The most interesting aspect of this round is that the valuation cycle of projects is completely opposite to the price cycle of cryptocurrencies.
From the perspective of BTC's price, it was undervalued in 2022 and 2023, reaching a peak in 2024.
In terms of project valuation, 2022 and 2023 were the highest periods, while 2024 began to decline.
The core reasons for this are:
1) The market's confidence in a bull market in 2025 is overly strong, leading to a massive influx of new money from major players into the industry, investing in VC and laying out projects in advance. The flood of capital has inflated project valuations, resulting in numerous projects with a $1 billion FDV in 2022 and 2023, creating a clear bubble.
2) The feedback cycle in the primary investment market is very long. It takes several years from VC investment to the project issuing tokens, and then to full unlocking. This leads to a sluggish response from both VCs and project parties.
This path is VC funds - project parties - exchange TGE - secondary retail investors. Starting from 2022, it has been moving from left to right. However, from 2024 onwards, a clear divergence has formed due to a large number of overvalued projects and limited market funds. This has resulted in BTC reaching new highs in 2024 and early 2025, while altcoins have been declining. Now this path is starting to reverse, beginning with retail investors unwilling to buy VC tokens in the secondary market, moving from right to left.
A very obvious phenomenon recently is that the market capitalization of new coins on Binance is getting lower and lower, including circulating market cap and FDV. For example, Parti and Gun now have a circulating market cap of only tens of millions, while previously Nillion and Red had circulating market caps of around $100 million to $200 million. Even earlier, in 2022 and 2023, many projects could reach $300 million to $500 million in circulating market cap. Top-tier projects could reach over a billion.
In addition to the declining market cap for new projects, Binance has been continuously trying new routes since 2024 amidst criticism. Now this route involves CZ and HeYi promoting, launching on Alpha, launching contracts, and voting on Binance's main site. This has purely become an on-chain route. Moreover, each step is backed by data, filtering from it.
This is actually bad news for VC-invested projects.
Retail investors are the most agile. After losing a few times in the secondary altcoin market, they become reluctant to buy.
Exchanges are next, needing to transform their methods and experiment, such as Binance.
Project parties face more challenges. Having taken VC's high valuations, they need to justify themselves and also need to make profits, while Binance's new route is uncertain and risky.
VCs are currently the most passive, as they can't do much. At most, they can refrain from investing in new projects, but the money already invested can only wait for news.
BTC in 2025 may reach new highs, but what we might see is that previously, during a major bear market, project parties went bankrupt one after another. This time, it could be that during the bull market of 2025, project parties are also going bankrupt. Overall, project valuations and VC institutions will undergo a revaluation, likely taking at least 1 to 2 years to reach undervaluation.
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