The Crypto Market Is Broken - I’ve Changed My Approach

It's no secret that this cycle is extremely different from prior crypto cycles. The market feels a lot more difficult, and a lot of you have probably experienced portfolio losses or have struggled to break even. The truth is, in some ways, the crypto market is broken, at least compared to how we previously thought about the crypto market.

So, in today's video, I want to spell out very plainly, very transparently, and very critically what the difference is this cycle versus last cycle, and even right now versus the market even six months ago. Because once we've worked that out, then we can work out exactly how to play the market right now to put ourselves in the best position to make money in the market. It is still possible to make money in the market, by the way. The game has just changed.

So, after we go through what's changed, we're going to discuss the things you can start doing today to make money in crypto. If you do enjoy content like this, make sure to subscribe to the channel and hit the post notification bell. Usually, videos like this, so mental models, frameworks, and deeper dives, are posted on the CryptoEge channel, but I am posting a few of these every now and then, so you can get a taste for this sort of content here on my main channel. So, if you're not already subscribed to Crypto Edge, do so using the link in the description or the pinned comment because that is the channel where I post all of these evergreen crypto videos to help you succeed in the crypto market.

Now, firstly, let's begin by comparing the current crypto cycle to 2021 and go through the reasons why the market has changed. The first thing that's changed is this cycle, there's just a lot more token dilution. There are millions of altcoins, new launches seemingly every single day, and each major sector has hundreds or thousands of coins that liquidity is dispersing amongst. Last cycle, if you were bullish on, let's say, gaming, there were only really like three or four coins that you could invest in to get exposure to gaming. Or if it was layer 1's, there were only really like two to three of layer ones that were actually gaining traction. So, it was very easy to speculate on an asset in order to make money in a specific sector.

The game is now different. The game is much more rotationary, and the influx of new altcoins means that there's this constant rotation from old altcoins into new altcoins, and liquidity on average per token is lower because the new amount of liquidity coming into the crypto market isn't enough to keep up with the demands from all the new altcoin tokens launching. So you have an unbalanced buy and sell dynamic, which has changed the market from a buy and hold market into more of a rotationary market. In rotationary markets, you can still make profits, and we're going to discuss later in the video exactly how you can do so, but we have to identify that it is now very different.

The other thing that's changed since 2021 and 2025 is that unfortunately, insiders have become much better at extracting. From VCs to funds to founders, it's become a lot more efficient to extract liquidity out of the crypto market. And truthfully, this is because the barrier to entry is not that high. To get listed on the stock market, you need to be regulated. You need to have multiple financial audits. It's extremely expensive. Anyone can launch a crypto token. And the launch of new websites like Pump Fund that literally enable you to launch a token have made it really easy to launch. And this has opened the door for more extractors to launch projects in crypto.

Now, the market's becoming smarter, and a lot of these extractionary projects aren't doing as well now, but they're still sucking liquidity from the market. And that's been one of the reasons why altcoins have suffered this cycle. That, alongside the reputational damage of the space as a whole. I think a lot of VCs experienced the pain of being overleveraged in 2021. Even the ones that survived, unlike 3AC who blew up, ended up experiencing massive drawdowns. And when the market started to recover, a lot of these funds relied on predatory tokconomics to make their money back. And this was not aided by the regulatory regime at the side, which was the Biden administration, who were extremely aggressive with pursuing crypto projects and founders through the SEC. And this meant through Operation Choke.2.0, as it was branded at the time, that founders were scared to launch ICOs or, you know, do certain airdrop mechanisms or pretty much anything that would benefit the community. So they would push further towards the model of launching on big exchanges at inflated valuations. And that combined with the fact that VCs were pushing for this to make more money meant that retail lost out. So, a lot of the new launches that would launch on the biggest exchanges would end up resulting in retail losing money because they would buy in, and unlocks were constantly being dumped on their heads. And this is obviously in tandem with altcoin dilution, which was putting more supply onto the market overall.

Now, things have changed somewhat. The launch of Echo in 2023, Legion, and other ICO platforms has made the market more fair again, and this has been aided by the Trump administration allowing this to happen or slightly deregulating the market to facilitate innovation. And I think that's reflected in these new platforms launching that are actually giving retail a chance to make money. But this trend isn't going to fix overnight. It's probably going to take a matter of many months or years for the market to course correct back into an environment that actually gives retail a chance to succeed after the damage that was done throughout the 2022 to 2023 period.

