I know very well that this kind of announcement is usually regarded as a "bottom signal" by traders.
After a pretty bad summer for crypto, I’m releasing the third installment in a series that includes: “There’s no excuse that any of this stuff has any purpose or will ever have any purpose” and “Financial Nihilism” : The Zeitgeist of Young America.” This is a roughly 10-minute read titled "The Quiet Quiet Exit Pervasive."
I have been focusing on the cryptocurrency field for seven years and running Ikigai for more than six years. I have a fairly extensive network in the U.S. cryptocurrency community and communicate with dozens of industry insiders on a regular basis.
There is an attitude or stance that I have observed or heard about so frequently lately that it has become a trend. Cryptocurrencies are experiencing a widespread “quiet exit” phenomenon.
To give you a little background, if you’re not familiar with the term “quiet exit,” it’s a relatively new concept—
Part of the reason why people come to me so frequently to discuss the Quiet Quit attitude is because of my previous posts on "There's No Excuse What This Stuff Can Do or Will Do" and "Financial Nihilism."
These two articles are some of the most popular long-form articles I’ve ever written. I still get mentioned on Twitter. I was at a cryptocurrency conference last week and at least half a dozen people mentioned these articles in person, so they really resonated widely.
The general “quiet exit” trend is a continuation of the views of these articles, which accurately capture and predict the current situation in the cryptocurrency space.
I have observed and heard that a significant portion of the cryptocurrency community is significantly less engaged than in previous years. The reason they invest less is because they have lost confidence in the potential of encryption projects to solve real-world problems and gain widespread adoption. From 2017 (the year I entered this field) to 2022, this dream has been repeatedly promoted and widely accepted-"Cryptocurrency will solve real-world problems and therefore gain widespread adoption." Many billions of dollars in venture capital funding have been raised based on this premise.
In the process, there are some phenomena that make people believe that cryptocurrencies are developing in a certain direction: decentralized finance (DeFi) is one of them, NFTs is one of them, the popularity of stablecoins is also one of them, Axie Infinity Also one of them. Additionally, Bitcoin’s adoption and price are rising, and it’s getting support from the likes of Paul Tudor Jones, Saylor, and Elon, which makes people feel optimistic about the cryptocurrency, as Bitcoin is performing very well.
These factors, combined with some smaller hotspots (such as DAOs and the Metaverse), have kept people generally optimistic, while also attracting many new people to the cryptocurrency space, both as investors and Full-time employees. Sometimes this optimism can turn into fanaticism, but even at the height of enthusiasm, most people understand deep down that much is unstable, overvalued, and lacks product-market fit. These concerns persist. During bear markets, when optimism turns to pessimism, these concerns are amplified, but even in the most severe bear markets (such as late 2018 and the second half of 2019), people still maintain strong optimism about various projects. and have broad hopes for the technology’s potential.
Extended reading: Ethereum “gives up on censorship resistance” and returns to traditional finance? Coinbase and others launch PoS node operation risk standard NORS
I think the emotions we are facing right now are different (and many seem to agree). As the truth is revealed, many things appear pointless and ridiculously overestimated, and the potential of existing projects is increasingly discredited.
The points-for-airdrop campaign was an embarrassing and ill-advised failed attempt to drive user adoption. The craze over Memecoin is further embarrassing and ill-advised. For many cryptocurrency players who have lived through multiple cycles, there has been a gradual realization that we have gotten to where we are today with very little actual achievement. This realization comes as a huge shock to those of us who have invested a lot of time and energy in this field over the years.
Suddenly, you may feel like most of your life's hard work has been in vain.
You are dissatisfied with both the current state of cryptocurrencies and the direction they are headed.
Many people experience cognitive dissonance in order to rationalize this perception, but the realization eventually sinks in. This has caused many people to leave the space entirely, and people are exiting the cryptocurrency community. However, there are still some who choose to stay, but their motivation, enthusiasm and belief have been greatly reduced. The main reason many people stay is because they can't imagine themselves doing anything else or investing their money in other areas. Would you look for a regular corporate job? That sounds like a disaster.
In addition, there is a "voting with your wallet" perspective. Although many people are severely disappointed that cryptocurrencies have realized their potential, they remain in the space because the "time-adjusted and risk-adjusted" returns are still considered more attractive compared to other investment options. This may seem contradictory, but it is true——
“I believe that Bitcoin (BTC) will outperform every other asset class in most years, although there will be the occasional bad year. At the same time, I think that in those years that are up, there will be a few picks Altcoin can significantly outperform BTC. It may be a few, it may be a lot, but there will always be some. If I can identify these opportunities, I can easily achieve multiple gains. Therefore, I think it is worth continuing. Pay attention to this area..."
Imagine that you have around $2 million in liquid net worth at the age of 30, wealth gained through investing in cryptocurrencies over the past five years. While that's a lot of money, it may not be enough to retire you. You need to turn this 2 million into 5 million or even 10 million US dollars to truly settle down. And you're still young and not ready to retire.
