Article Summary:
· The crypto industry bubble has burst, with the potential success rate and odds of "launching a coin" now lower than that of traditional equity financing. Traditional crypto players and their corresponding tactics will almost be completely wiped out. Currently, in 2026 Q2, we are still in the early to mid-stage of a bear market.
· The four-year cycle still exists, but due to its high correlation with the macro financial market, the amplitude will significantly decrease, and the boundaries will become more blurred.
· In the past 6 months, as well as the next 6-12 months, the main theme of the crypto space will focus on how to tokenize traditional financial assets to onboard traditional funds and increase the "total stablecoin market value." During this period, perp dex will serve as an important ecological entry point and become the best track, of which I highly endorse Lighter. It will be difficult to see native innovation narratives in the crypto space in the next 6-12 months.
· The bottom of BTC's current market cycle will appear in 2026 Q4, with a low point of $30,000-$40,000. After this, there will be a "double bottom" due to the Nasdaq's major collapse, and the second price low point generated thereafter will probably not be lower than the previous low point. Subsequently, as the Nasdaq enters a prolonged bear market, BTC will experience a period of lows before slowly rising into a new cycle.
"In Norse mythology, the gods all perish. Three consecutive harsh winters arrive, with no intermediate summer, the sun unable to give any warmth... The fire giant Surtr swings a sword of flame brighter than the sun, burning down the nine realms, the rainbow bridge shattering under the army's tread... The gods and giants meet their end on the final battlefield."
If you have played Warcraft III: Reign of Chaos, the term "Twilight of the Gods" will surely be familiar to you.
In Norse mythology, it is not the death of humans or the destruction of the world, but the death of the gods, as the old order has fulfilled its mission, and a new era is about to come.
And what is dying today is not just the set of "rules" of Native Crypto, but the entire financial system of the past thirty years.
Crypto Space: Winter Is Coming
"In the industry's heyday in mid-2025, there were approximately over 300 projects submitting Binance listing applications per week. Now this number may only be three."
I believe even the most optimistic veterans of the old industry can only sigh at the current state of the industry. A year and a half ago, I asserted, "And, as far as I can see by 2025, the atmosphere of the entire industry will determine that I am pessimistic about the milestone" business concept innovation. "(“2024&2025, BTC's Final Mega Cycle: BTC's Value and Price Theory”). Looking at it now, it's still the same.
Let's take a look at what has happened in the past two years:
Since 2024, when meme became a popular token issuance model, issuing tokens has become a low-threshold matter. In the 2025 industry boom, thousands of tokens are issued on various launchpads every day. As the entire industry increasingly deviates from its fundamentals and the supply side expands unprecedentedly, industry liquidity is completely diluted, and the token's primary market is completely killed.
So, unlike traditional finance, in which the secondary market overheats every time, driving the primary market, and after the secondary market bubble bursts, it takes some time to transmit to the primary market in a winter season. The Crypto industry in 2025 is the opposite.
Therefore, throughout 2025, we all knew the bull market could end at any time, and I also said the end of 2025 would be the peak of the cycle. But when it comes to making trading decisions, especially at the turning point of a trend, determining when the real top is, timing, pricing, and posture are all essential.
Reflecting on the core prediction I made in December 2024 in the article "2024&2025, BTC's Final Mega Cycle: BTC's Value and Price Theory”:
(1) Timing: I described the end of 2025, i.e., October, November, or possibly December. Relatively speaking, at the end of Q3 2025, when I started laying out the de-leveraging plan for the entire cycle, I favored the Q4 period, and the peak of the final stage appeared on 10/6.
(2) Pricing: For the past decade, I have always used the logic in my paper "Bitcoin Valuation Model in the Miner Market Equilibrium: Based on Derivative Pricing Theory" as a basis for price range judgment, giving a judgment that the BTC cycle peak is between 160-220K. However, as we entered 2025 Q3, I overlooked an important fact: a large number of mining farms have turned into data centers, and the actual mining machine hash rate is far from the results I have always used statistically.
(3) Posture: Even today, I still believe that under the momentum at the time, BTC had just broken its all-time high to 127,000 on 10/5, and there should have been a "final bull market" window of about a month ahead. However, the combination of four events destroyed this trend:
First, starting on October 1, the U.S. government shutdown caused the suspension of work at the SEC and other agencies, bringing to a halt the final sprint to the ETF launch for several prominent crypto projects at that time. By the time work resumed close to Christmas and into 2026, the momentum was lost, preventing the influx of incremental funds that were ready to enter the traditional markets in October. Second, on October 10, President Trump planned to impose an additional 100% tariff on China, triggering "Tariff War 3.0." This led to a period of Twitter governance and macro-financial market turbulence, affecting the cryptocurrency industry as well.
