The most challenging phase in the crypto industry has already arrived

Author: Santiago Roel Santos Source: Retrospectively Translation: Shan Opa, Golden Finance

Price - The Application Paradox

The pace of application adoption will not slow down, but the coin prices may remain difficult to recover for a long time.

The contradiction between accelerating real-world application adoption and sluggish market prices is not a “fault” in industry development, but a core characteristic of this round of crypto industry evolution.

If you hold a long-term perspective of ten years on the crypto industry, current strategic layouts are quite attractive. However, maintaining this long-termism requires enduring significant psychological pressure. You must be prepared: watching application scenarios expand continuously, while coin prices stagnate or even decline; seeing others profit immensely from current hot tracks like artificial intelligence and stocks, while the crypto sector seems to have been completely forgotten by the market.

This gap can feel unfair and make the road ahead seem long and arduous. But coin prices are inherently lagging — after all, many early crypto asset valuations have been unreasonably inflated from the start.

The market ignores the benefits of application adoption… until one day, it suddenly rushes toward it.

Application Adoption or Valuation Bubble Exposure

In the short term, application adoption might actually worsen the industry’s situation.

As crypto infrastructure enters a scale application phase, the market will increasingly see: how much capital has blindly flooded into this track before genuine sustainable demand appears. Application adoption is not a validation of business models but a brutal stress test. Some projects will withdraw quietly; others may survive but see their valuations shrink significantly, far below the levels depicted during peak narratives.

The crypto industry is gradually transforming from a star of public attention to an invisible infrastructure integrated into daily life; from once exciting to now plain and ordinary.

And this, precisely, is a good thing.

This development trajectory is not unprecedented. During the dot-com bubble burst, the Nasdaq index plummeted about 78%, but at the same time, internet users exploded — the global user base tripled, and broadband infrastructure was extensively built out. It took years for the market to clear the haze, but the internet steadily changed the world during that period. While investors were still licking their wounds, software had already begun sweeping through the global economy.

The development of foundational technologies never rewards those lacking patience.

Infrastructure Popularization: Who Will Benefit?

For many industry participants, this transformation will be a painful experience.

Developers who have poured years into open-source codebases will watch companies copy their成果, capturing most of the economic benefits; early investors in crypto infrastructure will find that traditional VCs on Silicon Valley’s Sand Hill Road have captured more value; retail investors who bought tokens instead of equity will feel isolated when companies profit from crypto networks but rarely give back to token holders.

This situation is partly due to structural issues within the industry, and partly the bitter fruit sown by the industry itself.

However, the crypto industry is actively adjusting. The evolution of open systems has always been rapid, incentive mechanisms will continue to optimize, and value capture models will become more refined. But unfortunately, not all business models will survive long enough to enjoy the benefits of this evolution.

The process of application adoption is quietly unfolding right before our eyes, but the market currently pays no attention. It may take years before the market rethinks the logic, viewing crypto technology as a core operating system rather than merely a speculative asset class.

Price Cycles and Application Cycles Are Not in Sync

Price cycles are driven by market sentiment and liquidity, while application cycles are driven by technological practicality and infrastructure development.

Although related, they do not resonate in the same frequency. Historically, the crypto industry has always been price-led in adopting applications — common in early stages of emerging technological revolutions. But now, the trend has shifted: application adoption is leading, while prices lag far behind.

Currently, incremental buyers of crypto assets are turning their attention to other fields, with capital fervently chasing AI tracks. This trend may last a long time or reverse quickly — and this is beyond our control.

But what we can clearly see is: it’s hard to imagine a world without stablecoins, transparent financial channels, and real-time global clearing systems.

The deepest lesson from the cyclical changes in the crypto industry is to accept a reality: the divergence between application adoption and price trends may last far longer than reasonable expectations; and to achieve compound growth of assets, one must remain rational and calm when others lose patience.

It’s important to emphasize that this is not a manifesto advocating “mindless HODLing.”

Many crypto projects are doomed not to revive: some have fatal flaws from inception, some lack moats, and some have long been abandoned by developers. In the future, new winners will emerge, and former stars may fade away. Only a very few projects will achieve true turnaround and reversal.

Returning to Normalcy Is the Path to Health

We are entering a new regulatory and economic environment, which is precisely an opportunity to address the industry’s chronic issues — such as weak value capture, incomplete information disclosure, misaligned equity-token structures, and opaque incentive mechanisms.

If the crypto industry aspires to become the ideal it envisions, it must meet the standards of a mature industry.

