How to Continue Profiting in the New Paradigm of Cryptocurrency in 2025?
The four-year cycle has ended. We are entering a new paradigm in cryptocurrency—survival of the fittest, elimination of the unfit.
Before sharing my strategy for navigating market changes in 2025 to continue accumulating wealth in this unknown territory, let’s first explore why the four-year cycle has become a thing of the past.
I believe there are two reasons why the four-year cycle is no longer applicable.
Weakened Halving Effect
First, from the supply side, the halving effect of Bitcoin ($BTC) is gradually diminishing. With each halving, the reduction in the issuance of new bitcoins is becoming less pronounced.
For example, during the halvings in 2012 and 2016, the issuance was reduced by 50% and 25%, respectively, leading to a significant impact on market prices. However, in 2024, the reduction in issuance due to halving is only 6.25%. This indicates that the halving’s influence on prices has greatly diminished.
ETFs Changed the Market Rules
Secondly, from the demand side, the introduction of Bitcoin ETFs is a significant variable that permanently changed the market rules. Bitcoin ETFs are financial instruments that allow investors from traditional financial markets to invest in Bitcoin indirectly. Since their launch, they have become the most successful ETF products in history, with demand far exceeding expectations.
This influx of demand has not only altered the overall landscape of the cryptocurrency market but has also disrupted many old market rules (such as the four-year cycle). The most significant impact of ETFs is actually reflected in the altcoin market. Let me elaborate.
In the past, you might have frequently seen a chart illustrating the price rotation relationship between Bitcoin and altcoins. This was indeed the case in 2021. However, now this relationship has become ineffective.
(Source image from Miles Deutscher, compiled by Deep Tide TechFlow)
The Wealth Effect of Bitcoin Has Disappeared
In 2017 and 2021, when Bitcoin prices surged, many wealthy Bitcoin whales would transfer profits to altcoins on centralized exchanges (CEX), thereby driving the prosperity of the altcoin market. However, the majority of new capital flow into the market now comes through Bitcoin ETFs, and this capital is not flowing into the altcoin market. In other words, the way funds are flowing has fundamentally changed, and altcoins no longer benefit from Bitcoin’s wealth effect.
Retail Investors Skip Stages 2 (ETH) and 3 (Mainstream Coins)
Retail investors have directly flocked to high-risk speculative projects on-chain, referred to as “on-chain casino games (Pump Fun).” Compared to 2021, the number of retail investors in this cycle has significantly decreased. This is mainly due to the pressure of the macroeconomic environment and the severe impacts many faced in the previous cycle due to events like LUNA, FTX, BlockFi, and Voyager. However, those retail players who remain in the market have directly skipped mainstream coins and opted to seek opportunities on-chain. You can read my detailed analysis on how this phenomenon affects the market here.
If my judgment is correct, meaning that cycle theory is no longer applicable, what changes can we expect in the future market? I have one piece of bad news and one piece of good news to share.
The bad news is that it has become more difficult to “lie flat and make money.” This is a natural signal of the industry’s gradual maturation. In fact, there are now more trading opportunities in the market, but if you still apply strategies from 2021—such as holding a bunch of altcoins and quietly waiting for the “altcoin season” to arrive—you may be disappointed or even perform poorly.
The good news is that since there is no longer a so-called four-year cycle, this also means that prolonged bear markets triggered by specific factors in cryptocurrency will no longer occur. Of course, from a macroeconomic perspective, long-term bear markets remain a possibility, as cryptocurrencies do not operate in isolation; their correlation with the macroeconomy is now closer than ever.
The “risk appetite phase” and “risk aversion phase” in the market are now more likely to be driven by changes in macroeconomic conditions. These changes usually trigger short-term mini echo-bubbles rather than prolonged one-sided bullish trends. The so-called echo bubbles refer to brief market rebounds caused by changes in the macro environment, which, while smaller in scale, share similarities with past large bubbles.
Within these bubbles, there are numerous opportunities to profit. For example, in 2024, we witnessed rotations of different hot trends: November was the meme craze, December was the AI concept, and January was for AI agents. Undoubtedly, new trends will continue to emerge.
If you are sufficiently perceptive, these are excellent opportunities to make money, but they require a strategy that differs slightly from past cycles.
This brings us to the next topic: my strategy. A few days ago, I had dinner with @gametheorizing, who presented a very insightful perspective. Many people chase an ultimate goal: whether it’s to multiply their portfolio by 5, 10, or 20 times. However, a better strategy is to focus on multiple small bets rather than going all in. By continuously accumulating a series of small victories, the returns from this approach may be greater in the long run.
Thus, rather than betting everything in hopes that the altcoin season will rapidly double your assets, try to accumulate wealth continuously through the compounding effect of time. Specifically, you can adopt the following strategy:
Small Bets > Take Profit, Re-bet > Take Profit Again, Repeat the Cycle.
This is also why many top traders and thinkers in the crypto space (such as Jordi) were once professional poker players. They learned to view each trade with a probability mindset and assess possible outcomes, rather than betting blindly.
My current portfolio is allocated as follows: 50% invested in high-conviction assets with long-term potential, and 50% in stablecoins and active trading. I utilize this portion of funds to seek short-term opportunities in the market, entering and exiting flexibly.
Additionally, I use stablecoins as a benchmark for measuring the success or failure of trades. Each time I exit a trade, I convert profits back into stablecoins, allowing me to clearly see my earnings.
If your cryptocurrency portfolio is overly diversified and you don’t know how to respond to current market changes, last week I shared a guide detailing how to optimize your portfolio based on market changes. In that article, I emphasized a key point: the importance of setting “Invalidation” standards for each trade. Just as you need a clear reason to validate your choice when deciding to purchase a certain cryptocurrency, “Invalidation” refers to the criteria for exiting a trade when market conditions no longer align with your expectations.
I have noticed that many people lack basic risk management awareness when entering trades and do not set clear exit criteria. This practice often leads to unnecessary losses.
If you now seek to adopt a recommendation that can significantly enhance future profitability, it is to establish clear technical or fundamental “Invalidation” standards for each trade. This will not only help you better manage risk but also improve the overall efficiency of your trading.
Of course, your confidence level in a particular trade and the expected holding period may influence how you set the “Invalidation” standards or trigger conditions. Nonetheless, this does not change the fact that you need to plan in advance. Having a clear exit plan is one of the keys to successful trading.
While the current market may not fully adhere to previous cyclical rules, I remain optimistic about the future. As long as you maintain the correct mindset and strategy, 2025 still holds the potential for substantial growth.
Currently, we are in a bear market phase, but market trends will eventually change, bringing many new opportunities. Before that, your primary goal is to survive.
The returns in the cryptocurrency market often belong to those who can withstand extreme volatility. Regardless of how the market fluctuates, patience and resilience are the keys to ultimate success.
This article is a collaborative reprint from: Deep Tide.