Third, on the same day, October 10, MSCI announced its decision to remove MicroStrategy from its index. This move raised doubts among traditional investors about the correlation between BTC and stocks, prompting a significant outflow of institutional funds that day.
Fourth, under the combined impact of the previous three events, BTC was heavily shorted. That night, within a few hours, an unusual crash occurred, exacerbated by technical failures at Binance. BTC plummeted by over 20% in a matter of hours, with other altcoins dropping by over 50%, causing significant losses for many market makers and a drastic reduction in industry liquidity.
These four consecutive "coincidences," like a series of snowballs rolling downhill, culminated in a "confidence catastrophe," completely shattering the already fragile market structure.
Looking back today, when it comes to making trading decisions, I made some mistakes in timing, pricing, and positioning as the market transitioned from a bull to a bear phase. However, overall, the cryptocurrency market trend aligns perfectly with the analysis I presented in my two articles at the end of 2024 and the beginning of 2025. Although I did not swiftly liquidate my positions after October 11, I gradually began preparing to exit the market in late November and took action to clear my positions above BTC 90,000 and ETH 3,200 during the last "technical rebound" at the end of November and beginning of December.
I have devoted a significant portion of this article to reflect on the events of October 2025, not just for the outcomes but also for my understanding of "trading strategy structure" after reviewing. In the concluding thoughts on the future of finance in the AI era in this article, I will revisit this topic.
In the current crypto world, the bubble has burst. I believe that the current state of the crypto world is similar to the early 2002 of the Internet era, with shrinking transaction volumes, overall attention dropping to near-freezing levels, and extreme pervasive pessimism. The price has not yet dropped to the cyclical lowest point, but looking ahead, the industry still needs at least another year to rediscover its "anchor point" and the source of innovation.
And I predict that the next generation that can once again lead the crypto bull market innovation will not only be native blockchain technology or financial innovation but will inevitably be some breakthrough in mainstream technology that can be better applied on the blockchain, thus bringing about all-new growth in the form of "Blockchain +".
However, I still hold to my argument: Coin Rights will become the third financial medium after Debt Rights and Equity Rights. Regarding financing and capitalization paths, the difference between choosing Equity Rights and Coin Rights can be seen in another series of articles by the author: "Four-part Series on Crypto Capital: Token Issuance, a New Financing Paradigm" "Four-part Series on Crypto Capital II (Part One): Battlefield without Gunfire: VC or Token Fund?"
The current chaos of non-standard listings in the crypto world is like NASDAQ at its founding in 1971, more like an "electronic quotation system". It wasn't until 1982 that NASDAQ launched the NASDAQ National Market and established a clear set of financial and size requirements for the first time. For example: minimum net assets, minimum number of public shareholders, minimum number of shareholders, minimum stock price, etc.
Now, the trend of tokenizing stock in the crypto industry has brought a whole new form of on-chain assets, not only attracting traditional funds to enter the stablecoin market and increasing the potential on-chain fund capacity but also educating traders who used to follow the trend and speculate on coins. When these native traders, mostly retail investors in third-world countries, gradually establish a value system for asset trading, this will indirectly drive the issuers of Coin Rights projects, trading platforms, etc., to establish industry standards.
This takes time, and when we see that the play of crypto natives is fading, it indicates that day is fast approaching.
Talking About the Four-Year Cycle
"Looking back on over a decade of Crypto history, each major cycle has been born out of an innovation significant enough to change the industry's structure; and in the end, it has also died from the failure of that very innovation. As the saying goes: Xiang Yu is both the conqueror and the loser."
When we talk about the "four-year cycle," we are not only talking about Bitcoin's halving every four years, an unbreakable "industry axiom," but also discussing the "theme" of the rise and fall of each cycle.
The bubble bursting actually has "homology." In 2025, which was the previous bull market cycle, it began with favorable U.S. policies and traditional funds such as ETFs flowing in; strengthened by Wall Street forces such as DAT entering the scene, with public companies / funds and crypto actively interacting, led by MicroStrategy in a frenzy of fundraising; naturally, it also succumbed to the "cut-off of external funding" due to a government shutdown; and collapsed when ETF approvals became less sought after, and the MicroStrategy narrative completely fell apart.
Coincidentally, the bull market of 2021 began with the rise of DeFi and traditional VCs "running into the field," only to end in the DeFi collapse of 2022 and traditional VCs having a "change of heart" about coins: the milestone event was the collapse of Luna in May 2022, where globally prominent DeFi public chains and algorithmic stablecoins went to zero; shortly thereafter, in November 2022, came the collapse of FTX, leaving mainstream U.S. Silicon Valley funds and funds such as Temasek with nothing, as hundreds of billions of assets turned to zero overnight in this "fraud," causing unprecedented questioning of the credibility of VC-backed projects in the crypto world.