Another thing that's changed in crypto is that the aura of the technology has diminished. And this is quite ironic because the technology now is actually way better. Tech was so broken in 2021. It couldn't scale. Perplexes didn't work. Like, all of the stuff we have now, you just simply didn't have back then. But because prices were so inflated, because it was such a heavy hype cycle propped up by insane liquidity and stimulus checks and money coming into the market, prices became detached from innovation. So people had huge expectations for this technology. Now it's actually heading towards the point where those expectations are coming true, but prices aren't reflecting that. So you have this cohort of people who lost faith in crypto, and the aura of the overall industry has diminished because the tech took significantly longer and is taking significantly longer to get to the point that people thought the valuations commanded. And obviously, there were so many events in 2022 and towards the end of 2021 which eroded people's trust in the crypto space. I mean, Luna being the obvious example, the fallout from US, 3AC, BlockFi, Celsius, Voyager, and then of course FTX. All of this gave crypto a really bad name. And all that negative publicity has resulted in a lot of people distrusting the industry. Not only did people lose money and not come back, but new participants were scared of ever entering the industry because now they think it's a scam. And although there have been periods of bullishness since then, overall the sentiment regarding crypto has taken a long time to recover. And I still speak to people now. Like, I went to a barbecue the other night, and he asked me what I did, and I told him that I was in crypto, and he's like, "Oh, isn't crypto a scam?" Like, you know, it seems a bit dodgy. Like that is still the vibe of the industry.

Now, to be fair, that's always been the vibe of the industry. If you've been around since 2016, 2017, even in 2019 when I got into crypto, people thought it was a scam. Then they started to believe in 2021, but it almost confirmed their bias in 2022 when all of these actual scams occurred. And that makes it really hard to onboard new people into the industry, at least mentally. So that friction, and I think not seeing like many examples of people making money this year, have resulted in not enough of an incentive for people to come into the space and for new retail to actually be onboarded.

And then the other point leading on from that is, has there been enough technology which genuinely has piqued retail's interest? Now I see a very few clear needs and product market fit in the market that retail are using. For example, stablecoins. Even some of my friends that aren't in crypto use stablecoins to transact, but it's still a little bit niche because, you know, banks are fairly efficient these days, but not as efficient. Obviously, if you're trading the perp dexes like Hyperlid, which have launched, are amazing vehicles. Even prediction markets like Poly Market built on crypto rails have been verticals with product market fit. So we actually have seen applications which have gained genuine product market fit, but we haven't seen like that mass retail engagement on, let's say, like the gaming market that we thought that we might see, or at least it's taking much longer than anticipated to get to that point. And without these mass retail onboarding vehicles, it hasn't really given a real reason for people to use crypto beyond speculation. Now, speculation in itself is a massive niche. Look at the size of the gaming and the gambling industry. It's a massive niche, and it can prop up the industry on its own, by the way, and we saw that in 2021. But in order for the space to have longevity and strong underlying fundamentals, you need a real reason for people to actually transact and use crypto.

Obviously, Bitcoin as well and Ethereum have exhibited product market fit to some extent. I mean, Bitcoin as, you know, a form of, you know, digital gold or hard money or even just as an inflation hedge, whatever narrative you subscribe to. I think it's probably trading more as a leveraged tech stock. But then again, that is a way to, you know, fight against inflation because you're owning an asset which is going up. That is also obviously a compelling narrative. And I think Bitcoin going up overall will be very good for the space. But in terms of altcoins, there hasn't been, you know, that huge demand from applications in the space yet. And there are many verticals which are going to do that, by the way. And we've seen a few like with Hyperlid and Polyark, but we're going to see way more over the next five years. But I think largely, it's a slower process than a lot of people have thought.

So that's what's happened between 2021 and 2025. Now I want to talk about what's happening lately over the past few months, which have further changed dynamics because earlier in the year, we had periods of bullishness, obviously, you know, into the January period, then the whole Trump coin thing launched, and then the market unwound a little bit. It was a bit overheated. We had macro tensions like tariffs, etc. Since then, we've had a big run in August, but recently the markets have cooled off again, obviously after a big liquidation event. So I want to just talk about what's happened recently as well, because things have changed twice, you know, once from 2021 to the new cycle, and then also again this year.

