Most of the crypto industry is dying out; future value will be concentrated in four major sectors.

Author: Anthony Pompliano, Professional Capital Management; Translation: Shaw, Golden Finance

Two days ago, I posted this on social platform X: “Most of the business models in the crypto industry have already disappeared and will never come back. People will eventually realize this.”

This statement resonated strongly within the industry, so much so that it can be considered an understatement. Yesterday, during the Consensus conference, at least fifty people came up to ask me for my opinion on this tweet. After a full day of attending, I am more convinced than ever: Most of the business models in the crypto industry have come to an end and cannot return to the way they were.

Before I proceed with my analysis, I need to clarify one point: I have been writing about Bitcoin and the entire crypto industry for nearly ten years. I am inherently an optimistic person and sincerely hope that entrepreneurs and companies can succeed. I can never be a bear because I am fundamentally not a pessimist. Unless necessary, I rarely publicly comment on negative issues in the industry, but right now, the entire sector indeed needs candid advice and sober reflection.

If you cannot face reality squarely, it is impossible to reshape the future. This preamble may not convince everyone of my point of view, but at least when I write about the chaos and falsehoods in the industry, I can do so with a clear conscience.

First, to understand why most of the crypto industry has become defunct, you need to see a core issue: The crypto sector fundamentally cannot naturally follow the normal business cycle.

The rules of traditional industries are usually: First, technological breakthroughs occur; then a large number of startups emerge, of which only a small portion can truly succeed; failing companies go bankrupt and are liquidated, and the remaining capital and talent flow back into more valuable ideas and projects.

In the business cycle, eliminating inferior companies and supporting high-quality ones are equally important. But the reason why the crypto industry cannot complete a normal cycle mainly has two reasons:

• Public blockchains almost never truly shut down;

• Token prices almost never go to zero.

First, let’s talk about public blockchains: As long as one or two people maintain the nodes, the entire chain can barely keep running, making a complete shutdown almost impossible. A chain that has long lost its ecosystem and value still creates an illusion of “still alive” because it has not been officially shut down. The number of these ghost public chains is far greater than people are willing to admit.

Next, tokens: Crypto tokens have no official bankruptcy or liquidation mechanism. As long as a small group of people still hold onto illusions, the token price will never truly fall to zero. But tokens will continue to plummet, liquidity will be exhausted, and holders will be unable to exit, effectively trapping them in a “shell asset.” Even if exchanges delist low-liquidity tokens, most will only be marginalized and ignored. These zombie tokens are also rampant.

Ghost chains + zombie tokens already dominate half of the crypto industry. With millions of tokens and thousands of public chains on the market, these two phenomena alone are enough to confirm the points in my tweet. Does anyone really believe that hundreds of thousands of crypto tokens can all thrive in the future? I am deeply skeptical of that.

People just don’t want to speak the truth, so I will be frank and say it for everyone.

But the problem is not only that. The second deep crisis in the crypto industry: the number of true believers is decreasing.

Once, this industry was led by a group of steadfast idealists. For them, when choosing between personal profit and Bitcoin’s vision, they would prioritize fulfilling the industry’s mission, with personal interests second.

That era has basically ended. Today, there are few idealists left; the industry is filled with profit-seeking speculators who rush wherever the highest returns are. These people only focus on short-term trading and arbitrage, with no firm industry values. Without conviction, it’s easy to go with the flow and blindly follow every trend.

The proliferation of short-lived meme coins, scams of air tokens, normalized market manipulation, vicious competition in liquidity mining yields, and numerous hollow projects that only aim to attract attention but do not solve real needs all reflect this profit-driven mentality.

Today, profit-seekers far outnumber idealists, and the entire crypto discourse is in the hands of those who neither understand nor share the original vision of the industry.

Finally, there is a clear division within the industry: the conflict between investment institutions and anti-institution camps. Online public opinion is full of narratives: venture capital firms are negative entities, large traditional financial institutions are damaging the industry, and crypto should not have regulatory constraints.

Such ideas are not only naive and foolish but also accelerate the decline of most business models in the industry.

In the first ten-plus years since Bitcoin’s birth, almost all infrastructure companies that made it easy for ordinary people to buy, store, and transfer Bitcoin were backed by venture capital. Most leading projects and mainstream tokens in the industry also relied on early incubation by VCs.

Large traditional financial institutions are continuously injecting massive capital into various crypto sectors, which is one of the most noteworthy trends today. These professional, established giants are rapidly capturing market share from native crypto companies.

In other words: Native crypto business models are dying out, replaced by traditional big financial institutions.

Not all native crypto companies will be eliminated, but the vast majority will eventually be squeezed out or acquired by old giants. Every native company that fails or is acquired signifies another part of the old industry pattern disappearing.

For example: Morgan Stanley recently announced it will launch Bitcoin trading on its brokerage platform E*Trade, which has 8.6 million clients, with trading fees lower than Coinbase and Schwab. How much future trading volume will flow to traditional brokerages instead of native crypto exchanges? The answer is obvious—the scale will be substantial.

Meanwhile, native crypto platforms are desperately expanding into other traditional asset classes: adding stocks, prediction markets, options, commodities, just to attract new users, increase custody assets, and broaden revenue streams.

Additionally, Michael Saylor mentioned yesterday that in the future, they might sell Bitcoin to fund dividends for the STRC project. Currently, Bitcoin’s price is high, and this statement completely overturns previous market narratives. A few years ago, such a statement would be considered heretical; but given the current industry situation and the growth prospects of Strategy companies, it is now a rational choice.

The crypto industry is undergoing a reshuffling and dying process—most projects and tokens will not survive the next cycle. But those who do survive will eventually integrate into the traditional financial system and become an important part of it.

At the Consensus conference yesterday, I clearly felt a stark contrast: one side is composed of diligent entrepreneurs and investors focused on building infrastructure and solving real business needs; the other side is filled with opportunists and show-offs, still immersed in the old dreams of 2018, clinging to illusions that will never materialize.

The old crypto era we knew has already ended. I personally believe that future value will be concentrated in four major sectors: Bitcoin, stablecoins, blockchain infrastructure, and asset tokenization.

Not everything will disappear, but everyone must face reality and adjust their understanding.

Finally, a vivid example: yesterday, when I entered the Consensus venue, I saw a large booth with a sign that read—“Crypto Carnival.”

We don’t need more superficial carnival festivities; we need more people to focus, build products, and solve real problems.

If we cannot do this, the industry’s top talents will leave en masse, shifting to other innovative sectors such as artificial intelligence, space travel, gene sequencing, autonomous driving, or defense technology.

Let the natural cycle of business competition do its work. We must let poor projects die out and exit the market so that space can be made for new, high-quality innovations.