This article features insights from Shane Neagle, the Editor-in-Chief of The Tokenist.
Since the emergence of altcoins, a phenomenon that followed Bitcoin’s groundbreaking introduction, numerous projects have yielded substantial gains of up to 10x within brief time spans. The crypto market has demonstrated a tendency to cycle between altcoin and Bitcoin phases, indicating potential investment opportunities in the future.
Additionally, a surge of memecoins has appeared on the scene, functioning as a more vibrant form of gambling compared to online casinos. Given that the cryptocurrency landscape has seen a staggering $530 billion decline in market capitalization over the past month, it’s wise to revisit its foundational aspects.
Is the notion of ‘altcoin season’ still relevant in the future? Is there more substance to cryptocurrencies beyond cyclical speculation? To explore these inquiries, we must first reflect on past narratives.
A Prelude to The Merge
As the crypto landscape evolved, Bitcoin established itself as the primary proof-of-work digital asset that mattered, particularly after Ethereum’s transition known as The Merge in September 2022. This marked the shift from proof-of-work (PoW) to proof-of-stake (PoS), reflecting distinct philosophies within blockchain technology.
Bitcoin’s PoW framework demands computational resources, whereas Ethereum’s PoS model removes these barriers to enhance transaction speed and efficiency. Consequently, Bitcoin has further characterized itself as a store of value, while Ethereum has pivoted towards providing economical blockchain utilities.
Though these two approaches may seem to complement each other well, several underlying issues emerged over time.
- PoW is generally more conducive to decentralization when compared to PoS, which depends on the accumulated wealth of validators, creating a “rich get richer” dynamic.
- PoS systems lack hard asset backing, like energy and machinery, that underpin Bitcoin.
- Furthermore, Bitcoin’s blend of physical and digital components makes it less replicable than PoS as a commitment mechanism, contributing to Bitcoin’s network effect and providing long-term resistance against devaluation.
Overall, the division between PoW and PoS leads to fragmentation within PoS systems. Assets and platforms based on PoS, which can compete with Ethereum, have a lower barrier to entry, often launching with minimal initial investment. This environment results in a disarrayed crypto market, comprising over 34,000 digital assets.
From the vantage of Bitcoin and Ethereum, the two largest digital currencies by market capitalization, the fragmentation associated with PoS can have a detrimental impact on Ethereum’s price stability.
In other words, Bitcoin’s inherent characteristics—its PoW structure and scarcity—strengthen its fundamentals. In contrast, Ethereum faces challenges due to the diminishing network effect, compounded by competing PoS chains that provide similar functionalities and incentives.
Moreover, the growing complexity of the market outside of Bitcoin creates an obstacle for new capital influx. Who has the time or expertise to sift through thousands of assets and accurately predict their longevity beyond a year? Even seasoned investors leveraging popular trading algorithms frequently find it challenging to navigate this fragmented landscape effectively.
This environment explains the rise of memecoin hysteria. The complexity and fragmentation of the crypto market lead investors to consider digital assets through the lens of superficial factors rather than their fundamentals; celebrity endorsements and viral marketing often dominate, resulting in speculative pump-and-dump schemes.
This inevitably establishes a detrimental feedback loop:
- An overly crowded and unclear altcoin market fuels the emergence of memecoins.
- The volatile nature of memecoins gradually erodes faith in the altcoin market overall.
- As a result, genuine innovative projects struggle to gain momentum, with capital being misallocated.
However, an even larger dilemma exists. Let’s assume this negative feedback loop created by memecoins is absent. One must question whether there is a sustainable market for blockchain-based solutions as initially envisioned.
Diminution of Fundamental Values
Through regulations such as anti-money laundering (AML) and know-your-customer (KYC) measures, governments globally have made significant strides to control the crypto ecosystem. It’s worth revisiting some of the key assurances that were prevalent prior to these regulatory actions:
Decentralization aimed at abolishing intermediaries—yet nearly all transactions now occur through fiat systems, encompassing transfers from self-custodial wallets.
Financial inclusion was envisioned as a means of providing access to the unbanked and underbanked populations—however, traditional banking remains more convenient than blockchain technology, which often requires a level of digital literacy. A recent EMarketer report indicates that cryptocurrency payment adoption is stagnating.
