Will the market enter a "downward expectation" cycle?

The wealth effect should be determined by the project’s long-term Build cycle and the cost to enter a position.

Written by: Haotian

1. The project team Builder has lowered expectations, shifting from a luxurious startup team with a valuation of over 100 million to a financing of only 100,000 dollars, adopting a mindset of “survival first” like Xiaomi with firearms.

2. VC investors are lowering their expectations. The previous high valuation model of following big VC Fomo for investment is no longer effective. The VCs that survive will inevitably return to seek small but beautiful innovative technology teams or engage in Ponzi schemes. Small investments, multiple targets, and quick exits will become the mainstream. What? Gathering a group?? You must also meet the threshold for gathering a group.

3. Holders lower their expectations. Previously, they adhered to “technical narratives + long-termism,” always hoping to replicate past experiential methods to achieve significant gains (10-100 times). Moving forward, retail investors will have to strengthen their “trader” skills, appropriately increasing trading frequency under the premise of having some basic investment research learning ability, and giving up the illusion of hundred or thousand times returns. Achieving 3-5 times returns is already extremely challenging (excluding pure PVP lottery logic). After all, the situation for this generation of holders is quite brutal, and everyone has learned their lessons.

4. Airdrop expectations are being lowered. When everyone is focused on the attention point to farm, it actually narrows the potential reward space for airdrop farming. After all, in the context where industrialized production lines in studios have become extremely mature. Therefore, it is highly likely that “quietly farming” will become the norm, and investments of tens of thousands in farming will also become history, focusing on being able to farm without heavy investment, enjoying private opportunities, and never sharing with others.

5. Market narratives lower expectations. In the past, the Crypto market would always chase the “narrative resonance” effect, from DeFi, NFT, GameFi, to Restaking, BTCFi, chain abstraction, and AI Agent. Each round of narrative aimed to recreate the glory of the previous DeFi Summer, but it has been proven that the evolution of narrative expectations has become increasingly weak. It is difficult for the market to support a huge market bubble based solely on a single technical narrative. Perhaps a multiplicity of blooming micro-narratives will become the norm.

6. The construction of chain infra is lowering expectations. Crypto has relied on continuously stacking infra narratives to expand expectations, from high-performance layer 1 to Rollup layer 2, as well as various chain architecture models that take differentiated technological routes. It has been proven that the era where pure technology reigns is over. In the future, the market will only turn to “attention is king”. Infra that has only technology, without community stickiness and continuous capital accumulation and circulation, will lose the market.

7. The expectation of wealth effect from CEX is declining. For a long time, CEX has become the focus of public opinion and discussions due to its control over the majority of liquidity. The so-called “CEX listing effect” and “DEX PVP free market” have become the AB sides of market attention chasing, but overly relying on CEX to create wealth effects will inevitably result in a weakening listing effect. Ultimately, the wealth effect should be determined by the long-term build cycle of the project and the cost of entering a position.