From Speculation to Value: Challenges and Opportunities in New Era Encryption Investment

For cryptocurrency investors who experienced the bull market of 2020-2021, the current market is confusing and torturous. The era of euphoria ignited by the global central banks' loose monetary policies has passed, and now the global financial markets are at a delicate balance: on one side are strong U.S. economic data, and on the other side is the Federal Reserve's firm hawkish stance, with the high interest rate environment weighing down on risk assets.

This paradigm shift dominated by the macro environment has made this round of the encryption cycle the "most difficult era" for retail investors. The previous model, which relied on liquidity-driven and purely emotional speculation, has become ineffective, replaced by a "value bull" market that places greater emphasis on intrinsic value, driven by clear narratives and fundamentals.

However, the other side of difficulty is opportunity. When the tide recedes, true value investors will迎来属于他们的"黄金时代". Because in such an environment, institutional compliance entry, technological programmatic deflation, and real applications combined with the实体经济 can highlight their true value across cycles.

1. The Most Difficult Times: When Easing Policies Retreat

The difficulties of this cycle stem from a fundamental reversal in macro monetary policy. Compared to the extremely loose environment of the last bull market, the current market faces the most severe macro headwinds in decades. The Federal Reserve has initiated an unprecedented tightening cycle to curb severe inflation, which has imposed a dual pressure on the encryption market, ending the old model of easy profits.

1. The Macroeconomic Data Maze: Interest Rate Cuts Are Far Away

The key to understanding the Federal Reserve's reluctance to signal an end to interest rate hikes lies in recent macroeconomic data. These seemingly "good" data have become "bad news" for investors hoping for easing.

Despite inflation having fallen from its peak, its stickiness is far greater than expected. Recent data shows that the annual CPI in the U.S. for May, while slightly below expectations, still maintains a core inflation rate of 2.8%, leaving a significant gap from the Federal Reserve's target of 2%. This stubbornness is directly reflected in the Federal Reserve's latest economic forecasts and "dot plot". After the June meeting, Fed officials significantly lowered their expectations for interest rate cuts, reducing the median number of cuts for the year from three to one. This hawkish shift severely dampened market optimism.

At the same time, the U.S. labor market continues to show remarkable resilience. The non-farm payroll report for May revealed that 139,000 new jobs were created, surpassing expectations, while the unemployment rate remained low at 4.2%. A strong job market suggests that consumer spending is supported, which in turn could exert upward pressure on inflation, making the Federal Reserve more hesitant regarding interest rate cuts.

2. The "pull" of high interest rates: the "bleeding" effect of encryption assets

This macro background directly leads to the difficult situation of the encryption market:

Liquidity exhaustion: High interest rates mean a decrease in "hot money" in the market. For the cryptocurrency market, which heavily relies on new capital inflows to drive prices up, especially for altcoins, tightening liquidity is a deadly blow. The once prevalent situation of "everything rising" has been replaced in this cycle by a structural market characterized by "sector rotation" or even "only a few hotspots."

Opportunity cost surges: When investors can easily obtain a risk-free return of over 5% from government bonds, the opportunity cost of holding assets like Bitcoin, which do not generate cash flow and have volatile prices, increases sharply. This leads to a significant outflow of funds seeking stable returns from the encryption market, further exacerbating the "bleeding" effect.

For retail investors accustomed to chasing hot spots in an environment of abundant liquidity, this change in circumstances is brutal. The lack of in-depth research and strategies that merely follow the trend are easily hit hard in this cycle, which is the core of the "difficulty" in this round of the cycle.

II. The Golden Age: From Speculation to Value, the Emergence of New Opportunities

However, the other side of the crisis is an opportunity. Macro headwinds act like a stress test, squeezing out market bubbles and filtering out core assets and narratives that truly have long-term value, opening an unprecedented golden era for prepared investors. The resilience of this cycle is precisely driven by several strong endogenous forces that are independent of macro monetary policy.

1. Golden Bridge: Spot ETF Begins the Institutional Era

At the beginning of 2024, the U.S. Securities and Exchange Commission historically approved the listing of a spot Bitcoin ETF. This is not just a product launch, but a revolution in the encryption world. It opens the "golden gate" for trillions of dollars in traditional finance to invest in Bitcoin in a compliant and convenient manner.

As of the second quarter of 2025, only two major ETFs have seen their total assets under management exceed hundreds of billions of dollars, with a sustained daily net inflow providing strong buying power to the market. This "new lifeblood" from Wall Street has largely offset the liquidity tightening caused by high interest rates.

