Viewpoint: Destroy the "four-year cycle" theory, and cryptocurrencies can truly bridge the gap

Author: Matti

Compiled by: Luffy, Foresight News

Not long ago, I shared some of my thoughts on cryptotwitter (CT). To my surprise, these views sparked intense discussions within the community. I'm not sure if my opinions were beyond the comprehension of critics, or if I touched a nerve with the vested interests of CT.

CT is easily deceiving

This is not to say that people won't occasionally stumble upon useful investment advice on CT. CT is a novel form of information frenzy, a never-ending soap opera with absurd plots and villains. It is a platform for entertainment.

This experience led me to start thinking about the current state of cryptocurrency. At some point, I suddenly realized: cryptocurrency has already become mainstream. It may not be mainstream adoption, but it is mainstream entertainment. How many people around you have not heard of cryptocurrency? Today, cryptocurrency is a hot topic in the U.S. presidential election; how could it not be mainstream?

People love to be "early birds," deluding themselves into thinking that acting early will lead to profits. Participation is a prerequisite for success, and CT is a false prophet that perpetuates this notion. This is Alpha, that is Alpha… CT is a reality show where tokens are sold as entertainment.

CT is neither a bad nor a good thing for the industry; it is merely a manifestation of the mainstreaming of cryptocurrency. From humble anarcho-capitalism to peak idealistic culture, cryptocurrency today is experiencing a TikTokification, packaged and presented to consumers in ways that Satoshi could never have imagined.

This is how we integrate into the mainstream

A representative figure of CT once wrote (approximately): "The signs of a bubble are hard to distinguish from mainstream adoption." The problem with mainstream is that you lose early opportunities.

Cryptocurrency has adopted its own predestined cultural fate. Whether you are a maximalist of Bitcoin, ETH, or SOL, you will believe in the legend of the four-year cycle. Almost everyone believes that cryptocurrency is destined to grow, with a major bull market suddenly appearing every four years, leading us to a land of prosperity.

But as the industry scales up, imitation and borrowing have become more valuable than innovation. The crypto industry now perpetuates the idea of "early rising is advantageous" through the slogan of the four-year cycle. This situation may change, and participation may not be enough. The consequences of complacency will eventually arrive.

Demand is the mother of invention, but unfortunately, there is a lot of capital focused on short-term games (price increases), and many savvy founders know how to play the venture capital beauty contest. In the past two years, there has been neither demand nor any real factors triggering innovation.

This is why cryptocurrency currently views macro interventions as a lifeline, whether it’s interest rate cuts or a new presidential administration. This indicates that we expect to benefit from top-down capital inflows (such as ETFs), rather than bottom-up innovation. The question is whether this game will eventually break.

Currently, venture capital firms are struggling to raise new funds, and the venture capital industry is under strict scrutiny due to reduced returns. Cryptocurrency is no different, but with one caveat: existing crypto LPs had already received returns around 2021. This time, that won't happen, as funds boasting paper gains quickly faced brutal setbacks.

What is the savior? Treating financial deformity as the only way out and hoping for a greater fool to save us indicates how far we have fallen. The problem is that most people do not even hide this fact. I have never seen: standing on the edge of a bull market, everyone is eager to sell.

The concept of the "four-year cycle" in cryptocurrency needs to be thoroughly destroyed for cryptocurrency to truly cross the chasm and become something entirely new. As long as the concept of the "four-year cycle" exists, the default incentive mechanisms are:

• Prioritizing short-term behavior (whether builders or investors)
• Continuing the "greater fool theory," as people always believe that the current cycle will eventually collapse.

As readily available ideas are adopted, cryptocurrency is turning into a zero-sum game. Founders and the "community" celebrate large-scale funding without any products as a victory. While X and Y received funding from various sources, they obscure the fact that they do not have real technological innovations like the last cycle (DeFi).

Besides foolishly hoping someone will take over, what else do we believe in? Do we believe in CT? Is it just an emotional amplifier? Do we believe in alpha, or do we believe in self-deceptive narratives?

Look, this is all we have left… narratives. We force-feed ourselves stories we do not believe, just hoping others will buy in. But without narratives, there can be no bull markets and no adoption! Yes, but only when you do not treat them as narratives do they work best.

True narratives are not manufactured on Twitter. They are forged by innovation, which ignites people's passions and then turns into self-righteous arrogance. This is fanaticism, and fanaticism must have its foundation. We do not have that foundation; we only want to spread—using memes, turning hollow narratives into reality through Twitter.

I have made this mistake myself. Shouting "culture!" to cover up product flaws is not a good strategy. The only culture we have been nurturing is one that exploits hollow narratives and a violent community culture, and the strength of these cultures depends solely on price performance. But perhaps we should not underestimate the predictability of stupidity. In the past, didn't stupidity often spare us from extinction? Or maybe, in some corner, a significant innovation is brewing?

I have no answers. I suspect that if the market does not reach new heights, we will enter an unpredictable realm, which may be painful in the short to medium term but could be beneficial for innovation in cryptocurrency.