You entered the cryptocurrency space in 2017 because it was full of excitement, innovation, and potential. Although you are doing well personally financially, you are disappointed with the limited real achievements in the field and are less optimistic about the future prospects of cryptocurrency...but you are not quitting. Because you don’t know where else to spend your time? Go stock trading instead of investing in Altcoin? This doesn't sound reasonable. The stock market is more competitive and efficient, but returns less. Therefore, you choose to continue to observe the market, hoping to seize an opportunity to triple your net worth within a year... There are actually many such situations.
This view remains widespread despite growing skepticism about whether these things are or will ever be useful. Cryptocurrency enthusiasts have no idea what will drive the next big rally. There is no DeFi summer, and there is no NFT craze. There’s little life left in the gaming space right now. The Metaverse is proven to be a complete joke. Decentralized social media has stalled. People try to get excited about the combination of cryptocurrencies and AI, but I (like many) think this excitement may be misplaced (at least for now).
DePIN is making progress and growing rapidly and excitingly – probably the most noteworthy part of the Altcoin space right now. So this is an area where people are banking on real-world applications to drive future price increases. However, in cryptocurrencies, such areas are few and far between.
Another aspect is the much-criticized cryptocurrency venture investment environment. Simply put, the crypto market continues to reward VCs who invest early in token projects, even if these projects make little apparent progress in their intended use, VCs are still able to sell them to retail investors at huge profits.
Token projects can: perform a chain reaction from points to airdrops; artificially inflate the market value; hire market makers and pay high fees to ensure they make profits no matter what; list the Token on major exchanges; and then sell off in large quantities, causing its value to Hit rock bottom. Even if the token price drops by 85% since listing, early stage venture capital investors can still earn several times the income. This is a striking feature of the current Altcoin market structure. Crypto markets allow VCs to recycle capital and raise new funds from investments that never really had an impact. This is a classic case of misaligned incentives. It's hard to blame VCs - people act on incentives. So far, the market's attitude is: "Please VCs, list more shoddy projects on the major centralized exchanges (CEX) at ridiculous fully diluted valuations (FDV), and then sell them to us." Unless The market as a whole no longer offers this opportunity, otherwise you can hardly expect VCs to change their approach. This way they made enough money to buy a private jet.
There is a saying in the cryptocurrency world, popularized by a friend of mine: "Do you want to do the right thing, or do you want to make money?" This sentence has become a slogan for many cryptocurrency practitioners. I understand that it emphasizes profit first, especially over your desire to prove that you are "right." But I want to make a counter-point - "If you make enough mistakes in the process of making money, you may eventually lose the opportunity to continue to make mistakes and make money." We are witnessing some of this now.
All of the above can explain why the "quiet exit" phenomenon is common in the cryptocurrency field. Going back to the traditional definition of "quiet exit" in the New Yorker article - "quiet exit" in the workplace will destroy the company's culture. This is an aspiring CEO’s worst fear. When employees see others not working hard and not believing in the company's mission, they will naturally have thoughts about not wanting to work and not believing in the mission. We are creatures of imitation. Enthusiasm is contagious, but so is lack of enthusiasm. Because of this, "quiet exits" lead to more "quiet exits."
So far in this cycle, we are not even close to attracting as many new users (excluding new ETF investors) as we did in previous cycles. Cryptocurrency is not a priority area for America’s best and brightest young people. The industry still faces many embarrassments since the damage 2022 brought, and we haven't done nearly enough to repair our reputation in terms of attracting top talent. Think about it, if you were considering joining a company where "quiet exits" are common, would this be an opportunity you would want to take?
So, what does this mean?
I know very well that this kind of announcement is usually regarded as a "bottom signal" by traders. In the cryptocurrency space, buying when market sentiment is at its most pessimistic and selling when sentiment is at its most optimistic has historically resulted in staggering returns. This common "quiet exit" phenomenon is undoubtedly a pessimistic signal, so usually in this case, people will tend to buy heavily. I understand this.
Another rebuttal to the point I'm making here is "We're still in the early stages, bro." Stop saying that. It's actually not too early. Bitcoin is now worth a trillion dollars, and almost half of Wall Street owns it. The remaining cryptocurrencies also have a market capitalization of $1 trillion. Tether holds more U.S. Treasury bonds than even Germany. Over the past four years, more than $20 billion in venture capital has poured into this area. We are no longer in the early stages.
Stop comparing it to the "internet of the late '90s" and look at what was happening then. This is not the Internet of the late 1990s. Bitcoin and stablecoins have both found their niche in the market, while other cryptocurrencies are lost at sea. At best they are solutions looking for a problem, and at worst they are heartless and cruel scams.
Nonetheless, I think it’s still possible to be optimistic about Altcoin. In my opinion, the most anticipated scenario is a Trump victory in November, which will lead to a de facto regulatory framework so that Altcoin structures can be redesigned to have security-like characteristics and thus achieve attractive The value of power increases.
For many years, we have been discussing the concepts of value creation and value accumulation, and the bridge connecting the two is the Token structure. Under the policies of the Trump administration, governance tokens that have no value may be eliminated and pseudo-securities with profit and burning mechanisms may be introduced. This is thanks to the U.S. regulatory framework that allows such innovations. In this environment, you can imagine that in two years, the Altcoin market will become more real.
This is a development direction worthy of our close attention.
