Web3 Startup Insights: The Illusion of Bull Markets and the Test of Bear Markets
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Web3 Startup Insights: The Illusion of Bull Markets and the Test of Bear Markets
Cyclical misguidance in Web3 could distort entrepreneurs' judgment; the positive feedback during bull markets may merely reflect short-term market reactions.
Navigating Web3 tides with focused insightsBear markets are the best time for reflection and review. Recently, I looked back on my entrepreneurial journey since inception. The cyclical nature of Web3 can severely distort founders' actions—what we often perceive as positive feedback might simply be riding the bull market’s elevator. Motivated by this realization, I wrote this essay.
TL;DR
1. Web3's cyclicality may mislead entrepreneurs, causing distorted judgment—positive feedback during bull markets may merely reflect short-term market conditions.
2. Founders should break out of the Web3 echo chamber, uphold core beliefs, and persist in market education.
3. During bear markets, focus on financial management, core product optimization, community engagement, and team training.
4. Prioritize physical health and maintain a balanced work-life rhythm.
Feedback & Decision-Making: The Illusion of Bull Markets and the Test of Bear Markets
Web3 entrepreneurs are easily influenced by market signals, especially in such a volatile and fast-moving space.
The Illusion of Bull Markets:
Easy fundraising, high valuations: Many projects raise capital quickly during bull runs, leading to valuations that may be disconnected from actual value—setting up future financing challenges when the market turns.
Rapid user growth: A surge of users enter Web3 projects, but many are only chasing short-term gains or are bots.
Fast-rising token/NFT prices: In bull markets, excess liquidity drives quick price increases for tokens and NFTs—but these surges are often unsustainable and collapse rapidly when the market shifts.
Distorted tech and product decisions: Positive “feedback” during bull markets can lead founders to overestimate their product and technology direction, overlooking real issues in product, decision-making, or team dynamics—and worse, codifying flawed strategies into methodologies mistakenly applied in bear markets.
The Test of Bear Markets:
Harder fundraising, lower valuations: Capital tightens, investors grow cautious, and project valuations become more realistic.
Slower user growth: User acquisition slows, and even retained users are often focused on quick cashouts or farming rewards.
Sustained decline in token/NFT prices, liquidity dries up: In bear markets, increased selling pressure and hesitant buyers cause prolonged price drops and significantly reduced liquidity.
Flawed methodologies derived from bull markets: Positive feedback in bull markets doesn’t equal correctness—it may simply mean rising prices masked underlying project weaknesses.
How to Make Smarter Decisions?
Break out of the Web3 information bubble: Founders shouldn’t limit themselves to the narrow Web3 sphere. Expand your horizons, learn methodologies from other fields, and seek new users and market opportunities.
Continue market education: Ensure investors and users understand your project’s true value and long-term vision.
Stay calm and hold onto core beliefs: Across all market conditions, teams need clear-headed judgment and long-term strategic vision.
Strategic Adjustment: Navigating the Shift from Bull to Bear Market
I’m dedicating a separate section to this because, in recent conversations with peers, I’ve noticed some still using certain projects’ bull-market decisions as strategic references for today’s environment—which makes me genuinely concerned.
When the market shifts from bull to bear, founders face a new set of challenges. Tightening capital, weakening investor confidence, and overall market pessimism directly impact projects.
Under these conditions, most events from the bull market lose their relevance. So how should founders respond prudently? This is a critical question every entrepreneur must address.
1. Financial Management and Cost Control:
Founders must learn to audit and optimize budgets. Cash flow is lifeline during bear markets. Scrutinize every expense and cut costs in non-core areas—not just monetary spending, but also time and personnel costs, which should be converted into financial terms. One specific note: our industry has countless global conferences with high travel expenses. Whether to attend should be carefully considered before deciding.
2. Internal Product Optimization:
Strengthen core product development and depth: Focus on improving the core product to enhance competitiveness and user experience. This could include DApps, media content, GameFi, NFT IPs, etc.—depending on your business. Using our Little Ghost as an example, the core product is the Little Ghost IP itself. We must reflect on past shortcomings, refine our brand narrative during the bear market, produce quality content, and establish the IP firmly in public consciousness—expanding its influence and monetization potential beyond Web3 into Web2.
Delay launch of non-essential projects:
Consider postponing non-core initiatives or features to concentrate resources on addressing primary business challenges. Of course, this requires founders to clearly identify what their core business actually is. If a founder believes their model lies in endlessly launching new NFT generations, they’ve already taken a wrong turn from the start.
3. Market Strategy and Community Building
Increase community interaction: Founders and team members should remain embedded in the community, sincerely listening to feedback and suggestions.
Break out of the niche and expand reach: Actively extend beyond Web3—collaborate with traditional industries, seek new partners and user segments, or create onboarding guides for those unfamiliar with Web3.
Reposition branding and messaging: Communicate clearer, more authentic brand messages so outsiders can easily grasp your project’s core value.
4. Team and Partner Relationships
Internal team training: Use this downturn to upskill the team, preparing them to navigate current difficulties and position for the next upcycle. For instance, many of our team members now have the ability to independently secure partnerships with Web2 brands—no longer confined to the Web3 space. This is a valuable new skill aligned with our current business needs.
Strengthen ties with key partners: Maintain frequent communication with essential suppliers and collaborators to ensure mutual understanding of needs and challenges.
Conclusion
Market volatility and uncertainty place immense pressure on every entrepreneur. From the euphoria of the bull market to this unprecedented bear phase—deeper and longer than many anticipated—every market signal profoundly affects our decisions. Yet history and experience show that truly valuable things withstand the test of time. Projects that坚守 principles, continuously learn, deepen their products, and engage authentically with communities during bear markets often emerge stronger and more prosperous in the next cycle.
In this high-pressure environment, I also want to remind every founder: while your venture matters, your physical health is the foundation of sustainable entrepreneurship. Don’t sacrifice long-term well-being for short-term success. Balance work and rest, exercise regularly, and maintain healthy habits—so you’re better prepared for future challenges.
Don’t end up like me—writing this piece at night due to anxiety-induced insomnia. GN.
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