I think the first thing that's changed over the past like month or so is that DATs are under a bit more pressure. So what was really propelling the market to new highs in August for Bitcoin and Ethereum were the fact that DATs and treasuries were buying a lot of coins, Bitcoin and Ethereum, and then we saw a lot of speculation on these assets as, you know, people were pricing in the DATs. We are now starting to see a bit of an unwind. So some DATs are starting to sell. A lot of them are below their MNAV, which means potentially they'll sell in order to get back to NAV so they can raise again because a lot of these stats can only raise in a positive NAV environment. So although Micro Strategy is probably safe, and I don't think it's going to be a big unwind yet, like the setup is there to happen eventually. Um, but, you know, that's what's putting a bit of pressure on the short term. I don't think a big unwind happens. I think it's more of a reset. The market should recover a little bit, and then, you know, we might see a bigger deleveraging later down the track. But, you know, that reflexivity that applied to the upside on the DATs is also applying, you know, to the downside right now.

Obviously, ETF flows are also under a bit of pressure. That's mostly retail driven. And clearly, the big thing which has caused a lot of people to feel a bit iffy about the space right now is October 10th, where we saw that massive liquidation wick. You know, a lot of exchange engines collapsed, and it was just honestly a big mess which resulted in a lot of people losing trust in the leverage side of crypto. And also, it's not just the trust element. It's also the fact that a lot of market makers and funds who were overleveraged are now slowly starting to unwind their books again, which is putting pressure back on the altcoin market, which is why you're not seeing the rebound being as strong as maybe you'd expect after a big dip like that. So, I think structurally, and I said this at the time, it's going to take a matter of weeks or months to restore trust and confidence back in the market. And I'm just saying it how it is, like the market is definitely structurally weaker than it was then because of this event.

Although this does, and we'll discuss this in the next segment, create a lot of opportunity for those who are willing to stick around because once sentiment does improve and Bitcoin does make another run, prices are going to be coming off a much lower floor, which actually gives you more of a chance to profit instead of getting in, you know, super late, which I think opens the door for big profits for people that are actually paying attention right now. So, that's what's happened over the past few months. It's going to take a bit of time to recover, but there's still massive opportunity.

So, now I want to talk about what you can do to seize that opportunity. So far in this video, I've talked about what's changed. That's great. Now you understand. You know, maybe you're able to learn a couple of things. But what can you do right now to maximize the crypto market over the coming months? Because I still think Bitcoin will go to new highs. And whether you think it won't go to new highs or not, I think you would admit there's going to be a pump at some point. And if Bitcoin pumps at some point, there'll be some sort of rotation. That aside, you know, that overall rotation aside, there's also specific sectors with extreme product market fit. Right now, I think AI with the X42 narrative is really interesting. Prediction markets, which we discussed, are great. Revenue-generating protocols are great. We're seeing a lot of projects in the internet capital markets. Meta taking traditional products and launching on crypto rails. Like, this stuff is happening. Asset tokenization is happening. The space is actually evolving and advancing. So even if the market was flat or altcoins were overall flat down, there's still so much opportunity if you know where to look that it just doesn't make sense from an EV perspective to not be paying attention to the space right now. And even though right now the market is choppy and slow, I'm still paying attention because I know this is where the biggest opportunity is and the biggest upside is if you know where to look.

So now let's go through what you can do right now to set up your portfolio trading and investing for the best upside in what has objectively been a tricky market.

First thing, I've spoken about this a lot, but I'll say it again. Hold fewer tokens. This isn't 2021. Altcoin dispersion is a real thing. The way to counter against it is instead of holding 20 core positions, hold five. But the way I think about it is I'd rather hold fewer tokens in my core portfolio, so large cap and midcaps. And then, you know, I'm happy to hold like 10 to 15 low caps or risky plays. But that's my spray and prey portfolio, and I'm not tracking that as closely as my main core portfolio, which I'm being very strict with invalidations and risk management on that portfolio.

