VC funding is bleak, new coin narratives are exhausted—what can the crypto market trade in a year?

Author: Mandy, Azuma, Odaily Planet Daily

This weekend, under internal and external troubles, the crypto market was once again bloodied. BTC is currently hesitating around the Strategy holding cost price of $76,000, while altcoins are even more eager to gouge their eyes out at the slightest price movement.

Behind this current downturn, after chatting with projects, funds, and exchanges recently, a question kept recurring in my mind: What exactly is the crypto market trading a year from now?

The more fundamental question behind this is: If the primary market no longer produces “the future of the secondary,” then what is the secondary market trading a year from now? What changes will exchanges undergo?

Although the death of altcoins has long been old news, the past year has shown that the market is far from lacking projects. Every day, projects are still queuing up for TGE. As media, it’s quite intuitive—we are still frequently coordinating with project teams for marketing and promotion.

(Note: In this context, when we say “projects,” we mostly refer to the “project teams” in a narrow sense—simply put, projects that are comparable to Ethereum and its ecosystem—underlying infrastructure and various decentralized applications, and they are “token issuance projects.” This is also the foundational basis of what our industry calls native innovation and entrepreneurship. So, platforms emerging from Meme and other traditional industries entering crypto are temporarily set aside.)

If we rewind the timeline a bit, we’ll find a fact we all tend to avoid discussing: These upcoming TGE projects are “existing old projects,” most of which raised funds 1–3 years ago, and are only now finally reaching the token issuance stage. Under internal and external pressures, they have no choice but to go through this step.

It’s like an “industry inventory clearance,” or more bluntly, queuing to complete their lifecycle—issuing tokens to give the team and investors an explanation, then lying flat and waiting for death, or spending the remaining funds in hopes of a miracle.

The Primary Market Is Dead

For us veterans who entered the industry during the 1CO era or even earlier, experienced multiple bull and bear cycles, and witnessed the industry’s dividends empowering countless individuals, there’s an unconscious belief: As long as time passes, new cycles, new projects, new narratives, and new TGEs will inevitably emerge.

But the reality is, we are far from our comfort zone.

Looking at the data, within the recent four-year cycle (2022-2025), excluding mergers, IPOs, public fundraising, and other special primary market activities, the number of crypto industry funding deals has shown a clear decline (1639 ➡, 1071 ➡, 1050 ➡, 829).

The reality is even uglier than the data suggests—changes in the primary market are not only about shrinking total funding amounts but also structural collapse.

Over the past four years, early-stage rounds (including angel, pre-seed, and seed rounds), which represent fresh blood for the industry, have seen a significant drop (825 ➡, 298, a 63.9% decline). This decline is even larger than the overall decrease (49.4%), indicating that the primary market’s ability to supply new projects is continuously shrinking.

A few sectors with increasing funding deal counts include financial services, exchanges, asset management, payments, AI applications, and other crypto-related tech. But these are less relevant to us—most of these won’t issue tokens. In contrast, native “projects” like Layer 1, Layer 2, DeFi, and social platforms show a more pronounced decline in funding.

Odaily note: Chart source from Crypto Fundraising A common misinterpretation is that while the number of funding deals has sharply decreased, the average deal size has increased. The main reason is that “large projects,” as mentioned earlier, have attracted substantial funds from traditional finance, greatly raising the average; additionally, mainstream VCs tend to bet on a few “super projects,” such as Polymarket’s multiple rounds of billion-dollar funding.

From the perspective of crypto capital, this vicious cycle of “heavy head and light tail” is even more evident.

Recently, a friend outside the industry asked me about a well-known, veteran crypto fund that is raising capital. After reviewing their deck, he was puzzled and asked why their returns are “so poor”. The data from the deck I’m sharing here is real—I won’t name the fund, but I’ve extracted performance data from 2014 to 2022.

It’s clear that between 2017 and 2022, this fund experienced significant changes in IRR and DPI—the former reflects the fund’s annualized return, more about “book gains,” while the latter shows the cash multiple actually returned to LPs.

Looking at different vintage years, this fund’s returns show a very clear “cycle break”: funds established between 2014–2017 (Fund I, Fund II, Fund III, Fund IV) generally outperform others, with TVPI mostly in the 6x–40x range, and Net IRR maintained at 38%–56%. They also have high DPI, indicating these funds not only have high book gains but have also realized large-scale exits, capturing the early infrastructure and top protocol boom from 0 to 1.

Funds established after 2020 (Fund V, Fund VI, and the 2022 Opportunity Fund) are noticeably weaker, with TVPI mostly in the 1.0x–2.0x range, and DPI close to zero or very low, meaning most returns are still on paper and haven’t been realized as actual cash. This reflects that, amid rising valuations, increased competition, and declining project quality, the primary market can no longer replicate the excess returns driven by “new narratives + new assets” in the past.

The real story behind the data is that after the DeFi Summer hype in 2019, the valuations of native protocols in the primary market were inflated. When these projects issued tokens two years later, they faced narrative fatigue, industry tightening, and exchanges temporarily changing terms to control the flow—results were often disappointing, with some even seeing market cap inversion, making investors the weak group, and exit difficulties for funds.

However, these cyclical capital mismatches can still create illusions of prosperity in certain parts of the industry. It’s only in the past two years, during the fundraising of some massive star funds, that the true severity of the situation has become visually apparent.

The example fund I mentioned manages nearly $3 billion, which also serves as a mirror to observe industry cycles—whether it performs well is no longer about individual project choices; the trend has shifted.

Although veteran funds now face difficulties raising capital, they can still survive, lie flat, collect management fees, or pivot to AI investments. Many others have already shut down or shifted to secondary markets.

