In the deep winter of 2018, I was inspecting a photovoltaic power station in the Gobi Desert of Qinghai. In the -20°C cold wind, the chief engineer pointed to the rows of idle photovoltaic panels and said, "These are the legacies of the last round of expansion. Only after the market has cleared will new technologies break through." At this moment, gazing at the Binance altcoin list, those K-lines that have been flat for a long time are strikingly similar to the photovoltaic panel arrays of that year.

The cryptocurrency market is experiencing a cyclical rotation identical to that of traditional industries. Just like the 2012 - 2016 photovoltaic industry elimination race, the CEX altcoin market has entered a brutal clearance stage: the daily trading volume of many star projects from 2021 has fallen below ten million dollars, and the median FDV has evaporated by more than 70% from its peak. This is similar to the trajectory of photovoltaic, Internet, and coal giants falling from hundred-dollar stocks to penny stocks.

But behind the cruelty of the cyclical law, there is always a generous gift. Just as Longi Green Energy bet on monocrystalline silicon technology at the industry's low point, the current darkest moment of the altcoin market is nurturing the momentum to break the deadlock:

1. Valuation Logic Restructuring: VC's "Paper Wealth" and Leverage Liquidation

At the peak of the 2021 bull market, VCs in the primary market were like speculators hoarding coal:

• Valuation Bubble: The median valuation of seed-round projects by venture capital (VC) reached $82 million (Messari 2022 Annual Report), a 16.4-fold increase from the 2017 cycle (compared to $5 million for similar projects in 2017), resulting in a 10-fold overvaluation when tokens were listed on CEXs;

• Leverage Blowup: Institutions like Genesis provided 100% LTV BTC-collateralized loans in the last cycle, spawning an arbitrage loop: institutions collateralize BTC → obtain stablecoins → allocate to high-beta tokens. Whales could collateralize BTC to buy altcoins, creating a false boom. However, with the 2022 Genesis scandal, the value of collateral in 2022 breached the liquidation line, triggering a chain of liquidations, severing this "funding artery," and turning the altcoin market into a slaughterhouse for primary market dumping of junk stocks.

2. Clearance in Progress: The Crypto Industry's Clearance Cycle Is Always Faster Than Traditional Industries

After two years of reshuffling, the market signals we can already observe are:

• Market Sentiment Bottoms Out: The average market value of CEX altcoins has already approached the 2020 level, with many projects listed from 2022 - 2024 seeing their market value shrink by over 80%; retail investor exit rates have reached historical peaks, with retail coin address activity over 90 days dropping to 12.3% (Santiment), close to the historical low; CEX altcoin fear and greed index has remained below 20 for 15 consecutive weeks, hitting the low point since March 2020.

• Gestation of New Tracks: Although traditional market makers are contracting, new mechanisms such as parent-child coins and on-chain DEX pool liquidity locking are rebuilding the leverage flywheel channel, with AI and Crypto, and compliance and Crypto attempting to nurture new industry momentum.

Conclusion: The current altcoin market is very similar to coal stocks around 2015 — capacity clearance is rapidly underway, market heat is quickly declining, good news and bad news no longer cause industry fluctuations, and it is also facing the "bloodsucking" of the alternative sector (DEX) in the eyes of the entire market. But there is nothing new under the sun; the first principle of investment is always liquidity and cheapness. There are gold mines hidden in the ruins, and we believe that high-quality projects only need to shine in the industry clearance.

Altcoin Capital War: CEX Valuation Enters the Bottom-Seeking Stage, and the Dawn of the New Continent of DEX

1. CEX Dilemma: VC Poison Pill Not Gone, Clearance Enters the Second Half

The essence of CEX altcoins is the "catcher" of primary market valuation bubbles:

• Pricing Power Struggle: Projects that VCs invested in at a $1 billion valuation in 2021 now only recognize a $100 million market value in the secondary market, with the $900 million in between becoming a "valuation gap" (example: a project with a $200 million seed round valuation had a circulating market value of only $40 million after going live on Binance);

• Capital Logjam: The BTC ETF brought $17 billion in incremental funds, but due to tightened risk control, market makers could no longer leverage by collateralizing BTC as in the past. Funds are stranded in new trading venues, turning CEX altcoins into a "dry riverbed" and entering a negative feedback loop of losing money.

2. DEX Breakthrough: Secondary Pricing Power Revolution

Decentralized exchanges are rewriting the rules of the game:

• Traditional Path: VC pricing → exchange listing → retail catch

• Valuation Inversion: On DEX, retail investors can buy fully liquid tokens at 1/10 the price of VCs.

• Valuation Restructuring Mechanism: The DEX market achieves price discovery through AMM algorithms, with typical projects having a 73.5% lower premium rate at listing compared to CEX (Dune Analytics); DEX is siphoning off CEX liquidity, giving birth to a new paradigm for asset pricing: community consensus → DEX liquidity proof → CEX passive listing.

