Author: Michael Nadeau, The DeFi Report; Translated by: Deng Tong, Golden Finance

Cryptocurrencies should have entered the "golden age". But I have been unable to escape this constant worry over the past few months.

This week, I will share a report explaining why this happens.

Previously, we shared our views on important topics in 2025. That is, uncertainties related to inflation/tariffs, interest rates, fiscal expenditure/DOGE, US dollar, global liquidity, business cycles, etc.

Why? We want to have an argument. We want it to be rooted in data and game theory/incentives.

In other words, we want to have faith. Just like that.

However, when we sift through the data, we cannot build beliefs and point out favorable conditions for the cryptocurrency market in the short to medium term.

It’s just that my beliefs are moving in another direction—we are in the late stages of this cycle.

Of course, we shared with you the “bear market case” on January 15th. At that time we felt the market became quite bubbled. So we started to build cash positions. But we are not ready to call it "top."

Seven weeks later, there is growing evidence that the “top” may have arrived.

So, let's continue to discuss why I can't get rid of this "continuous worry." We will start with a specific perspective of cryptocurrency and then discuss macro/economic issues.

We have been in a bull market for more than 2 years. Things that were unthinkable a few years ago (like supporting cryptocurrencies) are happening now. But it feels bearish and "topped".

Trump. Is the memecoin launched by Trump the beginning of a new paradigm in the industry? Will we see new innovations in memecoin that add practicality to novel new capital formation strategies? It seems we may be moving in this direction. But that's not the case. Instead, the president/his company has not provided any communication or guidance to the public about Trump’s plans – which has done a huge harm to the industry. Why? Others are following his bad examples (like Milei). Furthermore, the lack of any attempt to bring practicality to Trump has fueled opponents and critics of our industry. This looks like an untenable scam. In my opinion, the counterattack here hasn't even begun.

Just last week, the U.S. Securities and Exchange Commission announced that it would cancel several cases against key cryptocurrency companies such as Coinbase, Uniswap and Consensys. This is very optimistic. But then Trump tweeted that he would build a strategic cryptocurrency reserve, promising that he would include XRP, ADA and SOL. We do not cover X in our DeFi reportThere is a reason for RP or ADA. They are zombie chains. In addition, Elon/DOGE’s mission is to clean up excessive fiscal spending related to fraud, waste and abuse. But will we use taxpayer money to buy speculative centralized crypto tokens? There is no ambiguity here-this is too stupid. And it undermines the good work Elon and DOGE did (DOGE will be detailed later in this report). Many cryptocurrency investors were cheering for this last weekend, believing it was a sign that the cycle was still going on. We think this is an illusion.

David Sachs. He should be the cryptocurrency tsar. But do you think he knows Trump will tweet on Sunday about strategic reserves? Don't seem to know. Furthermore, it is clear that the industry is not consistent with which tokens should be included in the reserves (or how regulation should work). It is one thing to go on the path of new regulations, and we are optimistic about it. But it's another matter to do it correctly, and it takes some time.

Kanye. Dave Portnoy. Now Eric Trump won't stop talking about cryptocurrencies. When he did so, he made sure to use a lot of buzzwords like “revolutionary.” This is a red flag for anyone who has gone through several cycles. We have seen many such "cases" later in the cycle.

World Liberty Financial. I don't know if this is a scam. But it does look like it. If you want to try to divert people from scams, you can call it "World Liberty Financial." All jokes aside, the site just provides a way to buy WLF tokens. Seriously. There is nothing there. No business model. No practicality. There is only a group of people in suits and a link to buy WLF tokens. It's revolutionary indeed.

Pump dot fun. This is a lot of fun during this time. But it seems that Solana's speculation peak is over.

This is starting to be more and more like the OpenSea of ​​the previous cycle (the picture below never rebounded).

In both cases, the volume/on-chain activity is obviously linked to the price of the L1 asset. So, what will trigger the next wave of Solana to keep the casino lively?