For example, in the Chinese market, who remembers the “Ethereum Milk King” Yi Lihua, once a leading figure in primary markets with over a hundred investments annually?

Altcoin Alternatives Are Never Meme

When we say native crypto projects are drying up, a counterexample is the explosion of Meme.

Over the past two years, a recurring saying in the industry has been: The alternative to altcoins is Meme.

But looking back now, this conclusion has actually been proven wrong.

In the early Meme wave, we played Meme by “mainstream altcoin play”—filtering from numerous Meme projects based on fundamentals, community quality, and narrative coherence, trying to find projects that could survive long-term, continuously evolve, and eventually grow into Doge or even “the next Bitcoin.”

Today, if someone still tells you “hold Meme,” you’d think they’re crazy.

Current Meme is a mechanism for instant hype monetization: a game of attention and liquidity, produced by devs and AI tools in bulk.

It’s an asset form with extremely short lifecycle but continuous supply.

It no longer aims for “survival,” but for being seen, traded, and utilized.

Our team also has several Meme traders with long-term stable profits. Clearly, they’re not focused on the project’s future but on rhythm, diffusion speed, emotional structure, and liquidity pathways.

Some say Meme can’t be played anymore, but in my view, after Trump’s “final cut,” Meme has truly matured as a new asset form.

Meme is not a substitute for “long-term assets,” but a return to the game of attention finance and liquidity. It’s become more pure, more brutal, and less suitable for most ordinary traders.

Seeking External Solutions

Asset Tokenization

As Meme moves toward professionalism, Bitcoin toward institutionalization, altcoins fade, new projects face a gap, what can we ordinary folks who love value research, comparative analysis, and have a speculative edge—yet aren’t pure high-frequency gamblers—do to sustain ourselves?

This question isn’t just for retail investors.

It’s also facing exchanges, market makers, and platforms—after all, the market can’t always rely on higher leverage and more aggressive derivatives to stay active.

In fact, as the entire existing logic begins to overturn, the industry has already started seeking solutions externally.

The direction we’re all discussing is to repackage traditional financial assets into on-chain tradable assets.

Tokenized stocks, precious metals, are becoming the key focus for exchanges. From centralized exchanges to decentralized platforms like Hyperliquid, all see this as a breakthrough. The market has responded positively—during the most volatile days last week, Hyperliquid’s daily silver trading volume once exceeded $1 billion, with assets like tokens, stocks, indices, and precious metals accounting for half of the top ten trading volumes, pushing HYPE up 50% in the “all-asset trading” narrative.

Admittedly, some slogans like “providing new options for traditional investors, low barriers” are still premature and unrealistic.

But from a native crypto perspective, it might solve internal issues: the supply and narrative of native assets are slowing down. Old coins are sluggish, new coins are scarce—what new trading reasons can crypto exchanges offer the market?

Tokenized assets are easier for us to grasp. In the past, we studied: blockchain ecosystems, protocol revenues, token models, unlock schedules, and narrative space.

Now, the focus shifts to: macro data, financial reports, interest rate expectations, industry cycles, and policy variables. Of course, many of these areas we’ve already begun researching.

Fundamentally, this is a migration of speculative logic, not just a category expansion.

Launching gold and silver tokens isn’t just adding a few more coins; they’re trying to introduce a new trading narrative—bringing the volatility and rhythm traditionally belonging to the financial markets into the crypto trading system.

Prediction Markets

Besides bringing “external assets” on-chain, another direction is to bring “external uncertainties” on-chain—prediction markets.

According to Dune data, despite last weekend’s crypto crash, prediction market trading remained active, with weekly transaction counts reaching a new high of 26.39 million, led by Polymarket with 13.34 million trades, followed by Kalshi with 11.88 million.

We won’t elaborate on the development prospects and scale expectations of prediction markets here—Odaily has been publishing more than two articles daily analyzing and forecasting this space… feel free to search for them.

From a crypto user’s perspective, why do we play prediction markets? Are we just gamblers?

Of course.

In fact, for a long time, altcoin traders weren’t really betting on technology but on events: whether a coin will launch, whether there’s an official partnership announcement, whether a new token will be issued, whether new features will go live, whether there are regulatory benefits, or whether they can ride the next narrative wave.

Price is just the outcome; events are the starting point.

Prediction markets, for the first time, broke this down from “implicit variables in price curves” into objects that can be directly traded.

You no longer need to buy a token to indirectly bet on whether a result will happen—you can directly bet on whether “it will happen or not.”

More importantly, prediction markets are well-suited to today’s environment of “project supply shortages and narrative scarcity.”

As tradable new assets become fewer, market attention shifts more to macro, regulation, politics, big players’ actions, and major industry milestones.

In other words, while tradable “targets” decrease, the number of tradable “events” doesn’t—actually, it increases.

That’s why, in the past two years, almost all liquidity in prediction markets has come from non-native crypto events.

Essentially, it’s about bringing external world uncertainties into the crypto trading system. From a trading experience, it’s also more friendly to traditional crypto traders:

The core question is simplified to—Will this result happen? and Is the current probability worth it?

Unlike Meme, the barrier to prediction markets isn’t speed of execution but information judgment and structural understanding.

Saying this, you might think, “Hey, I can try this too.”

Conclusion

Maybe the so-called crypto world will eventually disappear in the near future, but before that happens, we’re still hustling. When “new coin-driven trading” gradually phases out, the market will always need a new, low-participation barrier, narrative-driven, sustainable speculative vehicle.

Or rather, the market won’t disappear; it will just migrate. When the primary market no longer produces the future, the truly tradable secondary assets are these two things—external world uncertainties and re-constructible trading narratives.

Perhaps all we can do is prepare for another migration of the speculative paradigm.