• Consensus Fission: When niche concepts (such as AI Agent) spread through the community to become mainstream consensus, the flow of chips upgrades from "whale and retail mutual cutting" (PvP) to "incremental influx" (PvE). Typical cases include:

  • Virtual: From a DEX niche sensation to being listed on Grayscale's watchlist, its market value soared 20 times in three months;

  • AI16Z: The community packages projects by imitating a16z's investment logic, attracting traditional tech funds to enter the market.

Core Logic: CEX is "state-owned enterprises dumping burdens," while DEX is "private enterprises going public through shell companies" — the former waits for policy bailouts, while the latter relies on mass movements.

CEX vs. DEX: Two Sets of Survival Rules, Two Types of Wealth Codes

1. CEX Strategy

• Cigar Butt Stocks: Only buy projects with a market value of $50 million - $200 million, with real products and communities, and where the project team has core pricing power, avoiding "penny stocks" (average daily trading volume < $1 million);

• Wait for Industry Cycle: Referring to the history of coal stocks, layout in 2025 - 2026, wait for the liquidity easing cycle to cash in on the market value return cycle, and seize the core targets of industry trends (example: bought MKR at $200 in 2020, sold at $6000 in 2021);

• Liquidity Arbitrage: In continuous market conditions, fully liquid tokens often exhibit linear changes in liquidity support across different CEXs. In emotional freezing points, there are often mispricing opportunities in market value ranges, which can be used for liquidity and emotional arbitrage. At this moment, we believe that ETH, enjoying the same dollar system liquidity as Bitcoin, presents a significant mispricing opportunity for game theory.

2. DEX Strategy

• Early Sniping:

  • $50 million - $20 million market value: Focus on team background, Github code/product quality, and chip absorption/distribution signals;

  • $20 million - $50 million market value: CEX listing expectations (for example, after a DeFi project was included in Binance's watchlist, the DEX price soared by 300%);

  • Community Empowerment: Observe the consensus building of Meme coins. Taking the AI Agent track as an example, for every 1 unit increase in the SocialFi index of the token (frequency of mentions on social platforms / circulating market value), there is a corresponding 47.8% excess return (LunarCrush data), capturing the key turning point from PvP to PvE.

Epilogue

In the twilight of the Qinghai photovoltaic base, the new generation of bifacial components is charging in the afterglow of the sunset. The altcoin market is a giant gold mine, but most people come in with gold rush dreams and leave with gravel.

In the deep winter of 2018, I was inspecting a photovoltaic power station in the Gobi Desert of Qinghai. In the -20°C cold wind, the chief engineer pointed to the rows of idle photovoltaic panels and said, "These are the legacies of the last round of expansion. Only after the market has cleared will new technologies break through." At this moment, gazing at the Binance altcoin list, those K-lines that have been flat for a long time are strikingly similar to the photovoltaic panel arrays of that year.

The cryptocurrency market is experiencing a cyclical rotation identical to that of traditional industries. Just like the 2012 - 2016 photovoltaic industry elimination race, the CEX altcoin market has entered a brutal clearance stage: the daily trading volume of many star projects from 2021 has fallen below ten million dollars, and the median FDV has evaporated by more than 70% from its peak. This is similar to the trajectory of photovoltaic, Internet, and coal giants falling from hundred-dollar stocks to penny stocks.

But behind the cruelty of the cyclical law, there is always a generous gift. Just as Longi Green Energy bet on monocrystalline silicon technology at the industry's low point, the current darkest moment of the altcoin market is nurturing the momentum to break the deadlock:

1. Valuation Logic Restructuring: VC's "Paper Wealth" and Leverage Liquidation

At the peak of the 2021 bull market, VCs in the primary market were like speculators hoarding coal:

• Valuation Bubble: The median valuation of seed-round projects by venture capital (VC) reached $82 million (Messari 2022 Annual Report), a 16.4-fold increase from the 2017 cycle (compared to $5 million for similar projects in 2017), resulting in a 10-fold overvaluation when tokens were listed on CEXs;

• Leverage Blowup: Institutions like Genesis provided 100% LTV BTC-collateralized loans in the last cycle, spawning an arbitrage loop: institutions collateralize BTC → obtain stablecoins → allocate to high-beta tokens. Whales could collateralize BTC to buy altcoins, creating a false boom. However, with the 2022 Genesis scandal, the value of collateral in 2022 breached the liquidation line, triggering a chain of liquidations, severing this "funding artery," and turning the altcoin market into a slaughterhouse for primary market dumping of junk stocks.

2. Clearance in Progress: The Crypto Industry's Clearance Cycle Is Always Faster Than Traditional Industries

After two years of reshuffling, the market signals we can already observe are:

• Market Sentiment Bottoms Out: The average market value of CEX altcoins has already approached the 2020 level, with many projects listed from 2022 - 2024 seeing their market value shrink by over 80%; retail investor exit rates have reached historical peaks, with retail coin address activity over 90 days dropping to 12.3% (Santiment), close to the historical low; CEX altcoin fear and greed index has remained below 20 for 15 consecutive weeks, hitting the low point since March 2020.