At that time, within a few weeks, all VCs made a complete 180-degree turn in their attitudes, almost completely ceasing equity investments in crypto projects.
Further back, the bull market of 2017 started with ICOs and ended in the ICO mechanism collapse in 2018. The milestone event was in January 2018 when Chinese VCs promoted equity projects that could not achieve an exit, quickly dumping their tokens after issuance, and with Fcoin emerging in May only to collapse rapidly by August. This was more like a funeral for an era, marking the end of the ICO era relying on coin issuance for funding, traffic reliance, and market manipulation.
It is important to correctly understand the essence of innovation in each cycle.
The hard fork dispute in late 2015 brought more attention to the crypto world, but what truly changed the fundamentals was ETH's ICO maturing at the end of 2016.
The victory in the 2019 bull market was only a phase; what truly changed the native fundamentals was the first DeFi wave that began in August 2020.
Early 2023 was a low point, with BTC technological advancements, NFTs, and other phase victories by the end of 2023, but what truly changed the fundamentals was the start of crypto ETF applications and U.S. regulatory actions bringing about a coin-stock synergy in the latter half of 2024.
Some say that BTC's four-year cycle is actually the U.S. interest rate cut cycle; during rate cuts, they advocate for the "eternal bull market," and if there are no future rate cuts, the four-year cycle will cease to exist.
However, does a rate cut always lead to a bull market in the crypto space?
If so, why is a bull market in the crypto space always attributed to a rate cut?
Going back to the original question, does the four-year cycle still exist?
Yes, but it will be subject to different levels of interference. As the correlation between BTC and the stock market strengthens, the four-year cycle will still exist ambiguously, but each cycle will not exhibit amplitudes as pronounced as before. Moreover, due to the increasing influence of the "off-crypto" world, there will be a certain degree of uncertainty regarding the time boundaries and triggering conditions during bull-bear transitions.
Of course, the most crucial question remains:
If ICOs were the answer in 2017, DeFi was the answer in 2021, and Financialization will be the answer in 2025.
Then, what will be the answer for the next cycle?
The Future of the Crypto Market
"When Wall Street learns to issue tokens, Crypto is no longer just Crypto."
Starting from 2024, the industry had already lacked native narrative innovation. By 2025, the only driving force behind the surge was the increased openness of the United States towards crypto compliance, the bridging of the traditional financial markets with the crypto space, and the resulting influx of capital.
The most common strategies for the Wall Street coin market and stock market linkage are: first, a listed company buys a certain well-known crypto asset to boost its stock price; second, a renowned crypto project shells out to effectively package its assets into the stock market; third, a renowned crypto project foundation, since some have been designated as "commodities" rather than "securities," raises a bond fund to artificially pump up the token price, then sells off at a high before redeeming the principal and interest.
By 2026, the capital inflow landscape had completely transformed. Due to the increasing number of ETF tokens (as of June 2026, there are approximately a dozen or so Crypto assets available for ETF purchase), traditional funds had lost interest in continuing to allocate tokens through ETFs. The capital inflow transitioned from "traditional funds entering native crypto through ETFs" to "traditional financial assets such as stocks, oil, etc., being tokenized on-chain to attract traditional funds to trade on-chain."
In the article "History Won't Repeat Itself, But It Will Echo: Don't Miss It This Time," I mentioned early on that the significance of Hyperliquid is to serve as the new gateway and infrastructure for the next generation of crypto funds: "Now, we face another important question: after BTC, if you still want to hold onto an asset, what should it be? I still adhere to my previous view: for a $500K investment, I choose Hyperliquid."
The compliance theme is now clearer. After Hyper, it should be lighter. Standing here today,
If you still ask me the same question:
If it's about putting in $5M, I only trust BTC;
If it's $500K, I choose Lighter.
Hyperliquid and lighter represent new capital inflows. If we consider perp dex as a pipeline: the assets flowing in are on-chain US stocks and various RWAs.
Of course, it is undeniable that the tokenization of US stocks will definitely experience a major collapse.
Now, only a few new projects in the crypto space are mostly focused on perp dex. The current approach to tokenizing US stocks mostly involves "synthetic/shadow stocks." With the liquidity flooding in due to the global stock market's boom, whether there is a verifiable 1:1 custody behind tokenized stocks, apart from a few liquidity providers, and whether there is a more scalable way beyond the hard support from market makers, remains a question.
Aside from the reliability of the assets, trading venues are almost entirely on leveraged new perp dex platforms lacking technical audits and legal compliance reviews: if any underlying asset disanchors or experiences a custodial collapse, coupled with leverage, it leads to a cascade of liquidations. This is akin to the concept of grey rhinos; it will arrive sooner or later.
