In February 2025, the cryptocurrency market is undergoing a brutal "rite of passage".
Just as Bloomberg issued that deafening commentary, the price of Bitcoin had already retreated from the historical high of 126,272 USD set last October, briefly falling below the 80,000 USD mark. This is not a simple technical correction, but a profound reconstruction of the underlying logic of the industry— the cryptocurrency world is painfully transforming from "narrative-driven" to "value-driven".
1. Market Crash: It's More Than Just a Drop in Numbers
In early February, the cryptocurrency market was bloody. On February 3, affected by Trump's tariff policy, the total liquidation amount within 24 hours reached 2.23 billion USD, with long positions accounting for over 84%; on February 25, BTC once again fell below the psychological barrier of 90,000 USD, with total liquidations amounting to 1.57 billion USD. Altcoins like Solana were even halved, with a decline exceeding 50%.
However, this round of decline is different from previous ones: it has not been accompanied by regulatory crackdowns, but has occurred against the backdrop of the White House's clear pro-crypto stance and a relaxed regulatory environment. This precisely confirms Bloomberg's core viewpoint— the problem is not external, but internal: the token-driven venture capital flywheel has already broken, and retail demand has dried up.
2. The great migration of venture capital: from 'born to exist' to 'fighting for value'
Santiago Roel Santos, founder of the private equity firm Inversion, makes a sharp judgment: 'As a category, Web3 currently lacks investment value to a large extent.'
This awareness is triggering an industry reshuffle:
The battlefield of retreat: NFTs, Web3 games, and the lack of innovation in DeFi clones. Data shows that investment in Web3 games plummeted 71% to $91 million in Q1 2025, with 17 blockchain games shutting down successively, evaporating a market value of 19.3%. Projects that once relied on the narrative of 'the next Axie Infinity' now face a double squeeze of funding exhaustion and a crisis of confidence.
The direction of offense: stablecoin infrastructure, on-chain prediction markets, and RWA (real-world asset) tokenization. Coinbase lists stablecoins as a primary focus area in its 2025 outlook—its market cap has reached $193 billion, with an annual trading volume exceeding $27 trillion, and it is evolving from a trading tool into the infrastructure for global capital flows.
More attention should be paid to cross-border migration: native crypto funds like Mechanism Capital and Tangent are beginning to invest in robotics startups like Apptronik and Figure; Portal Ventures is starting to expand into fintech and AI. This is not just a strategic adjustment, but a survival instinct—when traditional institutions enter with capital and compliance advantages, merely understanding crypto is no longer sufficient.
3. New valuation systems: revenue, retention, and willingness to pay
Tom Schmidt, a partner at Dragonfly, warns: 'If we see more funds quietly closing or downsizing, I won't be surprised at all.'
This sense of crisis stems from a complete shift in valuation logic. In the early cycle, narrative heat, token liquidity, and market share were the core metrics for evaluating projects; now, revenue, user retention, and willingness to pay have become hard currencies.
This shift places higher demands on entrepreneurs: they can no longer rely on white papers and token economic models for funding; they must prove real PMF (product-market fit). The popularity of stablecoins and prediction markets stems from their ability to address real needs—high costs of cross-border payments and liquidity issues in event betting.
4. Structural opportunities: rebuilding in the ruins.
Despite short-term growing pains, the market's self-purification is creating new opportunities:
Structural demand for Bitcoin ETFs: Despite extreme price volatility, there has been a net inflow of $6.63 billion into spot Bitcoin ETFs over the past five weeks, and BlackRock's crypto investment portfolio has surged from $54.77 billion at the beginning of the year to $102.09 billion (according to previous data). This indicates that institutional allocation demand has not waned due to price declines but has instead increased on dips.
The shift in the Federal Reserve's liquidity tools: The December FOMC meeting eliminated the daily limit of $500 billion on the standing repurchase agreement (SRP), allowing banks to borrow unlimited amounts from the Federal Reserve using treasury bonds as collateral. This change has increased market liquidity and may provide support for risk assets (according to previous data).
The eve of the explosion of RWA tokenization: Excluding stablecoins, tokenized RWAs have grown over 60% to $13.5 billion, with asset classes like private credit, commodities, and real estate going on-chain. This could be the breakthrough for crypto technology to truly integrate into traditional finance.
5. Investor insights: return to risk control anchors.
For ordinary investors, the current environment requires a rational allocation strategy. As you previously analyzed, allocating 30%-40% of positions to gold as a risk control anchor and deploying the remaining funds into Bitcoin and quality mainstream coins is particularly valuable in a volatile market.
Bitcoin at $91,000 and Ethereum at $3,000 are not only reflections of price volatility, but also represent the market's search for a new equilibrium price. From $61,000 in August 2024 to the current trend, the structure of the macro bull cycle has not been completely destroyed, but clearing leverage and reconstructing narratives will take time.
Conclusion: After the winter, the survivors will be kings.
The cryptocurrency industry is experiencing growing pains as it transitions from 'wild growth' to 'meticulous refinement.' This is not the first time, nor will it be the last. History shows that after each major reshuffle, projects that truly create value will gain a more solid footing.
When speculation recedes and naked swimmers leave the stage, what remains will be those builders who can solve real problems, generate real income, and retain real users. For investors, this may be the best time to reassess asset allocation and focus on fundamental value.
What are your views on the current transformation of the crypto market? Do you think this will lead to healthier development, or are you worried about the loss of innovative vitality? Feel free to leave a comment to discuss!
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