In the deep winter of 2018, I visited a photovoltaic power station in the Gobi Desert in Qinghai. In the cold wind of minus 20 degrees, the chief engineer pointed to the photovoltaic panels that were shut down and said: These are the legacy of the last round of expansion. New technologies will only break ground after the market is cleared. At this moment, staring at the Binance altcoin list, those K lines that have been sideways for a long time are surprisingly similar to the photovoltaic panel arrays of that year.
The crypto market is experiencing a cycle that is no different from traditional industries. Just like the photovoltaic industry elimination competition from 2012 to 2016, the CEX altcoin market has entered a brutal clearing phase: the daily trading volume of a large number of star projects in 2021 has fallen below 10 million US dollars, and the median FDV has evaporated by more than 70% from the peak. This is exactly the trajectory of the photovoltaic, Internet, and coal giants falling from 100-yuan stocks to penny stocks.
But behind the cruelty of the cycle law there are always great gifts. Just as Longi Green Energy Technology Co., Ltd. bet on monocrystalline silicon technology at the industrys freezing point, the darkest moment of the altcoin market is nurturing the momentum to break through:
1. Reconstructing valuation logic: VC’s “paper wealth” and leverage
At the peak of the bull market in 2021, VCs in the primary market were like speculators who were frantically hoarding coal:
Valuation bubble: The median valuation of venture capital (VC) for seed-round projects reached US$82 million (Messari 2022 annual report), which is 16.4 times larger than the 2017 cycle (compared to only 5 million for similar projects in 2017), resulting in the token being overdrawn 10 times when it was listed on CEX;
Leverage explosion: Institutions such as Genesis provided 100% LTV BTC mortgage loans in the last cycle, giving rise to an arbitrage cycle: institutions pledge BTC → obtain stablecoins → allocate high-β tokens. Market makers can pledge BTC to buy altcoins, creating a false prosperity. However, with the collapse of Genesis in 2022, the value of the collateral broke through the liquidation line in 2022, triggering a chain liquidation. This capital transfusion tube was cut off, and the altcoin market became a slaughterhouse for the primary market to sell junk stocks.
2. Clearing in progress: The clearing cycle of the crypto industry is always faster than that of the real industry
After two years of reshuffle, we can already observe the following market signals:
Market sentiment hits bottom: The average market value of CEX altcoins has almost fallen to the level of 2020, and the market value of multiple projects listed in 2022-2024 has shrunk by more than 80%; the retail investor exit rate has reached a historical peak, and the 90-day activity of retail investor holding addresses has dropped to 12.3% (Santiment), close to the historical freezing point; the CEX altcoin fear and greed index has been below 20 for 15 consecutive weeks, reaching the freezing point since March 2020.
The birth of a new track: Despite the contraction of traditional market makers, new mechanisms such as parent-child coins and on-chain dex pools locking liquidity are rebuilding the leverage flywheel channel. AI and Crypto, compliance and Crypto are trying to breed new industrial momentum.
Conclusion: The current altcoin market is very similar to coal stocks around 2015 - production capacity is being cleared quickly, market enthusiasm is declining rapidly, bad news and good news can no longer trigger industry fluctuations, and it is also facing the bloodsucking of alternative sectors (DEX) in the eyes of the entire market. However, there is nothing new under the sun. The first principle of investment is always liquidity and cheapness. There are gold mines that have been mistakenly killed hidden in the ruins. We believe that high-quality projects are only waiting to be precipitated and shine in the industry clearing.