The second thing you can do, I've got 10 points here, is focus on multicycle assets with your core portfolio. So, the good thing about multicycle assets is they'll not only do well this cycle, because if it's a good multicycle asset, it should also benefit from flows this cycle, but it will also be a better one long-term. So, even if you mistime things, you have the benefit of being able to hold through that if you completely mistime things. But although I've done invalidation guides and stuff like that to help you hopefully time things a little bit better, and I'll be here on the channel, so make sure you subscribe because I can help you with that. But multicycle assets are things like Bitcoin's not going away, Ethereum's not going away, Solana's not going away, Link's not going away. There are plays like Hyperliquid, which I don't think are going away, and there are many other protocols as well, like TA's not going away. Even some of the biggest memes might not be going away because they have culture and they have big communities. Focus on assets which can survive longer term. Comprise the majority of your portfolio with those assets, and then you can take riskier plays with the rest of your portfolio.

And this is where it's very important for point number three to split short-term and long-term capital. You want to be very clear about, okay, this section of my portfolio I'm holding for the long term. So you might even have, let's say, $1,000 in Bitcoin. You might say, "Okay, $500 of that $1,000 worth of Bitcoin is for long-term. I'm never going to sell that. That goes in cold storage." And then you put $500 in your active trading portfolio. And you say, "Okay, if Bitcoin dominance hits this amount, then I'm going to rotate X percentage into Ethereum and Solana." So, you can have an active one and a long-term one. With the active one, you could even sell at some point. You could say, "Okay, if Bitcoin breaks below the 200-day moving average and holds there for 3 days, I'm going to sell all of it. I'm going to sell half of it." So, you've got your short-term Bitcoin bag and your long-term Bitcoin bag. And you can do the same with alts. And whether you skew more towards short-term or long-term will depend on whether you think it's a multicycle asset or not. There could be an AI coin which you think is great for the hype wave of AI this cycle, but 70% of it you would sell short-term because you think it's risky to hold long-term, but you might keep 30% or 20% long-term if you think it has potential. Or you might go, look, 100% of it short-term because I think it's too risky to hold longer term.

This leads me into point number four. Just treat everything as a trade. The reality is, whether it's a short-term investment or a long-term investment, it's a trade. Holding Bitcoin because you think the dollar is debasing is really just a 10-year trade versus the US dollar. That's all it is. It's a trade. It's a long-term trade, but it's a trade. A trade on an AI token for two weeks because there's a big announcement you want to front-run it is also a trade. It's not a 10-year trade like Bitcoin. It's a two-week trade. So, I think knowing your time horizons and treating everything as a trade is better than the mental framing of it's an investment. And the reason for this is if you call something an investment, you're very unlikely to change your bias and you're very unlikely to correctly risk manage. If you treat it as a trade, then just like a normal trader, you'll have invalidations, time-based or fundamental or invalidation or technical-based. You'll have better management of that position. You'll have TP levels. You have levels where you'll take profits where you'll derisk, and you can treat it a little bit more carefully. So I don't think there's any fundamental difference in calling it an investment or a trade. It's just a difference in the way that your brain perceives it. So when I switched from "I'm investing in Bitcoin" to "No, I'm trading Bitcoin versus the US dollar over 10 years," now I'm more cognizant of the macro impact of certain things on that thesis, aka the trade. So I think framing things in that way has helped me. It might not help you, but maybe for some of you it will, and that's made a big difference for me.

Point number five, you want to be extremely cognizant of flows for altcoins. This is the cycle of flows, aka, is there more buy pressure than sell pressure? Now, there are things that can create more buy pressure. Is there a revenue buyback and burn program which is buying the token and reducing the circulating supply? Is there demand? Is it just a strong narrative that's commanding attention resulting in people buying? And then on the flip side, what's the sell pressure? Are there a lot of unlocks? Is there demand for the token? Is, you know, does the token not have enough differentiation? Or is there just not enough buy demand to offset the amount of supply coming onto the market? You have to work out whether something has positive or negative flows. A lot of this you can just see in the chart, to be honest. By doing that, you're going to put yourself in a better position to be buying coins that default go up versus default go down. So instead of thinking of things as narratives, think about whether that narrative could command flows. Flows are the most important thing in the market.

