From "point shaving bull" to "value bull", why are retail investors struggling so much?

Author: Luke, Mars Finance

For cryptocurrency investors who experienced the magnificent bull market of 2020-2021, the current market is undoubtedly confusing and agonizing. It was an era ignited by the global central banks’ “money printing” frenzy, with an abundance of liquidity causing everything to rise; it seemed that buying any project with closed eyes could yield astonishing returns. However, those days are long gone. Now, the global financial market hangs on a delicate balance: on one side, unexpectedly strong U.S. economic data, and on the other, the Federal Reserve’s unwavering hawkish stance, with the historically high interest rate environment weighing down on all risk assets.

This paradigm shift dominated by the macro environment has made this round of the cryptocurrency cycle the “most difficult era” for retail investors. The previous model of “liquidity-driven, purely emotion-driven speculation” has become ineffective, replaced by a market that places greater emphasis on intrinsic value, driven by clear narratives and fundamentals, known as a “value bull” market.

However, the difficult side is precisely the opportunity. When the tide goes out, true value investors will usher in their “golden era.” Because it is in such an environment that institutional compliance entry, technological programmatic deflation, and real applications that integrate with the real economy can highlight their true, cycle-crossing value. This article aims to deeply deconstruct this profound transformation, explaining why this era, which is difficult for speculators, is precisely the golden road paved for prepared investors.

1. The Most Difficult Era: When the Tide of “Massive Easing” Withdraws

The difficulties of this cycle stem from a fundamental reversal of macro monetary policy. Compared to the extremely favorable environment of the previous bull market characterized by “zero interest rates + unlimited quantitative easing,” the current market is facing the most severe macro headwinds in decades. In a bid to curb the most severe inflation in forty years, the Federal Reserve has initiated an unprecedented tightening cycle, bringing dual pressure to the crypto market and completely ending the old model of easy profits.

1. The Macro Data Maze: Why Interest Rate Cuts Are Far Off

The key to breaking the current market dilemma lies in understanding why the Federal Reserve is reluctant to ease up at the end of its interest rate hikes. The answer is hidden in the recent macroeconomic data—these seemingly “good” data have become “bad news” for investors hoping for easing.

Stubborn Inflation and Hawkish Dot Plot: Despite inflation having retreated from its peak, its stickiness far exceeds expectations. The latest data shows that the U.S. CPI year-on-year for May was slightly below expectations, but the core inflation rate remains stubbornly high at 2.8%.

There is still a significant gap between this and the Federal Reserve’s 2% target. This stubbornness is directly reflected in the Federal Reserve’s latest economic projections (SEP) and the closely watched “dot plot.” Following the June monetary policy meeting, Federal Reserve officials significantly lowered their interest rate cut expectations, reducing the median number of cuts for the year from three to just one. This hawkish shift heavily dampened market optimism. As Powell stated in the post-meeting press conference: “We need to see more good data to bolster our confidence that inflation is indeed moving toward 2%.” In other words, the Federal Reserve’s threshold for cutting rates has become very high.

Strong Labor Market: Meanwhile, the U.S. labor market continues to demonstrate impressive resilience. The non-farm payroll report for May shows that new jobs increased by 139,000, better than market expectations, while the unemployment rate remained low at 4.2%. A strong labor market means consumer spending has support, which in turn will put upward pressure on inflation, making the Federal Reserve more hesitant about cutting interest rates.

Powell’s “Historical Script”: As pointed out by Nicholas Colas, co-founder of DataTrek Research, current Chair Powell is following the script of his predecessors, adopting a hawkish tone in the final stage of his term to solidify his historical legacy of successfully curbing inflation. This consideration of personal and institutional reputation means that unless there is a dramatic downturn in economic data, the shift in policy will be extremely cautious and slow.

2. The “Gravity” of High Interest Rates: The “Blood Loss” Effect of Crypto Assets

This macro background has directly led to the difficult situation of the cryptocurrency market:

Liquidity Drought: High interest rates mean a reduction in “hot money” in the market. For the cryptocurrency market, especially altcoins, which heavily rely on new capital inflows to drive price increases, tightening liquidity is its most fatal blow. The once prevalent phenomenon of “everything rising together” has been replaced in this cycle by a structural market of “sector rotation” and even “only a few hotspots.”

Opportunity cost skyrockets: The opportunity cost of holding a non-cash-flow-generating and volatile price like Bitcoin increases dramatically when investors can easily earn more than 5% risk-free returns on U.S. Treasuries. This has led to a large outflow of funds seeking stable returns out of the crypto market, further exacerbating the “bleeding” effect of the market.

For retail investors who are used to chasing hot trends in an environment of excess liquidity, this change in circumstances is brutal. Strategies that lack in-depth research and merely follow the crowd are likely to suffer heavy losses in this cycle, which is the core of the “difficulty” in this round.

2. The Golden Age: From Speculation to Value, the Emergence of New Opportunities

However, the other side of the crisis is an opportunity. The macro headwinds are like a stress test, squeezing out the market bubbles and filtering out the core assets and narratives that truly have long-term value, thereby opening up an unprecedented golden era for prepared investors. The resilience of this cycle is precisely driven by several strong endogenous forces that are independent of macro monetary policy.

1. Golden Bridge: Spot ETF Opens the Institutional Year

In early 2024, the U.S. Securities and Exchange Commission (SEC) historically approved the listing of a spot Bitcoin ETF. This is not just a product launch, but a revolution in the crypto world. It opens a “golden door” for trillions of dollars in traditional finance to compliantly and conveniently invest in Bitcoin.