Second, the secret war of altcoin funds: CEX valuations enter a stage of shock and bottoming out, and the dawn of a new world of DEX
1. CEX dilemma: VC poison pills have not been eliminated, and the liquidation has entered the second half
The altcoins on centralized exchanges are essentially the “buyers” of the valuation bubble in the primary market:
Competition for pricing power: In 2021, VCs invested in projects with a valuation of 1 billion, but now the secondary market only recognizes a market value of 100 million, and the middle 900 million has become a valuation gap (case: a project was valued at 200 million in the seed round, and its circulating market value after listing on Binance was only 40 million);
Funding dam: BTC ETF brought in $17 billion in incremental funds, but due to tightened risk control, market makers could not increase leverage by pledging BTC as in the past. Funds were stranded in new trading venues, and CEX altcoins became dry rivers, 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 investors take over
Valuation inversion: On DEX, retail investors can buy fully circulated tokens at 1/10 of the VC price
Valuation reconstruction mechanism: The DEX market achieves price discovery through the AMM algorithm, and the typical project listing premium rate is 73.5% lower than that of CEX (Dune Analytics); DEX sucks CEX liquidity to give birth to a new paradigm of asset pricing: community consensus → DEX liquidity proof → CEX passive listing
Consensus fission: When a niche concept (such as AI Agent) becomes a public consensus through community dissemination, the chip circulation is upgraded from banker vs retailer (PvP) to incremental influx (PvE). Typical cases:
Virtual: From being popular in a small DEX circle to being included in Grayscale’s watch list, its market value increased 20 times in three months;
AI16Z: The community imitates a16z’s investment logic to package projects and attract funds from traditional technology circles.
Core logic: CEX is state-owned enterprises getting rid of burdens, and DEX is private enterprises going public through backdoor listing - the former waits for policies to save the market, while the latter relies on mass movements.
3. CEX vs DEX: Two sets of survival rules, two types of wealth codes
1. CEX Strategy
Pick up cigarette butt stocks: only buy projects with a market value of 50 million to 200 million, with real products and communities, and the project party has core pricing power, and avoid penny stocks (average daily trading volume < 1 million US dollars);
Waiting for the industry cycle: referring to the history of coal stocks, layout in 2025-2026, waiting for the market value return cycle to realize the benefits during the liquidity easing cycle, and grasping the core targets of the industry trend (case: buying MKR for $200 in 2020 and selling it for $6,000 in 2021);
Liquidity arbitrage: In a continuous market, fully tradable tokens often show linear changes with the liquidity support of different CEXs. There are often mispricing opportunities in the market value range during the emotional freezing point, which can be used for liquidity and emotional arbitrage. At this moment, we believe that ETH has significant mispricing game opportunities while enjoying the liquidity of the US dollar system that is connected to Bitcoin.
2. DEX Strategy
Early sniping:
5-20 million market value: focus on team background, Github code/product quality, and chip absorption/distribution signals;
20-50 million market value: CEX listing expectations (e.g. after a DeFi project is included in Binance’s watch list, the DEX price will surge by 300%);
Community empowerment: Observe the consensus building of Meme Coin. Taking the AI Agent track as an example, every 1 unit increase in the token SocialFi index (frequency of mentions on social platforms/circulating market value) corresponds to 47.8% excess returns (LunarCrush data), capturing the key turning point from PvP to PvE;
Conclusion
At the Qinghai photovoltaic base in the twilight, the new generation of bifacial modules are storing energy in the afterglow of the setting sun. The altcoin market is a giant gold mine, but most people come in with the dream of gold rush and leave with gravel and slag.
The gears of the crypto market cycle have never stopped turning. Those projects that have been sharpening their weapons in the cold winter will eventually reflect the most dazzling light at the dawn of liquidity. And all we have to do is to be like senior miners - calibrate the compass when others abandon the pit, and prepare enough ammunition before the industry wakes up. Only by combining the patience of coal miners, the ruthlessness of gamblers, and the computing power of accountants can we dig out real gold from the ruins. Remember: the bull market is the stage for cashing in profits, and the bear market is the battlefield for collecting chips - and now is the golden moment to carry the basket and bow your head to pick up the ore. We are firmly optimistic about the ETHBTC exchange rate trading opportunities at this moment and the golden opportunity to build a copycat position in the next year.
(Risk warning: The targets mentioned in this article are all subject to zero risk, so please invest with caution. It is recommended to grab a shovel, but dont bet all your dry food.)
about Us
Metrics Ventures, also known as MVC, is a data and research-driven secondary market liquidity fund led by an experienced team of crypto professionals. The team has expertise in primary market incubation and secondary market trading, and plays an active role in industry development through in-depth on-chain/off-chain data analysis. MVC works with senior crypto community influencers to provide long-term empowerment support for projects, such as media and KOL resources, ecological collaboration resources, project strategies, economic model consulting capabilities, etc.
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