How to view this cycle:
Longer and less volatile
Overall, we believe this cryptocurrency cycle is likely to be longer and less volatile than in the past. Large-cap assets will lead the market, while venture capital firms’ large reserves will support a range of new projects. However, to support more assets, we still need to attract new net buyers. Although ETFs bring in many buyers, these buyers are unlikely to become on-chain users and thus support the valuation of other tokens.
Large-cap assets lead gains, “altcoin season” may be a thing of the past
We expect large-cap assets to lead the gains in this cycle, while small-cap assets will face greater volatility. Many top assets may be included in institutional-grade products. Compared to past cycles, many small or emerging protocols are likely to go to zero as the scramble for capital intensifies. In this cycle, the investment and performance of long-tail protocols will diverge significantly.
Choice and focus are crucial
In this cycle, asset selection is more critical than ever. The traditional "casting a net to catch fish" approach is no longer effective. As supply increases, investor focus is almost as important as fundamentals (and in some areas even more important). Investors should focus on verticals and protocols at the Seed and Series A stages.