Continuous streams of fresh capital: As of the second quarter of 2025, the total assets under management of BlackRock’s IBIT and Fidelity’s FBTC ETFs have surpassed tens of billions of dollars, with a sustained daily net inflow providing strong purchasing power to the market. This “new capital” from Wall Street has largely offset the liquidity tightening caused by high interest rates.

The anchor of confidence: BlackRock CEO Larry Fink referred to the success of the Bitcoin ETF as “a revolution in capital markets,” stating that it is just the “first step towards asset tokenization.” This endorsement from the world’s largest asset management company has greatly boosted market confidence and provided retail investors with a clear signal to follow institutional footsteps and engage in long-term value investments.

2. The Faith in Code: Hardcore Support Under the Narrative of Halving

The fourth “halving” of Bitcoin in April 2024 will reduce its daily new supply from 900 coins to 450 coins. This code-based, predictable supply deflation is what sets Bitcoin apart from all traditional financial assets. Against the backdrop of stable or even growing demand (especially from ETFs), the halving of supply provides a solid mathematical underpinning for Bitcoin’s price. Historical data shows that in the 12-18 months following the first three halvings, Bitcoin’s price reached new all-time highs. For value investors, this is not a short-term speculative gimmick, but a reliable, long-term logic that transcends cycles.

3. The Narrative Revolution: When Web3 Begins to Solve Real Problems

Macroeconomic headwinds are forcing market participants to shift from mere speculation to exploring the intrinsic value of projects. The core focus of this cycle is no longer the baseless “Dogecoin” types, but rather those innovative narratives that aim to solve real-world problems:

• Artificial Intelligence (AI) + Crypto: Combining the computational power of AI with the incentive mechanisms and data ownership of blockchain to create entirely new decentralized intelligent applications.
• Real World Asset (RWA) tokenization: Bringing real-world assets such as real estate, bonds, and artworks onto the blockchain to unlock their liquidity and bridge the gap between traditional finance and digital finance.
• Decentralized Physical Infrastructure Network (DePIN): Utilizing token incentives to enable global users to collaboratively build and operate infrastructure networks in the physical world, such as 5G base stations, sensor networks, etc.

The rise of these narratives marks a fundamental shift in the crypto industry from “speculating on air” to “investing in value.” The crypto venture capital giant a16z Crypto emphasized the potential of “AI+Crypto” as the core engine of the next wave of innovation in its annual report. For retail investors, this means that the opportunities to uncover value through in-depth research have greatly increased, making knowledge and understanding more important than mere boldness and luck in this market for the first time.

3. New Period Survival Rules: Patiently Layout Between the Final Chapter and the Prelude

We are at the crossroads of an era. The “hawkish finale” of the Federal Reserve is unfolding, while the prelude to easing has yet to begin. For retail investors, understanding and adapting to the new rules of the game is key to navigating cycles and seizing golden opportunities.

1. Fundamental Shift in Investment Paradigms

• From chasing hot trends to value investing: abandon the fantasy of finding the “next hundredfold coin” and turn to researching the fundamentals of projects, understanding their technology, team, economic model, and the landscape of their respective tracks.
• From short-term speculation to long-term holding: In a “value bull” market, the real returns belong to those investors who can identify core assets and hold them for the long term, enduring volatility, rather than to short-term traders who frequently buy and sell.
• Build a differentiated portfolio: In the new cycle, the roles of different assets will become clearer. ** Bitcoin (BTC)** As the “digital gold” recognized by the institution, it is the “ballast stone” of the investment portfolio; Ethereum (ETH), with its strong ecosystem and ETF expectations, is a core asset with both value storage and means of production attributes; High-growth altcoins, on the other hand, should be “rocket thrusters” based on in-depth research and small-position layout, focusing on cutting-edge tracks with real potential such as AI and DePIN.

2. Be patient and plan ahead.

DataTrek’s research reveals an interesting phenomenon: the S&P 500 has risen by an average of 16% over the last 12 months of the last three Fed chairs, even as interest rates remain high. This suggests that once the market is convinced that the tightening cycle is over, risk appetite may pick up sooner, even if a rate cut has not yet occurred.

This “early bird” market trend may also appear in the crypto market. While the market’s attention generally focuses on the short-term game of “when will interest rates be cut,” the true wise ones have already begun to think about which assets and sectors will occupy the most advantageous positions in the future feast driven by the resonance of macro tailwinds and industrial cycles when the prelude to easing finally begins.

Conclusion

This round of the cryptocurrency cycle is undoubtedly a severe test of retail investors’ perception and mindset. The era of the “easy money bull” where profits could be easily made with courage and luck has come to an end, and a “value bull” era that requires deep research, independent thinking, and long-term patience has arrived. This is precisely where its “difficulty” lies.

However, it is precisely in this era that institutional funds have flowed in at an unprecedented scale, providing a solid bottom for the market; the value logic of core assets has become increasingly clear; and applications that can truly create value are beginning to take root. For retail investors who are willing to learn, embrace change, and view investment as a journey of cognitive monetization, this is undoubtedly a “golden age” where they can compete on the same stage with the top minds and share in the long-term growth dividends of the industry. History does not simply repeat itself, but is always remarkably similar. Between the final chapter and the prelude, patience and vision will be the only path to success.