reserve is still in a wait-and-see mode, and while a rate cut in July is not ruled out, it is more likely to wait until at least September.

According to market expectations, the probability of the Federal Reserve cutting rates in September has risen to 68.8%, as shown in the image below.

However, compared to the Federal Reserve's continued wait-and-see attitude, Trump seems to be very proactive about the issue of rate cuts. He is also trying to directly push (pressure) the Federal Reserve to lower interest rates, which is quite understandable. From Trump's perspective, lowering interest rates can significantly reduce the government's debt repayment costs while also enhancing the attractiveness of various risk assets.

In any case, based on the current situation, it seems we are getting closer to a clear expected outcome regarding rate cuts, which will undoubtedly become an important catalyst for the market. We mentioned this in our previous article (April 14): the Federal Reserve cutting rates will definitely happen; it’s just a matter of time. At the same time, we also reminded in that article that while rate cuts are certainly favorable for the market, we should not equate rate cuts directly with price increases, as the market is always dynamic and fluctuating.

3) Various new uncertainties brought by President Trump regarding tariffs and other issues

Regarding Trump, we seem to have not stopped discussing him since he began his campaign, as shown in the image below.

This is not only because he (including his family group) is deeply intervening in the crypto market, promoting Bitcoin as a national strategic reserve plan, and even personally launching tokens to profit from investors. His every word and action can directly influence global market trends (including the stock market).

Of course, besides the three aspects we listed above, the reasons affecting market trends are multifaceted (both known and unknown), which is also the main reason why the short-term market cannot be accurately predicted. Here, we reiterate what we mentioned in the previous article (June 23): the only thing we can do is to manage our positions well in this complex "game" of geopolitical games + market structure changes + macroeconomic expectations and find suitable trading opportunities.

Additionally, in the previous article (June 23), we also mentioned that for the current crypto market, we should execute two independent plans, namely, the investment plan for Bitcoin and the investment plan for altcoins should not be mixed.

Although our own investment strategy currently leans towards Bitcoin, from the comments in the background, many people still prefer to invest in altcoins, which is very understandable. Compared to the theoretically limited upside of Bitcoin, the potential for gains in altcoins seems greater, which is a matter of balancing returns with personal risk preferences.

In fact, we have already shared quite a bit about the discussion on altcoin seasons in previous articles. In summary, it can be boiled down to one sentence: we estimate that it will be difficult to see traditional altcoin seasons again, but mini altcoin seasons will still have opportunities to emerge.

Although some traditional experiences, rules, or indicators may no longer fully apply to mini altcoin seasons, the underlying logic of the market (liquidity rules) will not change. Capital will always seek profit and will not develop a so-called belief in Bitcoin (or any other cryptocurrency); it will only flow to wherever there is profit to be made.

In other words, most institutional investors are still primarily injecting funds into Bitcoin. However, everything has its phases. When Bitcoin's price reaches a certain level, making it temporarily no longer an attractive investment, funds may flow back into some altcoins, such as those that have already been through ETFs (including those that may go through ETFs) or crypto-related companies that have already gone public (including those that may go public).

If you still want to discover potential opportunities in altcoins, our current advice remains unchanged: continue to assess your risk preferences. You just need to closely monitor the changes in the BTC.D index and market sentiment, which will help you better determine the right timing to enter the market.

For example, now that crypto concepts in the US and Hong Kong stock markets are being hyped, chasing after this hot trend now seems to involve higher risks. Instead, consider this: after the funds have made a round of speculation in the stock market, do you think they will continue to speculate on related concepts in the crypto market? If you think they will, then regarding the currently hyped stablecoin concept, you can think about what other crypto sectors are related to it.

We have actually outlined some of this in previous articles, such as the two opportunities mentioned in the article on March 28: one is to participate in institutions or projects related to stablecoin issuance. The second is to participate in on-chain DeFi, RWA, and other projects. As shown in the image below.

In summary, rather than passively chasing whatever is hot, it is better to calm down and find one or two specific subfields that interest you, then maintain continuous attention and in-depth research, while also monitoring some indicators you deem necessary (such as K-lines, policy trends, or on-chain data such as capital flows). This will increase your chances of discovering potential opportunities in advance.

Here’s a simple example: during the bear market of 2022-2023, if you could firmly see (believe) that Bitcoin would definitely rise to $100,000, then you wouldn’t have thought that Bitcoin at $20,000, $30,000, or $50,000 was expensive. Similarly, if you only chased after Bitcoin because it broke through $100,000 and brought hype, without understanding what Bitcoin really is and lacking a relatively clear view or expectation of Bitcoin's future, then it would be very difficult for you to hold on.

Another example: if you believe that ETH ETFs will increase staking in the third quarter of this year and that SOL ETFs will also be officially approved, then you can still accumulate ETH and SOL, including the top project/protocol tokens related to their ecosystems.

This principle also applies to the stock market. For instance, when we discussed CRCL stock a few days ago (June 15), its price was $133, and then within a few days, the price surged to nearly $300, before recently pulling back to $198. If you chased after the $300 CRCL because of the hype around crypto concept stocks but did not have a clear view or expectation of Circle's future, then it would be very difficult for you to hold on, and you might even incur paper losses now. However, if you firmly believe that Circle will rise to $1,000 in the future, then you can buy in and hold at any time.

Of course, expectations aside, there will still be a risk consideration issue, which is the position management issue we have mentioned multiple times before. Since everyone's situation is different, taking Bitcoin as an example, even though Bitcoin is now at $100,000, and we believe it may continue to rise to $300,000 in the future (for example, within five years), we will not go all in directly. We will continue to adopt our existing strategy of accumulating coins and executing operations in phases.

There are generally three types of investment mindsets: ordinary logic, advanced logic, and super advanced logic. Simply put, ordinary logic means being greedy when others are greedy (the most typical example is FOMO chasing hot trends), advanced logic means being fearful when others are greedy (selling high to take profits), and super advanced logic means being even greedier when others are greedy (which requires extremely strong channels, capabilities, or techniques). However, for most ordinary investors, if they can comprehend and adhere to the advanced logic stage, they can basically outpace over 90% of retail investors.