1. The end of the era of “all coins rising at the same time”
Once upon a time, the cryptocurrency market had a good time when "all cryptocurrencies rose together", as if all crypto assets could appreciate together and create wealth together. However, this era is over now. Just like a lively carnival is over, the market begins to show its true side. Some people believe that the era of all crypto assets moving forward in unison is over, and the saying "WAGMI" (we will all succeed) is no longer applicable. This is the result of the natural evolution of the market. When we look at the current market, we will find that each sector has its own problems.
2. Current status and difficulties of each sector
L1 - "Infrastructure Excess"
Public chains are the foundation of blockchain, but now there is a situation of "over-infrastructure". For example, Ethereum is a well-known public chain, and many new public chain projects have emerged after it, such as Solana and Avalanche. These public chains all promote their advantages such as fast speed and low cost, but in fact many projects do not have unique technical innovations. Moreover, there are so many public chain projects that developers and users are confused and don't know which one to choose. At the same time, the construction of public chains requires a lot of funds and technology, but the market demand is not that great. For example, some small public chain projects, although they have been built, there are not many applications on them and few users, just like building a lot of empty houses with no practical use, which wastes a lot of resources and makes investors less confident in public chain projects.
Gamefi - The gap between life and death
Gamefi was once very popular, combining games and finance. For example, when Axie Infinity was first launched, players could get cryptocurrency rewards by playing games, which attracted many people. But later, its game content was not updated much, and there were problems with the economic model. Players found it increasingly difficult to make money, so they left one after another. There are many other Gamefi projects that initially attracted players with high rewards, but soon lost users due to various problems. Moreover, the quality of new Gamefi projects is uneven. Some are just for the sake of popularity, without good game design and no long-term development plan. For example, some simple small games only use cryptocurrency rewards as a gimmick, without real gameplay. Such projects are difficult to sustain, resulting in investors and players not being optimistic about the Gamefi market.
NFT - Narratives are hard to sustain
NFTs once attracted attention because of the confirmation of ownership of small pictures and community narratives. For example, CryptoPunks is an early well-known NFT project, and some pixel avatars were sold at very high prices. But later, a large number of similar NFT works appeared on the market, but the quality varied greatly. Many investors blindly followed the trend and bought them, but found it difficult to sell them, and the prices also fell sharply. In addition to the fields of digital art and collectibles, NFTs have few applications in other areas. For example, in games, although some projects say that they will use NFTs to represent game props, the actual effect is not good, and players are not very receptive to this method, so it is difficult for the market demand for NFTs to continue to grow.
DeFi (decentralized finance) - Problems
DeFi provides users with decentralized financial services. Like MakerDAO, it is a decentralized lending platform where users can borrow stablecoins by pledging their assets. But DeFi projects also have many problems. On the one hand, security issues are very serious. For example, some DeFi projects have been hacked and users' assets have been stolen. Like the bZx incident, hackers exploited smart contract vulnerabilities, causing many users to suffer heavy losses. On the other hand, the DeFi market is highly competitive. In order to attract users, some projects promise high returns, but this often hides great risks. For example, some liquidity mining projects had high returns at the beginning, but later the market fluctuated, the project's funding chain was broken, and users could not get their money back. In addition, the economic model of some DeFi projects is unreasonable and cannot be sustained.
3. Opportunities and Challenges in the AI Track
When other sectors encounter difficulties, the AI track seems to still have opportunities.
opportunity
On the one hand, AI can help cryptocurrency projects analyze data. For example, some trading platforms use AI algorithms to analyze market trends, automatically adjust trading strategies based on data, and improve transaction success rates and returns. On the other hand, AI can create new application scenarios. For example, develop smart contracts, use AI to achieve more complex functions, and improve security and efficiency.
challenge
However, there are also problems in the AI track. First, AI requires a lot of data, but the quality and security of data in the cryptocurrency field are not easy to solve. For example, data collection is difficult, and user privacy must be protected. If the data problem cannot be solved, the application of AI in the cryptocurrency field will be limited. Secondly, the application of AI in the cryptocurrency field is still in its early stages, and many projects are just concepts, and the actual effect is still uncertain. For example, some projects that say they use AI for risk management still need more practice to verify. In addition, there are ethical and legal issues in the development of AI, such as algorithm bias and data abuse, which need to be resolved.
IV. Future market trends and investors’ response strategies
Faced with changes in the cryptocurrency market, investors need to adjust their strategies.
In-depth research and rational judgment
Investors should carefully study the fundamentals of the project and not blindly follow the trend. For example, they should check whether the project's technology is truly innovative, whether the team is capable, and whether the market really needs the project. They should not invest based solely on price fluctuations.
Diversified investment and risk control
Investors should diversify their investments and not just invest in one sector or project. They can invest in different sectors such as AI, DeFi, NFT, etc., and they can also consider some traditional financial assets. They should also control risks, set stop loss and take profit points, and not be too greedy or too afraid to avoid big losses.
Focus on market trends and technological innovation
We should keep an eye on market changes, understand the situation of each sector, and look for new investment opportunities. We should also pay attention to the innovation of blockchain technology and plan potential projects in advance.
In short, the cryptocurrency market has changed, and the era of "all coins rising together" is over. Only the Tugou sector has always had legendary stories in any period.
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