If you can see it coming soon, let us know.

Hope on the timeline. I continue to see people talking about why we are still in the early stages of the cycle: regulation and SBR. What's the problem with this? It has been included in the price. When people make this statement, I want to cash out.

Emotion. I noticed that few people say that the market has reached its peak now? But people like Eric Trump are optimistic.

Hacking and fraud. Bybit Hacker +The memecoin trenches were exposed, which showed that the ratio of fraudsters/scammers to actual builders was imbalanced – just like the ones at the end of the previous cycle. We thought it was time to do a much-needed cleanup (bear market).

Overall, cryptocurrencies feel a little "dirty" at the moment. Meanwhile, speculation is weakening. We look for this trend in the later stages of the cycle.

In addition to the unique "peak" signal of the cryptocurrency market we see, our concerns about the short- to medium-term economy are also deepening. We believe the risk of a recession is increasing. According to Scott Bessent in a recent interview with Bloomberg, he said that in 6-12 months, the recession will dominate “our economy.”

DOGE. Our perspective is evolving. The initial idea was that Elon could not have a significant impact on spending. We updated this view based on what we are seeing now, as Elon's vandalism seems to have full support from Trump. This is not good for growth. Regardless of your stance on spending cuts, the huge deficits in the past few years are driving the economy, while the Fed has imposed quantitative tightening. It is a good thing to eliminate “fraud, waste and abuse” – but we also need to admit that it is the spending of some people in the economy and the income of others. So we have to ask a question: Which growth catalysts will offset this? We think deregulation will help, but it will take some time to change + it plays a role in the economy. In short, balanced budgets = tightening. Note that the 25-year budget forecasts deficit to fall by about $300 billion. Meanwhile, the recent plummeting GDP growth has been mainly due to slower growth in consumer spending and blocked net exports (the import preemptive effect related to tariffs).

Inflation/Tariff. Our view is that inflation concerns and concerns about the impact of tariffs are largely exaggerated. That being said, as facts change, so do our views. Trump confirmed that the 25% tariff on all goods in Canada and Mexico will take effect today. He also doubled tariffs on imported goods from 10% to 20%. This will certainly affect inflation and market uncertainty.

Rate cut/yield/USD. Our view is that the rate cuts this year will exceed market expectations and the dollar will fall (due to concerns about economic growth). Our confidence in this remains firm – mainly because we see it in Elon and DOGE. That being said, this may be detrimental to risky assets. This will be described in detail below.

Feder/Liquidity. If fiscal spending drops and markets sell off, the Fed will need to take easing. We think they will take easing, but they may wait too long to react (inflation concerns will play a role). In this case, rate cuts may not be enough to offset the impact of the slowdown. Even the Federal ReserveWith interest rate cuts, risky assets may also be affected. This was not the case when the Fed cut interest rates late last year. Some point out that TGA will be the next driver of liquidity since the reverse buyback is exhausted. This may provide some short-term relief, but it needs to be refilled immediately once the debt ceiling debate is over.

Business cycle. In our report released on February 14, we shared some data (ISM, CAPEX spending, small business confidence, bank loans) that suggest a new business cycle is about to begin. We think this is true. But we are concerned that a slowdown in growth could lead to a larger market adjustment/recession before starting to recover. Without DOGE/ fiscal expenditure and tariff reductions, we would rather predict a smoother transition.

Overall, the outside world is quite high. From a reverse perspective, this may indicate an improvement. We still think that now is the time to be cautious. Despite the recent correction in the cryptocurrency market (BTC fell 30%, SOL fell 50%, and other altcoins fell more), we are not convinced that the cryptocurrency market has bottomed out. Why? Because the traditional market has just begun to pull back. It is worth noting that traditional financial markets lead the economy. So further sell-offs could end up throwing us into recession. If this is the case (probably in the second quarter), we expect a significant response from the Federal Reserve/Treasury Department, but it does not feel the need to chase the sword of the decline at the moment.

