Bitcoin underperforms gold, but the golden age of the crypto economy has just begun.

Author: Ryan Watkins
Translation: Shen Chao TechFlow

Introduction: By 2026, the crypto economy is in its most critical transformation in 8 years. This article delves into how the market has “soft-landing” from the over-optimism of 2021 and is gradually establishing valuation frameworks based on cash flow and real use cases.
The author explains the pains of the past four years through the “Red Queen Effect” and points out that with relaxed US regulations and explosive enterprise applications, crypto assets are shifting from cyclical speculation to long-term trend growth.
Faced with a global trust crisis and currency devaluation, this is not just an industry revival but the rise of a parallel financial system. For investors deeply involved in Web3, this is not only a cognitive reshaping but also an undervalued, cyclical cross-cycle entry opportunity.
The full text is as follows:
Key Points

• This asset class over-anticipated in 2021; since then, valuations have been rationally correcting, and now high-quality assets are approaching fair value.
• With the easing of US regulatory environment, issues of token alignment and value capture are finally turning positive, making tokens more investment-worthy.
• Growth of the crypto economy is shifting from cyclical to secular trends, with some valuable use cases emerging beyond Bitcoin.
• Winning blockchains are consolidating their status as standards for startups and large enterprises, becoming hubs for some of the fastest-growing businesses worldwide.
• After a four-year bear market for altcoins, market sentiment hit rock bottom, and multi-year opportunities for top projects are mispriced; few analysts model exponential growth.
• While top projects may thrive in the next era of the crypto economy, increased delivery pressure and corporate competition will eliminate weaker participants.
• Nothing is more powerful than the idea that “the time is ripe”; the crypto economy has never felt more unstoppable than now.

In my eight years in this industry, the crypto economy is in the biggest transformation I have seen. Institutions are accumulating chips, while cypherpunks are diversifying wealth. Companies are preparing for S-curve growth, and industry-native developers feeling disillusioned are leaving. Governments worldwide are guiding global financial transformation onto blockchain rails, while short-term traders still worry about chart trends. Emerging markets celebrate financial democratization, while American rebels lament it as just a casino game.
Recently, many articles ask “which historical period does today’s crypto economy resemble most.” Optimists compare it to the post-dot-com bubble period, believing the speculative era is over, with long-term winners like Google and Amazon rising along the S-curve. Pessimists compare it to emerging markets, such as some in the 2010s, implying weak investor protections and long-term capital shortages could lead to poor asset performance, even as the industry flourishes.
Both views have merit. After all, history is the best guide besides experience. However, analogies have limited insights. We still need to understand the crypto economy within its macroeconomic and technological context. The market is not a single entity—it consists of many roles and stories interconnected but distinct.
Below is my best assessment of our past phases and future directions.
The Red Queen’s Cycle
“Now, here, you see, you must run as fast as you can just to stay in the same place. If you want to get somewhere else, you must run at least twice as fast!”
— Lewis Carroll
In many ways, expectations are the only thing that matters in financial markets. Surpass expectations, prices rise; fail to meet expectations, prices fall. Over time, expectations swing like a pendulum, and forward returns are often negatively correlated with them.
In 2021, the crypto economy vastly overshot expectations, far beyond most people’s understanding. Some signs of overheating are obvious—DeFi blue chips trading at 500 P/S multiples, or eight smart contract platforms valued over $100 billion. Not to mention the chaos of Metaverse and NFTs. But the most calm reflection of this is the Bitcoin/Gold ratio.
Despite progress, the Bitcoin-to-Gold price has never hit a new high since 2021 and remains in decline. Who would have thought that, in the global crypto capital Trump mentioned, after the most successful ETF launch in history, Bitcoin’s success as digital gold is actually worse than four years ago amid systemic dollar devaluation?

As for other assets, the situation is much worse. Most projects entered this cycle with a series of structural issues that intensified the challenge of responding to extreme expectations:

• Most projects’ revenues are cyclical, relying on asset prices continually rising;
• Regulatory uncertainty hindered institutional and corporate participation;
• Dual ownership structures caused misaligned interests between insiders and public market token investors;
• Lack of disclosure standards led to information asymmetry between project teams and communities;
• Absence of shared valuation frameworks resulted in excessive volatility and lack of fundamental price floors.

These combined issues caused most tokens to continue “bleeding,” with only a few reaching their 2021 highs. This had a huge psychological impact—few things are more frustrating than “working hard but not getting rewarded.”
For speculators and traders who see crypto as the easiest way to get rich, this disappointment is especially intense. Over time, this struggle has sparked widespread burnout across the industry.
Of course, this is a healthy development. Mediocre efforts should no longer produce extraordinary results as they did before. The era before 2022’s “vaporware” that created huge wealth is clearly unsustainable.
Nevertheless, the one glimmer of hope is that these issues are widely understood, and prices have already reflected these expectations. Today, apart from Bitcoin, few native crypto participants are willing to explore long-term fundamentals. After four years of pain, this asset class now has the conditions to surprise the market again.

Enlightened Crypto Economy
As mentioned earlier, the crypto economy entered this cycle with many structural issues. Fortunately, everyone is now aware of this, and many problems are gradually becoming history.
First, besides digital gold, many use cases have shown signs of compound growth, with more in transition. Over the past few years, the crypto economy has produced:

• Peer-to-peer networks: enabling users to trade and execute contracts without government or corporate intermediaries.
• Digital dollars: stored and transferred globally over the internet, providing cheap and reliable currency for billions.
• Permissionless exchanges: allowing anyone anywhere to trade top global assets across asset classes 24/7 in a transparent venue.
• New derivative instruments: such as event contracts and perpetual swaps, offering valuable predictive insights and more efficient price discovery.
• Global collateral markets: enabling permissionless credit access via transparent, automated infrastructure, substantially reducing counterparty risk.
• Decentralized asset creation platforms: allowing individuals and institutions to issue tradable assets at very low costs.
• Open financing platforms: enabling anyone worldwide to raise funds for their business, overcoming local economic restrictions.
• Physical infrastructure networks (DePIN): distributing operations to independent operators via crowdsourced capital, creating more scalable and resilient infrastructure.