Point number six, in order to take advantage of any opportunity in the market, you must stay liquid. Now, there's two things here. First thing, don't lock too much of your capital in pools. I think that's more of an issue from last cycle that I was doing a lot of, but I learned the hard way. You don't want to lock up too much capital. You want to maybe lock a little bit if you, you know, want to take advantage of an airdrop or a certain yield, but you don't want to lock up the majority of your capital. You want to keep it liquid.

Now, in terms of staying liquid beyond your altcoin portfolio, Bitcoin and stablecoins are probably the best option. However, stablecoins give you more of a feeling of peace and security that enable you to take opportunities when they arise. Like, I'm actually 50% cash right now, and that's not because I am bearish on the market. It's actually because I know that when I hold more cash or more stables, I actually make better decisions because I'm less emotional. I manage my positions better, and I also have the advantage to take opportunities as they arise. Like, if I see a new coin and I think it's a great opportunity, if I have stable coins, I can allocate stables into that position instead of having to sell an altcoin at potentially an inopportune time. So, I'm invalidating my thesis too early just because I don't have enough money to fund a new trade.

The other thing you can do if you have more stable coins is you can put them to work in many ways. Not only in terms of yield, but in terms of limit orders. I mean, on October 10th, if you had limit orders on exchanges, and I had a couple, you were able to make a lot of money off the fact price whipped down and filled a lot of orders at crazy prices. I'm not talking about leverage orders. I'm talking about either low leverage, but primarily spot orders on liquidation events and big wicks that happen in the market. This is a way that you can make money just from having liquidity. But if you don't have liquidity, you can't take advantage of this. Some of my biggest trades last year were because I had liquidity and I took advantage of big liquidation wicks. People that were watching the channel know that I hit a massive trade on WIF just doing this. So having liquidity doesn't mean you're bearish. Part of the reason is because I want to be a bit defensive because the market's a bit rocky. But it's also so I can be opportunistic. Also, there's a bunch of pre-sales launching. I might want to play those. Either I might want to farm them, or I might want to trade them on launch, or they might launch below expectations, and I might want to deploy liquidity there so I can make money. I want to stay liquid. So, I don't mind the approach of having 50% stable coins or even 70% stable coins this cycle, or 20. 20 is also fine, but I wouldn't go too much lower than 20. Personally, I think it's better to have a little bit more, be a bit more defensive, because that gives you more flexibility in the market overall.

Point number seven, and this is extremely important. This is a mindset. Stay curious. You always want to remain curious in the market. This isn't just markets. This is also life. You want to keep learning. You want to keep looking for new opportunities. You want to keep focusing on the exciting opportunities instead of lamenting things that happened in your past. Like, imagine if you took every single regret and you just thought about that every day. You'd be depressed and you wouldn't be finding new opportunities. It's the same in crypto. You don't want to think about, oh, I lost money, or I should have sold at the highs, or I should have done this. Forget your portfolio all-time high. It doesn't matter. All that matters is the current number that you have and how you can maximize that number. Forget the past. Focus on opportunities. Be curious. Be opportunistic. The people that I see succeeding in the market are those who are looking at the new trends and researching them and looking for coins and, and, you know, networking and being opportunistic and being curious and wanting to learn. You're going to need to do that if you want to be successful. And that's why even now the market's quiet, I keep researching. I keep looking at new stuff. I've been diving deep into X42, the new AI payment stat. That's super interesting. I've been looking into robotics plays. That's super interesting. I'm doing all this stuff because when the market's boring, it's your time to be curious. Actually, now's the time to be focusing on research because a couple of months ago, like in August, when things were flying, like I couldn't focus on researching because I was too busy managing my portfolio and trading. So, these are actually the times to invest in that.

