The current crypto downturn feels different from previous bear markets.
This is not simply a period of falling token prices. Capital is drying up, early-stage fundraising has become significantly harder, teams are shutting down, hiring has slowed, and the industry is increasingly concentrating around financial applications with clear product-market fit.
At the same time, some of the strongest opportunities may be emerging precisely because the market has become so selective.
Here are 14 observations on where crypto stands today and where it could go next.
1. We May Be Near the Bottom of the Selling Cycle
It increasingly feels like we are approaching the deepest part of the current bear market.
A large portion of the market has already sold, capitulated, or simply stopped participating. The bigger problem now is not necessarily aggressive selling. It is the absence of marginal buyers.
The next major catalyst could come from capital rotation.
If some of the enormous amount of capital currently flowing into AI begins rotating back toward crypto, potentially around Q4, the market could recover relatively quickly. If that rotation does not happen, crypto may remain range-bound for an extended period.
The market may therefore be closer to a liquidity problem than a conviction problem.
2. Early-Stage Fundraising Is in a Bad Place
Fundraising is particularly difficult for early-stage crypto startups right now.
The infrastructure investment narrative has largely disappeared. Many crypto VCs either have limited remaining capital or have become significantly more cautious about funding products.
A major reason is the previous infrastructure boom.
During 2023–24, the market heavily funded infrastructure projects, many of which ultimately launched tokens that performed poorly and offered investors little in the way of exits.
That experience changed the risk appetite of venture investors.
Meanwhile, much of the speculative capital that might previously have gone into crypto is now being directed toward AI.
For founders, the implication is straightforward:
Unless you have meaningful traction, strong distribution, or an exceptional pedigree, raising a crypto round right now may simply not be worth the time.
3. Teams Are Shutting Down, and the Job Market Is Feeling It
Crypto teams are shutting down across the industry, primarily because they either ran out of capital or failed to find product-market fit.
That is having a direct impact on employment.
There is still hiring on the institutional side, particularly in markets such as New York, but overall crypto hiring has declined significantly.
Companies with substantial treasuries have a major advantage because they can continue hiring while capital-starved competitors are forced to cut back.
Asian crypto projects appear particularly vulnerable to this environment.
This reinforces an increasingly important principle for startups:
Capital itself has become a moat.
For an otherwise capital-constrained early-stage company, having enough runway can determine whether it even gets the opportunity to find product-market fit.
4. The Early-Stage Funding Gap Is Creating an Opportunity
The collapse in venture funding has created an unusual opportunity for angels and small investors.
This could be one of the better environments in years to make early-stage investments at significantly lower valuations or to build micro-accelerators.
The decline in infrastructure funding has also affected hackathons and grants. Programs that once attracted large numbers of early-stage developers have reportedly contracted dramatically.
Previously, L1 ecosystems could use grants and ecosystem funding to attract teams before they had meaningful products.
With that money disappearing, the talent pipeline is weakening.
If crypto fundraising does not meaningfully recover by Q1 2027, the consequences could extend beyond the current bear market.
Innovation itself could shrink, pushing crypto toward becoming a legacy financial industry rather than a frontier technology ecosystem.
5. Crypto Has Become Financial Markets
One of the biggest structural changes is that crypto increasingly looks like a collection of financial markets rather than a broad technology movement.
There are several areas that appear to have achieved meaningful product-market fit:
- Memecoins and spot markets: Solana and Raydium
- Perpetuals: Hyperliquid
- Yield: Ethereum and protocols such as Morpho and Aave
- Prediction markets: Polymarket
- Stablecoin payments
Beyond these markets exists a much longer tail of experimental markets, including things such as digital collectibles and other speculative assets.
Meanwhile, many previously popular categories such as decentralized governance, crypto social networks, proof-of-X concepts, identity, and blockchain gaming have struggled to establish independent product-market fit.
Increasingly, these concepts appear more likely to become features inside successful speculative or financial applications rather than standalone categories.
6. Everyone Is Building an Exchange or Packaging Yield
Two dominant product strategies are emerging.
The first is the everything exchange.
Companies and protocols increasingly want to become the place where users can trade everything, whether that means crypto, stocks, prediction markets, memecoins, derivatives, or other financial assets.
Coinbase, Robinhood, Solana, Pump, Axiom, Polymarket, Jupiter, and Phantom are all moving in different ways toward broader financial-market access.
The second strategy is packaging yield.
Stablecoins and DeFi protocols are increasingly becoming mechanisms for turning idle capital into productive assets.
USDT, USDC, USDG, Morpho, Aave, and Kamino are examples of this broader direction.
The underlying thesis is simple:
If you control the user’s capital, you can potentially monetize both trading and yield.
7. There May Only Be Two Types of Chains Left
The blockchain landscape is becoming increasingly concentrated.
Broadly, two categories appear to be surviving:
Community-led chains
Ethereum and Solana have developed communities and ecosystems strong enough to sustain activity beyond individual applications.
Distribution-led chains
Base, Robinhood, Tempo, and BSC represent another model: chains where distribution, user access, or an existing platform provides a structural advantage.
For many other chains, the challenge is becoming existential.
Without a differentiated community, strong distribution, or meaningful application ecosystem, simply launching another high-performance blockchain is no longer enough.
The chain itself is becoming less important than who can bring users to it.
8. The Survivors Are Becoming Extremely Product-Focused
The teams that survive this cycle are increasingly obsessed with product.
