Crypto Market Reflection: Returning to Common Sense, Viewing Market Chaos with Rational Eyes
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Crypto Market Reflection: Returning to Common Sense, Viewing Market Chaos with Rational Eyes
What would you do if we continue to trade sideways for another three years from now?
Navigating Web3 tides with focused insightsAuthor: Simiao Li
Compiled by: TechFlow
TLDR
In markets with extreme reflexivity, the accuracy of some "truth" that most people pursue often doesn't matter—but common sense does. Don't focus solely on the precision of "fundamental analysis" while neglecting common sense.
Below are several issues in the cryptocurrency space that violate common-sense principles and should be corrected through natural market processes.
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Rule 1: If you see behaviors relying on get-rich-quick schemes or opportunism, things usually don't work out that way.
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Rule 2: If you still rely heavily on surface-level investment advice from many KOLs, builders, and investors, this is not a valuable approach. Learn to understand contrarian signals.
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Rule 3: Are there scams and manipulations? Do asset holders gain almost no net value? This is not a sign that large-scale value investors are ready to commit capital.
The ability and courage to stick with common sense are rare, because crypto and crypto Twitter enable the most obnoxious forms of media-driven price manipulation. Moreover, for the past decade, the crypto market has mostly gone up—training everyone’s attention to chase momentum only during rallies, never during downturns.
Extreme Accuracy vs. Common Sense
In crypto, the cost of pursuing extreme accuracy at the expense of common sense may be higher than in any other market.
You can calculate every detail of blue-chip projects perfectly, yet still mistake cyclical leverage beta for long-term growth (e.g., Lido, the entire DeFi sector).
Most of the time, the market doesn’t care about precise fundamental calculations, because we’re discussing an emerging on-chain native economy (Ethereum) with almost no existing consumer behavior. Most projects on ETH exist primarily to burn gas via speculative activity and are derivatives of Ethereum's network effects, offering little real net value addition.
No amount of analytical accuracy can compensate for a lack of awareness about ongoing narratives:
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Ethereum wants projects that burn gas and improve capital efficiency for existing TVL (total value locked) on chain. Projects that achieve either goal most efficiently will rise. Usually, a project can do this only temporarily, until the next one appears. The Ponzi nature of DeFi has faded; now it’s on-chain RWA T-bills just to keep TVL within crypto.
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We can only escape this extreme player-versus-player competition when genuinely new projects bring in fresh users and capital inflows.
We're in an era where PvP games have nearly drained all liquidity, and for over two years, few new consumer behaviors or real applications have emerged.
But I see some positive signs:
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Prediction markets: e.g., Polymarket.
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Intriguing casinos: e.g., Rollbit.
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Early practical NFT use cases: digital pawnshops for luxury watches.
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Some early attempts at building payment apps.
That’s really about it. Games (including Web 2.5 GameFi and fully on-chain games) haven’t found PMF (product-market fit) in my view—though I hope I’m proven wrong here.
Common Sense
Rule 1: If it still seems widely accepted that get-rich-quick schemes are normal, and scams/opportunistic behaviors are rewarded, then we haven’t entered the “value zone” yet.
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Layer 2s are the new Layer 1s. Now everyone (old L1s, projects) wants to become an L2 because it boosts their valuation.
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Blue-chip NFT projects squeeze the last bit of value from their most loyal users.
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Projects that haven’t proven anything are clearly overvalued (e.g., Worldcoin launching with OpenAI fame and high valuation).
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Most already-dead projects pump prices and dump to extract more exit liquidity from retail markets.
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VCs still invest in hot new narratives (though far less than six months ago), believing that when the bull market returns, these newly launched projects will immediately be valued at $100 million like before.
Rule 2: If among many so-called KOLs, builders, and investors, shilling matters more than analytical logic, then we’re still falling short in creating a true “builder’s market.”
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Too many attendees at conferences—first in Hong Kong, then in Singapore. Keynote speakers care more about showing presence than actual content.
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Being a founder remains glorified (even if they’ve already cashed out), even when your product has fewer than 100 real users, you care more about attending investor parties than grinding to build.
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Working in crypto often means spending Layer 1 foundation money traveling and hosting events.
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Underperforming VCs act like kings on Twitter, confidently declaring what the next big thing will be, while the total web traffic to apps built by their portfolio projects comes mainly from themselves and competitors.
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Conversely, those making the biggest contributions to the field tend to stay low-key (Brian Armstrong, Vitalik, Opensea, some new Solana projects, etc.). Founders of new projects quietly building legitimate products don’t time releases and announcements based on expected market risks, nor do they run aggressive PR campaigns. You simply build, launch, and let users judge with their money and attention.
Rule 3: When manipulation is tacitly accepted and liquidity remains primarily for exiting positions, institutions won’t come buy our assets.
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Just open any chart of a low-liquidity altcoin—it has slowly declined for over a year but periodically spikes due to catalysts—and you’ll understand why.
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Players like DWF becoming new talking points, somehow taken for granted.
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Projects without real users can still easily exit via IEOs.
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Projects that actually try to accumulate value for token holders perform well, yet are still labeled Ponzi schemes/scams by “professional investors” (Rollbit, Unibot).
Granted, this is somewhat exaggerated and oversimplifies the industry’s current state (in some areas, common sense has returned and trading is attractive), but overall, it reflects an underappreciated reality.
Courage and Conviction
A decade of ultra-low interest rates, quantitative easing, and cult-like crypto tribalism has truly eroded people’s sense of common sense. Because halving is coming, WAGMI (“we’re all gonna make it”). Because Powell is saving our positions, WAGMI. Because Bitcoin has risen over the long term, WAGMI. At times like these, adhering to simple common sense will yield enormous rewards.
I believe people’s convictions haven’t been tested enough. If we go sideways for another three years starting now, what would you do? Would you still believe in crypto? Would you still think this is the inevitable future of finance and human coordination? I would—but I’m certain most of today’s bulls wouldn’t.
True courage and conviction require completely ignoring consensus and appearances, along with unwavering patience. These remain qualities of the few.
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