Number eight, denominate your wealth in Bitcoin and not USD. Now, obviously, the USD balance of your portfolio is still important, and I still look at it. But by denominating each trade and your overall wealth in Bitcoin, you are accounting for the beta of the market, which basically means if you can't outperform Bitcoin, you should probably just be in Bitcoin because it's lower risk than every other altcoin, which means that on a risk-adjusted return basis, if Bitcoin, even if it matches the performance of your altcoin, you were still better off holding Bitcoin. You'd have less headaches, and you had a much better risk-adjusted return on that trade. So, when you are reviewing your portfolio performance, track it versus Bitcoin. Don't track it versus US dollars. Like, even I did this myself right from the start of the year. And I'll be honest, I realized that I wasn't performing as well as I thought. I looked at my portfolio versus US dollars, I'm like, "All right, it's it's up a bit." But then I looked at it versus Bitcoin, and I was like, "I'm actually not performing that well on a risk-adjusted basis." Even some of the trades that I took where I'd made money, I felt like they weren't the best risk-adjusted trades because Bitcoin had made the same amount. So, they were actually bad trades. So, you always want to denominate your trades and your overall portfolio in Bitcoin, and to some extent Ethereum, but Bitcoin is the king.

Now, I'm on to my final two points, and these are two of the most important points in the video. Build a network and leverage other people. Now, you can do this to any extent you want. I'm not saying you need to go to conferences and network and stuff. You could start as small as getting a friend and just researching together because doing it with people makes the journey so much easier than doing it alone. When I was doing it alone in 2019 and 2020, it was a lot harder than now. Now I have a big research team. We get on a call every morning. We have meetings. I have my Discord community. I have my Telegram. Obviously, not everyone's going to be able to scale to that point, but even just doing it with one or two friends is great.

And then as an extension of that, join a community. That's one of the reasons why I started my Discord community. It's a bunch of like-minded people who are all on the same mission. And I see the chats. People, not only are they looking at my alpha and my analyst alpha, they're trading together. We have a traders hub channel where everyone's trading. They're posting charts. They're getting feedback from the analysts, mentorships, they're joining the live sessions, they're communicating with each other, they're posting charts back and forth. You'll be able to network and make friends through these communities. That's why sometimes I find it funny when people say that the price point is too high or just don't want to pay money at all when all it takes is one to two really good connections in these communities to significantly improve your crypto journey. So, I'm not even saying join my group. I think my group's great, but if you want to join someone else's group, you should get a similar benefit if there are high-level people in there. And to be honest, the more expensive the group, the better the people because you're filtering out the cheap traffic. And typically, you're only getting the serious people. That's why in my group, there are some multi-millionaires in the group. I've seen some people's portfolios. It's absolutely crazy because it's high ticket. You get those kind of people. And these are the sort of circles you want to be networking in. So, that's a tip to help you stay in the game.

And then, of course, there's things you can do in addition to that, like starting a social profile and networking through social media. Part of my upcoming in the space is due to the fact that I grew a following on X and then I translated some of that into YouTube and I started doing video content, and that's helped me in the space, get connections in the space, you know, meet founders in the space for interviews and for meetings and learning about new projects, and also getting access to deal flow in the space to being able to invest in these rounds that not everyone can invest in in the space. That is all through network, and you can do that on different scales. You can do it with friends in a small community. You can do it through a paid group or something a bit higher ticket for an even better community. And then you can also build leverage in any way you want. I've even seen people become BDs or just, you know, getting to know other creators and other founders, and they built a network that way. So at the end of the day, it's just like life or any business. You just want to provide value to others, and you'll get value back.

And then point number 10 is respecting liquidity cycles. So the macro cycle is something extremely important that you need to pay attention to. Where are we in terms of quantitative easing tightening? Are rates going up? Are they going down? Is the business cycle in full effect? So are equities continuing to increase? Are we seeing rates coming down? That is all super important stuff because macro affects crypto. And now more than ever, Bitcoin is becoming a macro asset, and altcoins, at the end of the day, they are extensions of Bitcoin. They don't operate exactly one to one, but if Bitcoin does really well, altcoins typically do well. And if Bitcoin does badly, altcoins do badly. So you have to respect the overall liquidity cycle because Bitcoin is also an extension of the NASDAQ essentially. It's more correlated with the NASDAQ than it is gold. That's why I say it's more of a leveraged tech stock than it is digital gold. So you have to respect the macro environment. Put time into researching macro. Put time into understanding where we are in the liquidity cycle. And then all of your altcoin trades, research, and alpha is going to go much, much further.

If you enjoy this video, make sure to subscribe to the channel. Share this with a friend if you thought it was valuable. Come back to it later because I think a lot of these principles are going to be relevant for a long time to come. And I will see you in the next video. Hope you enjoyed. I'll see you in the next one. Peace out.