However, similar to the stablecoin industry that emerged with USDT at the end of 2017, which has experienced several "disanchors" over the years, with some once well-known stablecoin projects disappearing into history after collapses, ultimately leaving behind the oldest assets like USDT, USDC, DAI, I believe that stock tokenization and perp dex platforms will also go through such a process. For me, if I were to participate in these projects, the safest approach would be to look for the next "Circle."
Furthermore, the opening up of capital inflows does not mean that funds will flow in net. The "confidence concentration" of funds is crucial. Businesses need more and more "emotional value" to gain attention, to be believed by some.
The funds in the crypto space in the past, precisely because of the narrow entry points and relatively complex wallet operations, only allowed those who truly loved, had faith, and were willing to spend time to enter. In 2025, the crypto market has almost seen everything they dreamed of but suffered the most lackluster "bull market," because this newly entered capital has quickly exited:
What you thought was the arrival of God, was actually Satan disguised as God. Those traditional financial institutions may consider you a "barbarian" and may even have taken away the group of people originally expected in the market.
However, this also means that the industry is slowly straightening out. With the previously lacking legal and accounting infrastructure, and an overall improvement in the quality of practitioners, reshaping industry rules is necessary to allow newcomers who are "not original believers" to start a new bull market.
Of course, who's to say that the future rulers of the world, AI agents, or the digital beings, will not be the true "believers" of the crypto market?
Let's speculate on the price trend in the coming years
· In six months, by the end of 2026 and the beginning of 2027, BTC will reach the bottom of this four-year cycle, which is expected to be earlier than the end of the Nasdaq bull market, the "top" day.
· During this period, due to the loss of momentum, it will continue to slide downwards, accompanied by intermittent crashes, until the lowest extreme value, with the bottom expected to start with a 3.
· At the beginning of 2027, with the final frenzy of the Nasdaq, coupled with its own cycle in the crypto world, there will be a short-term resonance and rebound. Later, due to the Nasdaq's post-peak crash, it will also fall together or show a double-bottom state, approaching the previous bottom. Subsequently, due to external wars or other political events, a flight-to-safety effect will draw in funds.
· In 2027, the world's focus will be on traditional finance, but with on-chain stock compliance, AI trading maturing, on-chain funds, and stablecoin reserves that have been "waiting for a long time" rising, the funds from on-chain stocks will rotate to native crypto, namely BTC.
· In 2028, the aftermath of the AI bubble bursting will gradually fade away. There will be several rebounds in between, but overall, the tech stocks will still be gloomy, while crypto will not see a big surge, maintaining a steady upward trend.
Here, I need to clarify a question I am often asked: Are Bitcoin and the Nasdaq index positively or negatively correlated? This is not a simple yes or no. The answer is that in the event of a sudden event or trend reversal, they initially show a positive correlation and later exhibit a negative correlation.
The most typical example is war. Every time a war breaks out, whether it be the Russia-Ukraine war at the end of February 2022 or the US-Israel joint strike against Iran at the end of February 2026, just a few hours before the war begins, due to a panic-induced drop in the traditional financial markets, institutional funds, in addition to mainstream stocks, often allocate a portion to Bitcoin. This emotional response extends to Bitcoin, causing a short-term decline. However, often on the next day when the stock market continues to fall, Bitcoin demonstrates its safe-haven property, attracting inflows from other funds, leading to a rebound. This rebound usually occurs within a week and may even exceed the pre-war price.
That's why I say, if the AI bubble bursts in early 2027 and Nasdaq crashes, Bitcoin will definitely plummet as well in the early stages. However, a crash is not a one-day event. As Nasdaq consolidates, a slight rebound may give hope. Before the second wave completely crashes, BTC may retest the lows, approaching the major support level we mentioned earlier (but not necessarily breaking through), and then rebounding. As Nasdaq continues to decline in 2027, on-chain funds will show a demand for safety, rotating into BTC, thus breaking away from the four-year cycle's bottom range.
Wait, what are you talking about? The AI bubble bursting?
Yes, the burst of the AI bubble. Compared to the cryptocurrency industry, what I am more concerned about is the global macroeconomy and financial system. Everyone is hopping on one foot while lifting the other, using the advancement of technology to forcefully conceal all commercial issues. The development of AI technology will eventually push the speed of information transmission, reception, and processing to the extreme, triggering a larger scale, possibly irreversible chain reaction.
My prediction: Nasdaq is highly likely to crash from early to mid-2027, ending the four-year bull market that began in early 2023. Global mainstream stock markets will also be impacted, heading towards a historic collapse.
Next, let's shift our focus away from the cryptocurrency industry and turn to the battlefield that I am truly worried about: the global macroeconomy and the inevitable burst of the AI bubble.
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