Macroeconomically, the Federal Reserve's interest rate hikes have caused funds to flow back from high-risk assets, entering a capital tightening cycle. Industry-wise, events like the collapse of FTX have severely damaged trust, combined with strict regulations in the U.S., leading to a strong risk-averse sentiment in capital.
This marks the end of the industry's wild growth. Funds are shifting from speculative concepts to real infrastructure and application implementation. This current trough is a rational reshuffling period and a crucial stage for quality projects to solidify their foundation for the next round of development after the bubble clears.
The market is declining, confidence is collapsing.
BTC has been halved from 126,000, institutions are suffering heavy losses, LPs (funders) are fully retracting and are hesitant to invest in early-stage projects.
Regulations are tightening, and risks are increasing significantly.
The US, EU, and Hong Kong are tightening regulations, compliance costs are skyrocketing, and VCs are hesitant to touch high-risk startup projects.
The bubble has cleared, and speculation has receded.
In recent years, the bubbles of DeFi, NFT, and GameFi have burst, with many projects going to zero, and VCs becoming extremely cautious.
Funds are concentrating towards the top players.
90% of funds are flowing into BTC, ETH spot ETFs, and almost no one is paying attention to startup projects.
Industry impact
• Small projects are dying in batches: the 'three no projects' with no revenue, no compliance, and no ecosystem are going directly to zero.
• A wave of mergers and acquisitions is coming: leading companies are acquiring tech teams at low prices, increasing industry concentration.
• Returning to fundamentals: Only projects with real revenue, compliance capabilities, and technological barriers can secure funding.
Conclusion
This is not the end, but a process of distinguishing the true from the false.
The winter of financing has washed away speculative funds, leaving behind teams that truly get things done.
Once the market warms up, quality projects that survive will experience an explosion.