Chainfeeds Summary:

The rise of institutional adoption, market dilution, the transfer of retail liquidity, and changes in the macroeconomic environment have together shaped a new market landscape. The Chinese version was compiled and published by PANews.

Source:

https://www.panewslab.com/zh/articledetails/0tvzfibq.html

Author:

SubQuery

Viewpoint:

SubQuery: The biggest difference in this cycle is the role of institutional capital. Unlike previous bull markets driven mainly by retail speculation, this cycle has witnessed large-scale institutional adoption: the derivatives market has grown, the expansion of Bitcoin futures and options trading has made the market more structured and liquid, and volatility has decreased compared to previous cycles. Corporate and sovereign interest, with large companies and even some countries incorporating Bitcoin into their balance sheets or using it as a hedging tool. The approval of a Bitcoin spot ETF in the US has opened the door for institutional investors, allowing trillions of dollars in capital to enter the Bitcoin market in a regulated manner. As a result, Bitcoin has become the most prominent cryptocurrency asset, firmly enthroned as the king of cryptocurrencies, reaching new highs and dominating market liquidity, making it difficult for Altcoins to experience the same explosive growth as in previous cycles. In previous cycles, the supply of newly launched Altcoins was relatively low, creating opportunities for explosive growth. However, this time the number of cryptocurrency projects has increased significantly. According to Dune Analytics data, as of the end of January 2025, there were over 36.4 million circulating tokens, compared to only about 3,000 in 2017-2018. This change is due to many projects continuing to release locked tokens, increasing market selling pressure and causing the prices of most tokens to plummet significantly. Unlike the previous cycle where a few MEME coins (such as Dogecoin and Shiba Inu) attracted most of the attention, in 2024 a large number of new MEME coins are launched every day, making it difficult for a single token to maintain market momentum. The rise of hundreds of Layer1 and Layer2 scaling solutions has also fragmented market liquidity. This market dilution means that while some Altcoins may still perform well, the broad-based rallies where almost all tokens saw significant gains, as in previous cycles, are unlikely to be repeated. Retail traders have always been an important driving force in cryptocurrency bull markets, but the key difference in this cycle is that retail liquidity has been drawn to new mechanisms outside of traditional spot trading. Pump.fun, launched on January 19, 2024, has fundamentally changed the behavior of global cryptocurrency retail investors. The platform allows anyone to create a Solana token for free in one minute, spawning some of the largest MEME coins of 2024, attracting retail funds to high-risk, high-return speculative small-cap tokens, away from major Altcoins. This dynamic has brought several significant impacts: insiders launch new tokens that quickly attract retail funds, but the constant rotation means many retail investors suffer losses before they can transfer profits to major Altcoins. Retail funds cycle through new tokens in a matter of hours or days, making it difficult for mature Altcoins to establish sustained uptrends. As of January 2025, Pump.fun has generated $116.72 million in revenue, surpassing Solana ($116.46 million) and Ethereum ($107.64 million).