While the number of crypto payment users is projected to increase by 82.1% from 2024 to 2026, it’s starting from a very limited base of only 2.6%. It’s possible that stablecoins, such as USDT, may overshadow these efforts instead of a direct central bank digital currency (CBDC).
Censorship resistance was promised as a protective measure ensuring that transactions could not be reversed or intercepted by governments or other entities. Yet, authorities continuously seek inventive ways to undermine such assurances, from debanking practices to targeting smart contract developers.
Although sanctions levied by the Treasury against Tornado Cash were revoked in January, there’s little indication that financial privacy will soon be recognized as a fundamental right. In fact, evidence suggests a contrary trend.
🚨 BREAKING: The ECB’s Digital Euro is set to launch in October. Key concerns include:
– Real-time transaction tracking
– Potential for payment blocking
– Automatic tax deductions
– Restrictions on cash withdrawals
– Programmable money with expiration datesThey couldn’t… pic.twitter.com/UvQH750gbl
— Dr. Simon Goddek (@goddeketal) March 9, 2025
Overall, this friction between blockchain-driven solutions and government regulations keeps the market contained. Moreover, should a blockchain solution emerge, it will likely be on terms set by governmental bodies.
Finally, the very concept of Web3 appears questionable as a truly decentralized, blockchain-supported version of the internet. Recent revelations regarding Elon Musk’s DOGE and its implications for USAID funding highlight efforts to mold narratives, control discourse, and suppress dissent.
A supposedly decentralized and censorship-resistant Web3 stands in direct opposition to governmental needs to uphold authority and legitimacy in promoting various agendas. To believe that long-established information hubs like Google, Microsoft, and Facebook would allow their influence to wane in favor of Web3 is naive.
Governments require centralized hubs to maintain their power. This was starkly illustrated by the TikTok ban, where despite the app’s superiority over YouTube Shorts, measures were implemented to diminish its relevance.
Consequently, this situation further confines the blockchain sector to a narrow niche rather than facilitating its mainstream growth. However, the blockchain realm still warrants engagement.
Crypto Projects with Sustainable Revenue Potential
Bitcoin is likely to remain the cornerstone of crypto investment, thanks to its distinct PoW-driven network effect. Although the recent White House Crypto Summit was less optimistic than anticipated, it nonetheless conveyed a positive long-term outlook. The decision to utilize seized bitcoins has effectively eased sell pressure.
Moreover, former President Trump appears committed to ending the “war on crypto”. However, if we approach the crypto landscape solely from the standpoint of innovative solutions, which projects should retail investors contemplate amidst significant price reductions?
- Sonic (S) – formerly FTM, this leading layer 1 blockchain network boasts sub-second transaction finality, paving the way for new applications such as high-frequency trading (HFT), micropayments, in-game economies, decentralized exchanges (DEXs), and IoT supply chains.
- Near Protocol (NEAR) – this layer 1 launching pad for decentralized applications (dApps) has gained momentum, particularly within AI initiatives.
- The Graph (GRT) – aligning with the AI narrative, this protocol indexes data for AI applications, akin to how Chainlink (LINK) supports decentralized finance (DeFi) services.
- Hey Anon (ANON) – this pioneering project holds the potential to simplify DeFi complexities by utilizing conversational AI to manage strategies across different chains.
- Render (RENDER) – formerly RNDR, this project is set to see increased demand due to its ability to monetize GPU-based distributed asset rendering.
These five tokens are worth considering as potential long-term holdings during the ongoing downturn in the crypto market. After all, the AI narrative is unlikely to fade anytime soon.
When looking at the top 10 revenue-generating chains during the market downturn, the prevailing crypto activity leans towards low-friction payment chains (like Tron) and general-purpose, high-performing chains (such as Solana and Avalanche). Ethereum continues to hold a strong position due to its substantial presence in the DeFi ecosystem.
In summary, what should crypto investors bear in mind as they look to the future?
Due to persistent regulatory friction, it is improbable that digital assets will achieve significant mainstream penetration. Nonetheless, within this contained ecosystem, investors should concentrate on long-term narratives, including AI advancements, reliable infrastructure, and chain performance.
A truly decentralized Web3 should be viewed as a niche opportunity that will face substantial pushback from the financial clout of major firms like Alphabet, Microsoft, and Meta, as they act as centralized extensions of government authority. In light of this, retail investors may benefit from exploring stock options as safer alternatives.
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