That means:
- Better trading execution
- Better UX
- Mobile-first experiences
- Faster interfaces
- Better liquidity
- Stronger distribution
The old crypto playbook of launching a token, building a community, and hoping liquidity follows is becoming much harder to execute.
The new playbook increasingly resembles fintech:
Build an excellent financial product, acquire users efficiently, and use crypto rails underneath the experience.
At the same time, speculation remains the defining feature of financial markets.
Stocks, commodities, crypto, prediction markets, and even traditional assets increasingly trade around narratives.
Everything is becoming a narrative trade.
9. Crypto VCs Are Funding Non-Crypto Infrastructure Too
There are still teams building interesting infrastructure outside traditional crypto, including robotics, data collection, and DePIN-style projects.
Some of these companies are being funded by crypto-native investors.
But there is skepticism around many of these projects because of their token structures.
A recurring pattern is launching a token with relatively high circulating supply and low fully diluted valuation, then attempting to use token speculation to finance the business.
If the underlying product eventually finds genuine product-market fit, the team may then abandon the token narrative and reposition it as something like “credits.”
The market has seen versions of this cycle before.
The key question is therefore not whether a project is building something useful.
It is whether the token is actually necessary for the business to work.
10. Liquid Markets Still Offer Some of the Best Opportunities
There are still attractive opportunities in liquid crypto markets.
The problem is filtering them.
With teams shutting down, abandoning products, changing strategies, and running out of capital, it has become much harder to distinguish durable projects from temporary narratives.
Still, high-quality liquid tokens may offer some of the best risk-reward opportunities in the current environment.
A simple framework is to look for projects with:
- A strong treasury
- Founder-led teams that understand distribution
- Clear upcoming sector tailwinds
- Genuine product usage
- Sufficient runway
In a bear market, survival itself becomes a form of competitive advantage.
11. The Traders Who Remain Are Extremely Sophisticated
There are fewer traders actively operating in the trenches than during the previous cycle.
But the traders who remain are often exceptionally sophisticated.
Many have expanded beyond crypto and are now trading equities and other financial markets successfully.
That makes sense.
Crypto trained an entire generation of traders to think in terms of narratives, liquidity, reflexivity, momentum, and online attention.
Many of the strongest Gen Z traders have either traded crypto already or continue to do so.
This audience also remains highly receptive to experimentation.
Whenever a new financial market emerges, these traders are likely to be among the first participants.
12. Stablecoin Payments Could Be Huge, but Distribution Will Matter
Stablecoin payments are already significant in parts of the informal and cross-border economy.
For example, businesses may use USDT for international transactions because it can be faster or easier than navigating traditional banking infrastructure, taxes, currency controls, and regulatory complexity.
But turning this activity into an organized, mainstream payment market is much harder.
Agentic payments could eventually become a major opportunity, but meaningful product-market fit has not yet emerged.
Some of the transaction numbers being promoted by major ecosystems may also contain substantial internal or incentive-driven activity rather than representing genuine economic demand.
The companies with the strongest distribution could ultimately capture the regulated stablecoin payments market.
That puts companies such as Stripe, Tempo, and established financial institutions in a particularly strong position.
The technology may be built on crypto rails, but distribution could determine who actually wins.
13. Where the Biggest Opportunities May Be
The next generation of crypto startups may not look like the previous generation.
Some of the strongest opportunities could emerge around:
Better trading interfaces
AI-native trading, mobile-first interfaces, improved execution, and entirely new ways of interacting with financial markets.
New markets
Markets around compute, emerging-market assets, information, and other previously difficult-to-trade resources.
Tokenized speculation
Anything that creates new speculative mechanics around tokens, memecoins, attention, culture, or digital assets.
Fintech products
Ideas that previously struggled because of banking infrastructure or regulatory restrictions could become viable using stablecoins and crypto rails.
This could include new types of neobanks, cross-border financial products, and programmable financial accounts.
And, of course, there will always be opportunities in the picks-and-shovels layer supporting these markets.
The larger thesis is perhaps the most interesting one:
After the AI boom, speculation and trading may increasingly become a way for people to express conviction around anything that has social or economic value.
Crypto could become the default infrastructure for those new markets.
14. Memecoins Will Probably Come Back
And yes, memecoins are likely to return.
If macroeconomic conditions improve and capital begins rotating away from AI, speculative capital could eventually find its way back into crypto.
Memecoins, as internet-culture assets, are particularly well positioned to capture that renewed attention.
They are simple, liquid, culturally native, and built around speculation.
A new wave of memecoin activity could therefore bring users and attention back to crypto.
And when that happens, the VCs currently sitting on the sidelines may find themselves chasing the market again.
The Bigger Picture
Despite the current environment, I remain cautiously optimistic about crypto overall.
I am less optimistic about the old crypto industry.
The infrastructure-heavy, venture-funded model that dominated the previous cycle is breaking down. Many projects will disappear, fundraising will remain difficult, and a significant amount of talent will leave the sector.
But that does not necessarily mean crypto itself is dying.
It may mean the industry is becoming more focused.
The future could be less about building blockchains for their own sake and more about building financial products, markets, and distribution systems on crypto rails.
The strongest opportunities may come from teams that understand three things:
Build a great product.
Own distribution.
Create a market people actually want to trade.
If capital eventually rotates from AI back into crypto, the next cycle may look very different from the last one.
And crypto’s biggest opportunity may ultimately be much broader than crypto itself: becoming the rails for an “anything market” where almost anything with attention, value, or social consensus can become liquid and tradable.