I tend to view problems through probabilistic thinking. My most confident judgment is: within the next 15 years, the vast majority of enterprises will proactively adopt crypto technologies to maintain competitiveness. When that day comes, the total market cap of the crypto industry will surpass $10 trillion. Stablecoins, asset tokenization, user scale, and on-chain activity will all grow exponentially. Meanwhile, the valuation system of the industry will be reset, with major established companies possibly collapsing, and business models that have been illogical from the start being thoroughly exposed.

This is an inevitable path toward industry health and cannot be avoided.

Crypto technology should be “invisible.” The more a company uses crypto technology as a gimmick for hype, the more fragile its business model. True long-term winners will embed crypto into their workflows, payment systems, and balance sheets. Users won’t need to perceive the existence of crypto; they will simply enjoy faster settlement, lower operational costs, and fewer intermediaries.

The crypto industry should return to simplicity.

As capital tightens, airdrops proliferate, demand subsidies, incentive mechanisms fail, and over-financialization takes hold, this era will eventually end — an inevitable law of history.

My basic view is simple: application adoption accelerates, coin prices reprice, and valuations normalize. The crypto industry is a long-term track, but that doesn’t mean your tokens will rise in value automatically.

Who Will Ultimately Benefit?

The benefits brought by foundational technologies will first reach consumers through lower prices and better experiences. The secondary beneficiaries are those companies that upgrade their operating systems, leveraging cheaper, more efficient, and more programmable infrastructure to reduce costs and increase profits.

This logic raises a series of unsettling yet unavoidable questions: Visa or Circle? Stripe or Ethereum? Robinhood or Coinbase? Betting on a bunch of public chains or building user traffic aggregation platforms? Betting on public chains or decentralized finance applications? Betting on public chains or decentralized physical infrastructure applications? Choosing decentralized finance or traditional financial stocks? Choosing decentralized physical infrastructure or infrastructure stocks?

This is not a binary choice; different tracks can achieve win-win outcomes. The key lies in relative value and relative excess returns — who can truly capture the value surplus created by blockchain technology?

My inclination is: traditional and hybrid companies that can connect to open clearing networks, thereby reducing costs and increasing profit margins. Historical experience shows that such companies often profit more from technological change than the infrastructure providers themselves.

Of course, exceptions exist in any framework.

My Beliefs and My Doubts

I firmly believe that networks with genuine demand will ultimately achieve commercialization. The development of the internet has long proven this — Facebook also lay dormant for years before starting its monetization journey.

I believe that some public chains will eventually grow to match their valuations; but I also think most public chains will struggle to attract enough users, and may even fail to prove their own existence.

I believe that the wealth gap within the industry will further widen. Transparency will be crucial, and channel deployment, marketing, user relationships, and unit economics will matter far more than first-mover advantages.

A fatal mistake of the crypto industry has always been overestimating the role of early technological leadership and underestimating all factors outside of technology.

Grounded in Reality, Finding the Right Position

In the coming years, I do not hold overly high expectations for the price trends of crypto assets. Application adoption will continue, but coin prices may keep declining — if the stock market as a whole reverts to the mean and AI hype subsides, the situation for cryptocurrencies could worsen.

Patience is the greatest advantage.

My investment stance is clear:

• Bullish on crypto-as-a-service tracks
• Bullish on crypto-enabled enterprises
• Bearish on overly financialized projects
• Bearish on projects with poor unit economics
• Bearish on infrastructure bubbles built in advance of unmet demand curves

Capital preservation is critical. The value of cash is severely underestimated — its value lies not in generating returns but in providing psychological “immunity.” When others are forced to exit due to liquidity crises, those holding cash will have the confidence to act.

Today’s market changes are accelerating, and investors are increasingly impatient. Simply having a longer-term perspective than most participants is already a real advantage. Professional fund managers must constantly rebalance their portfolios to prove their value; retail investors, amid worsening payment crises, are increasingly obsessed with chasing market hot spots; institutional investors will again declare that the crypto industry has completely vanished.

Meanwhile, more companies will quietly integrate into crypto systems, and more balance sheets will connect to the 24/7 nonstop financial network.

One day, when we look back on these years, we will see that everything was an inevitable outcome, signals are everywhere. But only after prices rise will beliefs become unshakable.

Until then, be patient: wait for market panic to peak, for forced sell-offs to clear, for believers’ defenses to break down. And right now, none of that has happened.

You don’t need to rush into action. Prices will fluctuate, life goes on. Create something valuable, spend more time with those you care about. Don’t let your investment portfolio define your entire life.

Whether the market pays attention or not, crypto technology will continue to advance. Good luck.