How to Continue Profiting in the New Cryptocurrency Paradigm of 2025?
The four-year cycle has come to an end. We are entering a new paradigm of cryptocurrency—survival of the fittest and elimination of the unfit.
Before sharing my strategy for navigating market changes in 2025 to continue accumulating wealth in uncharted territory, let’s explore why the four-year cycle has become a thing of the past.
I believe there are two reasons why the four-year cycle is no longer applicable.
Diminished Halving Effect
Firstly, from the supply side, the halving effect of Bitcoin ($BTC) is gradually diminishing. With each halving, the reduction in the issuance of new bitcoins is decreasing.
For example, the halvings in 2012 and 2016 saw reductions of 50% and 25% in issuance, respectively, leading to significant impacts on market prices. However, by 2024, the reduction in issuance due to halving will be only 6.25%. This means the halving’s effect on price has greatly diminished.
ETF Changes Market Rules
Secondly, from the demand side, the introduction of Bitcoin ETFs is a significant variable that has permanently changed market rules. Bitcoin ETFs are financial instruments that allow investors in traditional financial markets to invest in Bitcoin indirectly. Since their introduction, they have become the most successful ETF products in history, with demand far exceeding expectations.
This influx of demand has not only changed the overall landscape of the cryptocurrency market but has also disrupted many existing market rules (such as the four-year cycle). The most significant impact of ETFs is actually reflected in the altcoin market. Let me elaborate.
In the past, you might often have seen a chart showing the price rotation relationship between Bitcoin and altcoins. This was indeed the case in 2021. However, now this relationship has broken down.
(Source: Miles Deutscher, compiled by Shenchao TechFlow)
The Wealth Effect of Bitcoin Disappears
In 2017 and 2021, when Bitcoin prices rose, many wealthy Bitcoin whales would transfer profits into altcoins on centralized exchanges (CEX), thereby driving the prosperity of the altcoin market. However, most of the new capital flowing into the market now comes through Bitcoin ETFs, and this capital is not flowing into the altcoin market. In other words, the way funds are flowing has fundamentally changed, and altcoins no longer benefit from Bitcoin’s wealth effect.
Retail Investors Skip Stages 2 (ETH) and 3 (Mainstream Coins)
Retail investors are now directly rushing into high-risk speculative projects on-chain, known as “on-chain casino games (Pump Fun).” Compared to 2021, the number of retail investors in this cycle has noticeably decreased. This is mainly due to macroeconomic pressures and the severe impact many faced during the last cycle due to events like LUNA, FTX, BlockFi, and Voyager. However, those retail players who remain in the market are directly skipping mainstream coins and choosing to seek opportunities on-chain. You can read my detailed analysis of how this phenomenon affects the market here.
If my judgment is correct, meaning cycle theory is no longer applicable, what changes might this bring to the future market? I have bad news and good news to share.
The bad news is that making money passively has become more difficult. This is a natural signal of the industry maturing. In fact, there are now more trading opportunities in the market, but if you continue to use strategies from 2021—such as holding a bunch of altcoins and quietly waiting for the “altcoin season” to arrive—you may find yourself disappointed, or even underperforming.
The good news is that since there is no longer a so-called four-year cycle, this also means that prolonged bear markets triggered by specific factors in cryptocurrency will no longer occur. Of course, from a macroeconomic perspective, long-term bear markets are still possible, because cryptocurrencies do not operate in isolation, and their correlation with the macro economy is now tighter than ever.
The market’s “risk-on” and “risk-off” periods are more likely to be driven by changes in macroeconomic conditions. These changes often trigger short-term mini echo-bubbles rather than prolonged one-sided bull runs. An echo bubble refers to a short-term rebound in the market brought about by changes in the macro environment; although smaller in scale, it shares similarities with past large bubbles.
Within these bubbles, there are plenty of profit-making opportunities. For example, in 2024, we witnessed rotations of different hotspots: November saw the meme craze, December the AI concept, and January the rise of AI agents. Undoubtedly, new trends will continue to emerge. If you are sharp enough, these represent excellent profit-making opportunities, but they require a slightly different strategy than in past cycles.
This leads to the next topic I want to discuss: my strategy. A few days ago, I had dinner with @gametheorizing, who made a very insightful point. Many people pursue an ultimate goal: whether it’s to multiply their portfolio by 5, 10, or even 20 times. However, a better strategy is to focus on multiple small bets rather than going all-in. By continuously accumulating a series of small victories, the returns from this approach may be greater in the long run.
Therefore, rather than placing all your bets and hoping for altcoin season to double your assets, consider trying to accumulate wealth through the compounding effect of time. Specifically, you can adopt the following strategy:
Small Bets > Take Profits, Re-Bet > Take Profits Again, Repeat.
This is also why many top traders and thinkers in the crypto space (like Jordi) were once professional poker players. They learned to view each trade through a probabilistic lens, evaluating potential outcomes rather than blindly betting.
My portfolio is currently allocated as follows: 50% invested in high-confidence assets with long-term potential, and 50% in stablecoins and active trading. I utilize this portion of funds to seek short-term opportunities in the market, flexibly entering and exiting.
Additionally, I use stablecoins as a benchmark to measure the success or failure of trades. Each time I exit a trade, I convert profits back to stablecoins, allowing me to clearly see my earnings.
If your cryptocurrency portfolio is too diversified and you’re unsure how to respond to the current market changes, last week I shared a guide detailing how to optimize your portfolio based on market changes. In this article, I emphasized a key point: the importance of setting “Invalidation” standards for each trade. Just as you need a clear reason to validate your choice when deciding to purchase a certain cryptocurrency, “Invalidation” refers to the criteria for exiting a trade when market conditions no longer meet your expectations.
I’ve noticed many people enter trades without basic risk management awareness and without setting clear exit criteria. This often leads to unnecessary losses.
If you’re looking for a recommendation that can significantly enhance your future profitability, it is this: establish clear technical or fundamental “Invalidation” standards for each trade. This will not only help you better manage risk but also improve the overall efficiency of your trades.
Of course, your level of confidence in a trade and your expected holding period may affect how you set your “Invalidation” standards or triggers. Nevertheless, this does not change the fact that you need to plan ahead. Having a clear exit plan is one of the keys to successful trading.
Although the current market may not fully adhere to past cyclical rules, I remain confident about the future. As long as you maintain the right mindset and strategy, 2025 still holds the potential for significant growth.
Currently, we are in a bear market phase, but market trends will eventually change, bringing many new opportunities. Until then, your primary goal should be to survive.
The returns in the cryptocurrency market often belong to those who can persist through extreme volatility. Regardless of market fluctuations, patience and resilience are the keys to ultimately winning.
This article is a collaborative reprint from: Shenchao.