GuShiio.com The rise of institutional adoption, market dilution, the transfer of retail liquidity and changes in the macro environment have jointly shaped a new market landscape.
Original article: SubQuery Network
Compiled by: Yuliya, PANews
The cryptocurrency market has always been known for its cyclical fluctuations, commonly characterized by extreme peaks and deep pullbacks. Since the birth of Bitcoin in 2009, the market has gone through multiple cycles, and the price trend of each cycle has been affected by different factors. Although some elements remain unchanged, such as the four-year Bitcoin halving cycle, each cycle also introduces new dynamics and changes the way the market works.
With the arrival of a new market cycle in 2024-2025, the market generally believes that this time is different from the past. From institutional adoption to changes in the way retail investors participate, a variety of factors have made this cycle unique. The following will explain why this cycle has unfolded differently than in the past, and what this means for investors and builders.
Review of the traditional cycle of the cryptocurrency market
Cryptocurrency market cycles typically follow the following pattern:
- Correction/Bear Market:Markets return to reality, profit-taking accelerates, and liquidity in speculative assets dries up.
- Fanatic/Peak:The market is overheated, speculation dominates, and the altcoins have experienced extreme gains.
- Expansion/bull market:Optimism returned, prices rose, and media reports attracted new retail investors.
- Accumulation stage:After a bear market, smart money and long-term holders accumulate assets at low prices.
This pattern has been repeated in multiple cycles, from the boom and bust of 2013, to the ICO craze of 2017, to a bull market driven by DeFi, NFT and institutional interest in 2021. However, the 2024 market cycle presents a different pattern, and some unique forces are reshaping the market environment.
Institutional adoption drives Bitcoin strong
The biggest difference in this cycle lies in the role of institutional capital. Unlike previous bull markets, which were driven mainly by retail speculation, this cycle has witnessed large-scale institutional adoption:
- Derivatives market growth: The expansion of Bitcoin futures and options trading has made the market more structured and liquid, with less volatility than in previous cycles.
- Business and sovereign state interests: Large companies and even some countries include Bitcoin on their balance sheets or as a hedging tool.
- Bitcoin Spot ETF: The U.S. approval of the Bitcoin Spot ETF opens the way for institutional investors to allow trillions of dollars of capital to enter the Bitcoin market in a regulated manner.
As a result, Bitcoin has become the most prominent cryptocurrency asset, firmly sitting on the throne of the “king of cryptocurrencies”, reaching a new high and dominating market liquidity. It is difficult for altcoins to obtain the same explosive growth space in this cycle as in the past.
Market dilution: The number of altcoins has surged, and the revenue space has shrunk
In previous cycles, the supply of newly launched altcoins was relatively small, creating opportunities for explosive growth. However, this time, the number of encryption projects has increased significantly.
According to Dune Analytics, as of the end of January 2025, there were more than 36.4 million tokens in circulation on the market, compared with only about 3000 in 2017-2018. Reasons for this change include:
- Token unlocking:Many projects continue to release lock-up tokens, increasing market selling pressure and causing a significant correction in most token prices.
- Meme coin market is overcrowded:Unlike a few Meme coins (such as Dogecoin and Shiba Inu) that attracted most attention in the past cycle, a large number of new Meme coins will be launched every day in 2024, making it difficult for a single token to continue to gain market momentum.
- Proliferation of Layer 1 and Layer 2:The rise of hundreds of Layer 1 and Layer 2 expansion solutions has dispersed market liquidity.
This dilution of the market means that while some altcoins are still performing well, it is unlikely that a broad market in which almost all tokens have risen sharply in past cycles will recur.
Retail liquidity is directed into new areas
Retail traders have been an important driving force in the cryptocurrency bull market, but the main difference in this cycle is that retail liquidity has been attracted to new mechanisms beyond traditional spot trading.
The rise of Pump.fun
Pump.fun will be launched on January 19, 2024, completely changing the behavioral pattern of retail investors in cryptocurrencies around the world. The platform allows anyone to create Solana tokens for free in a minute, spawning some of the largest Memes of 2024, attracting retail money to high-risk, high-return speculative small-cap tokens and away from major altcoins.
This development has had several significant impacts:
- Provide insiders with more exit liquidity:Insiders launched new tokens that quickly attracted retail money, but the constant rotation caused many retail investors to suffer losses before transferring profits to major altcoins.
- Capital rotation accelerates:The flow cycle of retail funds between new tokens has been shortened to hours or days, making it difficult for mature altcoins to form a sustained upward trend.
As of January 2025, Pump.fun has generated revenue of $116.72 million, exceeding the revenue of Solana ($116.46 million) and Ethereum ($107.64 million).
What does this mean for crypto investors?
Although this cycle is still developing, several key conclusions have been made clear:
- Retail speculative funds are being directed to emerging platforms such as Pump.fun and innovative on-chain trading mechanisms. Understanding these changes helps traders judge liquidity trends.
- The altcoin market will be more selective. Unlike in the past, where almost all tokens have risen, projects with practical application scenarios, strong token economic models and real needs will become the main winners in this cycle.
- Due to institutional adoption, Bitcoin remains the dominant force, and many investors are focusing on Bitcoin rather than speculative altcoins.
conclusion
Although the cryptocurrency market still follows a familiar cyclical pattern, the market cycle in 2024 will be different from the past. The rise of institutional adoption, market dilution, the transfer of retail liquidity and changes in the macro environment have jointly shaped a new market landscape.
For investors and builders, adapting to these changes is the key to successfully responding to this cycle. Market rules have changed, but opportunities still exist for those with insight into the flow of money.
