One post tagged with "market analysis"

Since 2023, the cryptocurrency market has departed from its previously clear bull-bear cycles, entering a "chaotic race" shaped by a combination of macroeconomic liquidity, internal supply-demand imbalances, and rapid narrative rotations. For investors, this presents both a challenge and the ultimate test of their knowledge and strategies. This article will delve into the current fragmented state of the market, analyze its underlying structural causes, and provide actionable observation paths for investors heading into the second half of 2025.

1. A Fragmented Market: Bitcoin Season Coexists with a Deep Altcoin Bear​

The most prominent feature of the current market is the massive performance gap between Bitcoin (BTC) and the vast majority of altcoins.

• Bitcoin's Powerful Rally to New All-Time Highs: Driven by continuous institutional funding, Bitcoin has demonstrated remarkable resilience. According to MarketWatch data, on July 9, 2025, BTC touched an intraday high of $112,000, marking a year-to-date increase of approximately 20%, making it a rare bright spot among major assets.

• Significant "Scramble for Chips" by Institutions: US-based spot Bitcoin ETFs have become the core engine of this market rally. CryptoRank data shows that as of now, these products have seen a cumulative net inflow approaching $50 billion, with $13.5 billion contributed in 2025 alone. This "siphoning effect" means that the limited supply of compliant capital in the market has been almost entirely monopolized by Bitcoin.

• The Long Winter for Altcoins: In stark contrast to Bitcoin's brilliance is the widespread slump among altcoins. According to data from AInvest and BeInCrypto, the Altcoin Season Index has been lingering at a low range of 22-27 in July. An index below 25 is typically considered "Bitcoin Season," clearly indicating that over the past 90 days, the investment returns of most altcoins have underperformed Bitcoin.

This extreme market divergence has created a clear "sandwich" structure:

1. Top Layer: Bitcoin exclusively enjoys institutional liquidity and positive macro-narratives (e.g., inflation hedge, digital gold).
2. Middle Layer: Ethereum (ETH) and a few leading public chains fluctuate with Bitcoin's movements in the absence of independent narratives.
3. Bottom Layer: A massive long tail of altcoins continues to bleed out with high volume in a liquidity-deprived environment, receiving no attention.

2. Why Is Investing "Harder Than Climbing the Heavens"? Three Major Structural Dilemmas​

The collective decline of altcoins is no accident; it stems from a severe imbalance in supply and demand.

1. VC Funding Mismatch and "To-Be-Released" Selling Pressure Looking back to the bull market peak in 2021, crypto startups completed a record-breaking $30 billion in financing (CoinDesk). However, Blockworks statistics show that North American VCs alone raised $12.1 billion in "dry powder" in 2022 but deployed only $3.2 billion. This has created a massive "to-be-released supply"—a large number of projects waiting to unlock and dump tokens onto the market in the coming years.

2. The "High FDV / Low Float" Trap In recent years, new projects have commonly adopted an extreme token issuance model: releasing only 1%-5% of the initial circulating supply while setting the project's Fully Diluted Valuation (FDV) at a sky-high 9 to 12-figure valuation. This model pre-scripts immense selling pressure for the token unlocks scheduled over the next few years. Industry research has classified this as the "low float-high FDV" trap (CoinDesk), which allows early investors to easily pump the price on a thin circulating supply and then dump on retail investors as tokens unlock.

3. Depletion of External Capital Inflows While the supply side is abundant, the demand side is starved.

   • DeFi Contraction: According to data from The Block and CoinGecko, the Total Value Locked (TVL) in DeFi plummeted by 27.5% quarter-over-quarter in Q1 2025, with Ethereum's on-chain TVL dropping from $112.6 billion to $72.7 billion. The double whammy of a rising US Dollar Index and a general decline in altcoins has exacerbated the outflow of on-chain liquidity.
   • NFT Market Cooldown: The NFT art market, once a gateway for mainstream adoption, has entered a deep freeze. DappRadar data shows its transaction volume fell from a peak of $2.9 billion in 2021 to just $0.197 billion for the full year of 2024. In Q1 2025, it recorded a mere $0.024 billion, a cumulative drop of over 93%.

In summary: Against a backdrop of oversupply and scarce demand, the altcoin market as a whole has entered a structural deep bear market.

3. Asset Performance Snapshot (2024-2025)​

The following table visually demonstrates the fragmented state of the market:

Asset	High (July 2024)	Current (July 2025)	Gain/Loss	Notes
BTC	$93,000	$112,000	+20%	Sustained institutional buying, independent rally
ETH	$4,600	$3,200	-30%	ETF expectations not fully met, weak performance
VIRTUAL	$4.72 (Jan 2025)	$1.5	-68%	A typical example of the fading AI Narrative (CoinLore)
Covalent (CQT)	$2.10 (2021)	$0.0023	-99.9%	An extreme case of the High FDV + Low Float trap (CoinMarketCap)