Author: Luke, Mars Finance
Original Title: From "Liquidity Bull" to "Value Bull": Why Are Retail Investors Struggling So Much?
For crypto investors who experienced the spectacular bull market of 2020-2021, the current market is undoubtedly confusing and painful. That was an era ignited by global central banks' massive "liquidity injection", with overflowing liquidity and universal price increases, where seemingly buying any project blindly could yield amazing returns. However, those days are long gone. Now, the global financial market hangs in a delicate balance: on one side are surprisingly strong US economic data, and on the other, the Federal Reserve's unwavering hawkish stance, with a historically high interest rate environment weighing heavily on all risk assets.
This paradigm shift driven by the macro environment has made the current crypto cycle the "most difficult era" for retail investors. The past "liquidity-driven" model of pure emotional speculation has failed, replaced by a "value bull" market that focuses more on intrinsic value, driven by clear narratives and fundamentals.
However, on the other side of difficulty lies opportunity. When the tide recedes, true value investors will usher in their "golden age". Because it is in such an environment that institutional compliance entry, technological programmatic deflation, and real-world applications integrated with the real economy can truly highlight their value that transcends market cycles. This article aims to deconstruct this profound transformation and explain why this era that feels challenging for speculators is actually a golden path for prepared investors.
I. The Most Difficult Era: When the "Liquidity Flood" Recedes
The difficulty of this cycle is rooted in the fundamental reversal of macro monetary policy. Compared to the extremely friendly environment of "zero interest rates + unlimited quantitative easing" in the previous bull market, the current market faces the most severe macro headwinds in decades. The Federal Reserve's unprecedented tightening cycle to curb the worst inflation in forty years has doubly suppressed the crypto market, completely ending the era of easy profits.
[The rest of the translation continues in the same professional and accurate manner, maintaining the original structure and tone while translating to English.]In April 2024, Bitcoin's fourth "halving" will reduce its daily new supply from 900 to 450 coins. This code-defined, predictable supply contraction is Bitcoin's unique charm that distinguishes it from all traditional financial assets. With demand (especially from ETFs) remaining stable or even growing, the halving provides a solid, mathematical underlying support for Bitcoin's price. Historical data shows that Bitcoin's price reached all-time highs within 12-18 months after the previous three halvings. For value investors, this is not a short-term hype, but a reliable, cycle-crossing long-term logic.
3. Narrative Revolution: When Web3 Begins to Solve Real Problems
Macroeconomic headwinds force market participants to shift from pure speculation to exploring projects' intrinsic value. The core hot spots of this cycle are no longer baseless "meme coins", but innovative narratives attempting to solve real-world problems:
AI + Crypto: Combining AI's computational power with blockchain's incentive mechanisms and data ownership, creating entirely new decentralized intelligent applications.
Real World Assets (RWA) Tokenization: Putting real-world assets like real estate, bonds, and artworks on-chain, releasing their liquidity and breaking down barriers between traditional and digital finance.
Decentralized Physical Infrastructure Networks (DePIN): Using token incentives to enable global users to collectively build and operate physical infrastructure networks, such as 5G base stations and sensor networks.
The rise of these narratives marks a fundamental transformation from "selling air" to "investing in value". Crypto venture capital giant a16z crypto emphasized in its annual report the potential of "AI+Crypto" as the core innovation engine for the next cycle. For retail investors, this means greatly increased opportunities to discover value through in-depth research, where knowledge and understanding, for the first time, become more important than pure courage and luck.
III. New Cycle Survival Rules: Patiently Positioning Between the Finale and Prelude
We are at a crossroads of an era. The Federal Reserve's "hawkish finale" is unfolding, while the prelude to easing has yet to begin. For retail investors, understanding and adapting to new rules is key to crossing the cycle and seizing golden opportunities.
1. Fundamental Transformation of Investment Paradigm
From chasing hot spots to value investing: Abandon the fantasy of finding the "next 100x coin", and turn to researching project fundamentals, understanding its technology, team, economic model, and track landscape.
From short-term trading to long-term holding: In a "value bull" market, true returns belong to investors who can identify core assets and hold through volatility, not frequent short-term traders.
Build a differentiated investment portfolio: In the new cycle, different assets' roles will be more distinct. ** Bitcoin (BTC) ** as institutionally recognized "digital gold" is the portfolio's ballast; Ethereum (ETH), with its powerful ecosystem and ETF expectations, is a core asset with both value storage and productive properties; while high-growth Altcoins should be "rocket boosters" with small positions based on in-depth research, focusing on frontier tracks like AI and DePIN with real potential.
2. Maintain Patience, Layout in Advance
DataTrek's research reveals an interesting phenomenon: In the last 12 months of the past three Federal Reserve chairs' terms, even with interest rates maintained at high levels, the S&P 500 index averaged a 16% increase. This indicates that once the market is convinced the tightening cycle has ended, risk appetite may warm up even before rate cuts occur.
This "front-running" trend may also appear in the crypto market. While the market's focus is generally on short-term speculation about "when will rates be cut", true sages have already begun thinking about which assets and tracks will occupy the most advantageous positions in the future feast driven by macro tailwinds and industry cycles when the easing prelude finally plays.
Conclusion
This crypto cycle is undoubtedly an ultimate test of retail investors' cognition and mentality. The era of easily profiting through courage and luck has passed, and a "value bull" era requiring deep research, independent thinking, and long-term patience has arrived. This is precisely its "difficulty".
However, it is in this era that institutional funds are flowing in at unprecedented scales, providing a solid market bottom; the value logic of core assets becomes increasingly clear; truly value-creating applications begin to take root. For retail investors willing to learn, embrace change, and view investment as a cognitive realization journey, this is undoubtedly a "golden age" where they can compete with top minds and share the industry's long-term growth dividends. History will not simply repeat, but it is always surprisingly similar. Between the finale and prelude, patience and foresight will be the only path to success.
