Did the market really collapse in 2025 due to technical errors? A deep look into the structural problems of the monetary system

Introduction: The Paradox of Simultaneous Growth and Decline in Sentiment

The year 2025 will be recorded as an extraordinary paradox in cryptocurrency history. The Crypto Fear & Greed Index fell in November to a level of 10—its lowest since the global crises of 2020 and 2022. At the same time, the total market capitalization of cryptocurrencies did not fall below the peak of the previous cycle, and infrastructure security reached new highs. All major exchanges are operating smoothly, and the value of stablecoins continues to grow unabated.

This is an observation highlighted in Messari’s recent report: a collapse in sentiment is not synonymous with the system’s failure but rather a sign of deeper structural changes.

For professionals managing portfolios on Wall Street, 2025 is an unprecedented period. For those spending nights on social platforms seeking quick profits, it is a time of greatest disappointment. How is it possible that the same market generates two completely opposite experiences?

Part 1: Why Numbers Tell a Different Story Than Feelings

A market sentiment collapse is a documented fact. However, statistically, it does not correspond to any known historical crisis pattern. In the past, extreme drops in trust were associated with specific catastrophes: liquidity panics, stock market crashes, or loss of confidence in entire infrastructures.

This time, the problem is not with the market itself but with the divergence between institutional and retail experiences.

For institutional entities and large capital allocators:

• New ETFs have enabled transparent and low-cost allocation
• Regulatory frameworks are beginning to crystallize
• The market is maturing towards long-term investments

For participants operating on quick transaction principles:

• Opportunities for rapid gains have drastically decreased
• Rotation between asset narratives has lost effectiveness
• The link between effort and results has been disrupted

The market has not rejected anyone—it has changed the reward mechanism. The fact that many participants are not making money is mistakenly interpreted as a crisis of the industry. Meanwhile, it is a sign of system maturation.

Part 2: Who Really Bears the Cost of an Unstable Monetary System?

To understand the root of deep disillusionment in 2025, one must look beyond price charts. Messari’s report points to a fundamental phenomenon: over the last fifty years, the public debt of major economies has grown faster than their production.

Today:

• USA: public debt is 120.8% of GDP
• Japan: 236.7% of GDP
• France: 113.1% of GDP
• United Kingdom: 101.3% of GDP

This is not the result of mistakes by a single country or political system. It is a shared fate crossing borders and economic structures.

When debt grows faster than the economy, the system can only maintain the illusion of stability through:

1. Inflation – overt devaluation of savings
2. Low real interest rates – hidden transfer of value from savers
3. Financial repression – direct control of capital flows, withdrawal restrictions, regulatory interventions

Regardless of the chosen path, the costs are always borne by the same group: savers. In 2025, more and more people realized that hard work and prudent saving no longer guarantee the preservation of wealth’s value.

This awareness, rather than technical issues in Crypto, is the real source of sentiment collapse. Cryptocurrencies are simply the place where this shock is felt most acutely.

Part 3: Bitcoin as a Response to the Instability of the Monetary System

If the problem lies within the monetary system itself, why has Bitcoin specifically become the answer, rather than one of the thousands of other digital assets?

The answer is invaluable: money is not a technical problem but a matter of social consensus.

Speed, cheaper transactions, more features—these qualities have never been the core of money’s strength. What truly matters is: does society long-term recognize this asset as a credible store of value?

Data from December 2022 to November 2025 clearly show:

• Bitcoin increased by 429%
• Its market capitalization grew from $318 billion to $1.81 trillion
• Bitcoin’s share of the total crypto market capitalization rose from 36.6% to 57.3%

In a cycle where altcoins theoretically should grow faster, capital consistently returned to Bitcoin.

This change is not due to a lack of innovation in other projects. It results from the market reclassifying assets. New institutional players—ETFs, digital asset managers (DAT), state reserves—treat Bitcoin as a long-term asset, not a speculative instrument for quick resale.

The more “boring” Bitcoin becomes—without new narratives, applications, or future promises—the more it resembles genuine money. Money doesn’t have to be exciting; it must be reliable.

Part 4: The End of Layer 1 Narratives as Money Equivalents

Confirming Bitcoin as the primary monetary asset in the crypto ecosystem places Layer 1 in a difficult position. Data shows that approximately 81% of the entire crypto market capitalization is valued as “money” or a potential form of money.

What does this mean for application layers? Much more than it seems at first glance.

Total revenues of the Layer 1 sector have fallen:

• 2021: $12.3 billion
• 2025 (annual forecast): $1.7 billion

Meanwhile, the price-to-revenue multiple (P/S) has exploded:

• 2024: 205x
• 2025: 536x

This is mathematically irrational. For a Layer 1 project to justify such valuation, it would need to demonstrate fundamental value growth—yet revenues are declining.

The market did not “kill” Layer 1; it simply limited their prospects from being full-fledged money to high-risk, high-beta assets.

The example of Solana is instructive. The Solana ecosystem grew 20–30 times, yet the currency’s price outpaced Bitcoin’s by only 87%. To achieve truly higher returns, Layer 1 must experience an explosion of the ecosystem by an order of magnitude greater than Bitcoin.

This is not about team effort; it’s the mathematics of returns rewritten anew.

Part 5: From Sentiment to Reality—What the Change Means for the Future

The sentiment collapse in 2025 is thus not a sign of industry failure but a symptom of the clash between the old participation model and the new economic reality.

The old model assumed: if you are fast, aggressive, and stubborn, you will achieve above-average profits. The new model states: if you want to participate in an alternative to the traditional monetary system, you must think long-term, like a saver, not a speculator.

This is a fundamental role change, and role changes always involve pain of transition.

For the maturing crypto market, this is a critical period. Bitcoin has gained legitimacy as a store of value. Layer 1s have become more speculative. And other assets?—they must find their niche or change fundamentally.

Sentiment does not tell the whole truth. A sentiment collapse ≠ industry failure. Increased suffering ≠ loss of value. It is merely a signal: old participation methods are losing effectiveness. Those who can adapt to the new reward logic will be in a better position. Those waiting for the old system to return may wait a very long time.