This is not an exhaustive list of all value use cases built so far. But the key point is many of these use cases are demonstrating real value, growing regardless of crypto asset price trends.

Meanwhile, with regulatory pressure easing and founders increasingly aware of the costs of misalignment, dual equity–token models are being corrected. Many existing projects are consolidating assets and revenues into a single token, while others explicitly allocate on-chain income to token holders and off-chain income to equity holders. Additionally, as third-party data providers mature, disclosure practices are improving, reducing information asymmetry and enabling better analysis.
At the same time, market consensus is growing around a simple, time-tested principle: apart from rare value storage assets like Bitcoin (BTC) and Ethereum (ETH), 99.9% of assets need to generate cash flows. As more fundamental investors enter the space, these frameworks will only be reinforced, increasing rationality.
In fact, given enough time, the concept of “on-chain cash flow sovereignty” might be understood as unlocking a paradigm of “sovereign digital value storage” of the same scale. After all, when can you hold an unregistered digital asset that autonomously pays you whenever it’s used, from anywhere on Earth?

Against this backdrop, the winning blockchains are gradually emerging as the foundation of the network’s currency and financial infrastructure. Over time, the network effects of Ethereum, Solana, and Hyperliquid strengthen, thanks to their growing assets, applications, ecosystems, and user bases. Their permissionless design and global distribution make their platforms among the fastest-growing businesses worldwide, with unmatched capital efficiency and revenue velocity. In the long run, these platforms are likely to support the overall market potential of financial superapps—an area that almost all leading fintech companies are vying for.

In this context, giants from Wall Street and Silicon Valley are pushing blockchain initiatives at full throttle, which is no surprise. Every week, new product announcements emerge, covering tokenization, stablecoins, and everything in between.
Notably, unlike the pre-crypto era, these efforts are not experiments but production-grade products, mostly built on public blockchains rather than isolated private systems.
As regulatory lag continues to permeate the system over the coming quarters, these activities will only accelerate. With increased clarity, companies and institutions can finally shift focus from “is this legal?” to how blockchain can expand revenue opportunities, reduce costs, and unlock new business models.

Perhaps one of the clearest signs of the current state is that very few industry analysts build models for exponential growth. Anecdotal evidence suggests many sell-side and buy-side peers around me dare not consider annual growth rates above 20%, fearing to appear overly optimistic.
After four years of pain and valuation resets, it’s time to ask: what if all this actually achieves exponential growth? What if “daring to dream” again brings returns?
Dusk Moment
“Lighting a candle casts a shadow.”
— Ursula LeGuin
On a cool autumn day in 2018, before starting another exhausting day at the investment bank, I entered an old professor’s office to talk about everything blockchain. After I sat down, he recounted a conversation with a skeptical hedge fund manager who claimed cryptocurrencies were entering a nuclear winter, a “search for problems’ solutions.”
After giving me a crash course on unsustainable sovereign debt burdens and the disintegrating trust in institutions, he finally told me how he countered that skeptic: “In 10 years, the world will thank us for building this parallel system.”
Although it’s not yet ten years, his prediction seems prescient, as cryptocurrencies increasingly look like a “ripe moment” idea.
In the same spirit, the core message of this article is to prove that the world is still underestimating what is being built here. For all of us investors, the most relevant point is that the multi-year opportunities of leading projects are undervalued.
The last part is crucial because, although crypto may be unstoppable, your favorite token might actually be heading toward zero. The other side of crypto’s unstoppable nature is that it attracts fiercer competition, and the pressure to deliver has never been greater. As I mentioned earlier, with institutional and corporate entry, many weaker players are likely to be cleared out. This doesn’t mean they will win everything and dominate the technology, but it does mean only a few native players will become the big winners around the world’s repositioning.
The focus here is not cynicism. In all emerging tech fields, 90% of startups fail. There may be more public failures in the coming years, but that shouldn’t distract you from the big picture.
Perhaps no technology better embodies the zeitgeist than cryptocurrencies. Declining trust in institutions, unsustainable government spending in G7 countries, blatant currency devaluation by the world’s largest fiat issuer, deglobalization and fragmentation of the international order, and the growing desire for a fairer new system than the old—all these point to an era ripe for crypto to emerge from its small bubble.
As software continues to consume the world, AI becomes the latest accelerant, and the younger generation inherits wealth from the aging Baby Boomers, there’s no better time for crypto to break out of its small bubble.
While many analysts frame this moment using classic frameworks like Gartner’s hype cycle and Carlota Perez’s “Post-frenzy” stage, implying the best returns are behind, and the subsequent phase is more dull and tool-oriented, the reality is much more interesting.
Crypto economy is not a single mature market but a collection of products and businesses at different points on the adoption curve. More importantly, when a technology enters growth, speculation doesn’t disappear—it just fluctuates with sentiment and innovation pace. Anyone telling you the speculative era is over might just be tired or simply unaware of history.
Skepticism is reasonable, but don’t be cynical. We are reimagining money, finance, and how our most important economic institutions are governed. This should be challenging but also fun and exciting.
Your next task is to figure out how to best leverage this emerging reality instead of endlessly tweeting about why everything is doomed to fail.
Because those willing to bet on the dawn of a new era, beyond disillusionment and fog of uncertainty, will find a once-in-a-lifetime opportunity.