• Gestation of New Tracks: Although traditional market makers are contracting, new mechanisms such as parent-child coins and on-chain DEX pool liquidity locking are rebuilding the leverage flywheel channel, with AI and Crypto, and compliance and Crypto attempting to nurture new industry momentum.

Conclusion: The current altcoin market is very similar to coal stocks around 2015 — capacity clearance is rapidly underway, market heat is quickly declining, good news and bad news no longer cause industry fluctuations, and it is also facing the "bloodsucking" of the alternative sector (DEX) in the eyes of the entire market. But there is nothing new under the sun; the first principle of investment is always liquidity and cheapness. There are gold mines hidden in the ruins, and we believe that high-quality projects only need to shine in the industry clearance.

Altcoin Capital War: CEX Valuation Enters the Bottom-Seeking Stage, and the Dawn of the New Continent of DEX

1. CEX Dilemma: VC Poison Pill Not Gone, Clearance Enters the Second Half

The essence of CEX altcoins is the "catcher" of primary market valuation bubbles:

• Pricing Power Struggle: Projects that VCs invested in at a $1 billion valuation in 2021 now only recognize a $100 million market value in the secondary market, with the $900 million in between becoming a "valuation gap" (example: a project with a $200 million seed round valuation had a circulating market value of only $40 million after going live on Binance);

• Capital Logjam: The BTC ETF brought $17 billion in incremental funds, but due to tightened risk control, market makers could no longer leverage by collateralizing BTC as in the past. Funds are stranded in new trading venues, turning CEX altcoins into a "dry riverbed" and entering a negative feedback loop of losing money.

2. DEX Breakthrough: Secondary Pricing Power Revolution

Decentralized exchanges are rewriting the rules of the game:

• Traditional Path: VC pricing → exchange listing → retail catch

• Valuation Inversion: On DEX, retail investors can buy fully liquid tokens at 1/10 the price of VCs.

• Valuation Restructuring Mechanism: The DEX market achieves price discovery through AMM algorithms, with typical projects having a 73.5% lower premium rate at listing compared to CEX (Dune Analytics); DEX is siphoning off CEX liquidity, giving birth to a new paradigm for asset pricing: community consensus → DEX liquidity proof → CEX passive listing.

• Consensus Fission: When niche concepts (such as AI Agent) spread through the community to become mainstream consensus, the flow of chips upgrades from "whale and retail mutual cutting" (PvP) to "incremental influx" (PvE). Typical cases include:

  • Virtual: From a DEX niche sensation to being listed on Grayscale's watchlist, its market value soared 20 times in three months;

  • AI16Z: The community packages projects by imitating a16z's investment logic, attracting traditional tech funds to enter the market.

Core Logic: CEX is "state-owned enterprises dumping burdens," while DEX is "private enterprises going public through shell companies" — the former waits for policy bailouts, while the latter relies on mass movements.

CEX vs. DEX: Two Sets of Survival Rules, Two Types of Wealth Codes

1. CEX Strategy

• Cigar Butt Stocks: Only buy projects with a market value of $50 million - $200 million, with real products and communities, and where the project team has core pricing power, avoiding "penny stocks" (average daily trading volume < $1 million);

• Wait for Industry Cycle: Referring to the history of coal stocks, layout in 2025 - 2026, wait for the liquidity easing cycle to cash in on the market value return cycle, and seize the core targets of industry trends (example: bought MKR at $200 in 2020, sold at $6000 in 2021);

• Liquidity Arbitrage: In continuous market conditions, fully liquid tokens often exhibit linear changes in liquidity support across different CEXs. In emotional freezing points, there are often mispricing opportunities in market value ranges, which can be used for liquidity and emotional arbitrage. At this moment, we believe that ETH, enjoying the same dollar system liquidity as Bitcoin, presents a significant mispricing opportunity for game theory.

2. DEX Strategy

• Early Sniping:

  • $50 million - $20 million market value: Focus on team background, Github code/product quality, and chip absorption/distribution signals;

  • $20 million - $50 million market value: CEX listing expectations (for example, after a DeFi project was included in Binance's watchlist, the DEX price soared by 300%);

  • Community Empowerment: Observe the consensus building of Meme coins. Taking the AI Agent track as an example, for every 1 unit increase in the SocialFi index of the token (frequency of mentions on social platforms / circulating market value), there is a corresponding 47.8% excess return (LunarCrush data), capturing the key turning point from PvP to PvE.

Epilogue

In the twilight of the Qinghai photovoltaic base, the new generation of bifacial components is charging in the afterglow of the sunset. The altcoin market is a giant gold mine, but most people come in with gold rush dreams and leave with gravel.