The CEO of a global leading asset management company has called the success of Bitcoin ETFs a "revolution in the capital markets" and stated that this is just the "first step in asset tokenization." This endorsement from top institutions significantly boosts market confidence and provides retail investors with a clear signal to follow the institutional pace and engage in long-term value investment.

2. The Faith in Code: Hardcore Support under the Halving Narrative

The fourth "halving" of Bitcoin in April 2024 will reduce its daily new supply from 900 coins to 450 coins. This code-defined and predictable supply deflation is the unique charm of Bitcoin that sets it apart from all traditional financial assets. Against the backdrop of stable or even growing demand (especially from ETFs), the halving of supply provides solid, mathematically-based underlying support for the price of Bitcoin. Historical data shows that Bitcoin prices have reached all-time highs within 12-18 months following the first three halvings. For value investors, this is not just a short-term speculation gimmick, but a reliable, long-term logic that transcends cycles.

3. The Narrative Revolution: When Web3 Starts to Solve Real Problems

Macroeconomic headwinds force market participants to shift from pure speculation to exploring the intrinsic value of projects. The core hotspots of this cycle are no longer the baseless "Dogecoins," but rather the innovative narratives that attempt to solve real-world problems:

• Artificial Intelligence (AI) + Crypto: Combining the computational power of AI with the incentive mechanisms and data ownership of blockchain to create entirely new decentralized intelligent applications.
• Real World Asset (RWA) tokenization: Bringing real-world assets such as real estate, bonds, and artworks onto the blockchain to release their liquidity and bridge the gap between traditional finance and digital finance.
• Decentralized Physical Infrastructure Network (DePIN): Utilizing token incentives to enable global users to collaboratively build and operate infrastructure networks in the physical world, such as 5G base stations and sensor networks.

The rise of these narratives marks a fundamental shift in the encryption industry from "speculating on air" to "investing in value". For retail investors, this means that the opportunities to discover value through in-depth research have greatly increased, making knowledge and awareness more important in this market than mere courage and luck.

3. The Survival Laws of the New Cycle: Patience in Layout Between the Finale and the Overture

We are at the intersection of an era. The "hawkish finale" of the Federal Reserve is unfolding, while the prelude of easing has yet to be played. For retail investors, understanding and adapting to the new rules of the game is the key to navigating the cycles and seizing golden opportunities.

1. A fundamental shift in the investment paradigm

• From chasing trends to value investing: abandon the fantasy of finding the "next hundredfold coin" and shift to researching the fundamentals of projects, understanding their technology, team, economic models, and the competitive landscape they are in.
• From short-term speculation to long-term holding: In a "value bull" market, true returns belong to those investors who can identify core assets and hold them long-term, navigating through volatility, rather than to frequent traders.
• Build a differentiated investment portfolio: In the new cycle, the roles of different assets will become more distinct. Bitcoin, recognized by institutions as "digital gold," is the "ballast" of the portfolio; Ethereum, with its strong ecosystem and ETF expectations, is a core asset that combines value storage and production material attributes; while high-growth altcoins should be the "rocket boosters" based on in-depth research and small position allocations, focusing on frontier tracks with real potential such as AI and DePIN.

2. Be patient and plan ahead.

Data from a certain research institution reveals an interesting phenomenon: in the last 12 months of the terms of the past three Federal Reserve chairpersons, even with interest rates remaining high, the S&P 500 index averaged a rise of 16%. This indicates that once the market is convinced that the tightening cycle has ended, even if rate cuts have not yet occurred, risk appetite may start to warm up in advance.

This "jump the gun" market may also appear in the encryption market. While the market generally focuses on the short-term game of "when will interest rates be cut," the true wise ones have already begun to think about which assets and which sectors will occupy the most advantageous positions in this future feast driven by macro tailwinds and industry cycles when easing policies ultimately return.

Conclusion

This round of encryption cycle is undoubtedly a severe test of retail investors' cognition and mentality. The era of "easy profit" through courage and luck, known as the "water buffalo" era, has ended, and a "value bull" era that requires in-depth research, independent thinking, and long-term patience has begun. This is precisely its "difficult" aspect.

However, it is precisely in this era that institutional funds have poured in at an unprecedented scale, providing a solid bottom for the market; the value logic of core assets has become increasingly clear; and applications that can truly create value have begun to take root. For retail investors who are willing to learn, embrace change, and view investment as a journey of cognitive monetization, this is undoubtedly a "golden age" where they can compete on the same stage as top minds and share in the long-term growth dividends of the industry. History does not simply repeat itself, but is always remarkably similar. Between the final chapter and the prologue, patience and vision will be the only path to success.