As mentioned above, we have been turning to cash in addition to long-term BTC holdings. We are looking for opportunities to deploy into our favorite assets. The problem is, we haven't seen any "fat appointments" yet.

We think they will come. So now is the time to do an in-depth study and make a shopping list.

Remember that we have been following the current bull market since the end of 22 years.

If you have only started to engage in cryptocurrencies in the last 6 months or so, here are our suggestions:

Be careful when chasing a sharp blade of decline. If you missed a surge, don't think that this is a "buy" after a sharp pullback. may be. But the market may also be bad for you. Cryptocurrencies have a volatile focus. Most tokens will never come back. If you are going to make this mistake, it is best to make it with BTC.

If you "buy the highest price", don't blame yourself. This happens to many new market participants. You are studying. What you learn today is likely to be realized in the future – but you need to remain interested in this field. The key is to invest in assets you want to hold for a long time.

Many retail investors enter cryptocurrencies late in the cycle, leave in a bear market (missing all the best opportunities), and then return late in the next cycle. Please do not do this.

Be careful about your psychology. If you find yourself blindIf you agree with the bullish and get angry with the bearish, you will be more likely to make mistakes. Remember, people like Raoul Pal (who usually does a good job) called for $30,000 in a similar phase of the last cycle. Influential VCs may have portfolio projects that have not yet launched tokens. They have the motivation to tell you that the cycle is still strong. Try not to outsource your beliefs to others who may have competitive motivations.

Focus on your income/job. Make sure you have some funds to deal with the correction/bear market.

Please note that my preference is to turn to cash. If everyone starts to agree that prices will go lower, it may indicate that those market participants have also sold out. This will point to a higher bottom/low point. It is worth noting that there is currently record cash in the money market:

At the end of the day, as an investor, my job is to make the best decisions based on the best information available—and this information is always evolving.

Some on-chain indicators point to medium-term cycles—so there is reason to support the bull market. But since the end of 2022, we have been long irresponsibly. The risks/rewards at this stage are simply not worth staying in the market or deploying new capital. We believe that it is wiser to take profits, enter the market with cash and wait for a "fat agreement".

In addition, in the future, thinking about "cycle" may no longer be so important.

From now on, we can see a possible scenario that is a further adjustment (BTC fell to $65-70,000, which may be lower depending on how fast the Fed responds), followed by a few months of consolidation and another wave of gains before the end of the year to enter 2026. If we see a significant reaction from the Fed, BTC could go much higher in this case. This will follow the 21st century cycle – after Coinbase went public, the market peaked in the first quarter. After that, NFTs suddenly emerged, driving increased activity on Ethereum – which brought about a fierce "altcoin season". The problem with this altcoin prediction is that we have seen some "yuan" play (meme coins, AI tokens). So, what is the next thing that will bring "crazy" on-chain activities?

If the market has reached its peak, it seems to us that this is a disappointing cycle. Our bull market forecast is a $10 trillion market cap (200,000 BTC). The basic situation is $7.5 trillion (150,000 BTC). Not to mention the poor performance of ETH. Our feeling is that many professional investors are struggling – because over the past few years, you really have to get into BTC and SOL early to do a good job.

Although this report is calm, we are still very optimistic about the long term. The infrastructure is ready for prime time, and that was not the case in the previous cycle.

The reality is that cryptocurrencies as an industry are indeed entering a "turning point". Supervision and formulation highlight the "turning point" - marking the end of the "installation period" of new technologies and the beginning of the "deployment period".

At this point, cryptocurrencies seem inevitably to become mainstream, with a market value of $10 trillion. But this may take longer than we think.

Lastly, you may be wondering, at what price will we be bullish again? This is hard to say. We will reevaluate as we move forward. Generally speaking, we want to buy BTC and buy discounted altcoins when the MVRV is close to or below 1.