Author: Ryan Yoon

Compiled by DeepTide TechFlow

Deep Tides Guide:The market is entering a downturn cycle, and skepticism toward the crypto market is growing. Tiger Research believes this is different from previous cycles: past winters were triggered by internal issues (Mt. Gox theft, ICO scams, FTX collapse), while this time, both the ups and downs are driven by external factors (ETF approvals driving a bull market, tariff policies and interest rates causing declines).

The post-regulation market has split into three layers: the compliance zone, the non-compliance zone, and shared infrastructure, where capital no longer trickles down as it did in the past. ETF funds are staying with Bitcoin and no longer flowing into altcoins.

The next bull market requires two conditions: a killer application emerging from the non-compliant areas + a shift in the macro environment toward support.

The full text is as follows:

With the market entering a downturn, skepticism toward the crypto market is growing. The question now is whether we have already entered a crypto winter.

Key Points

• The crypto winter follows a sequence: major events → trust collapse → talent drain
• The past harsh winter was caused by internal issues; the current ups and downs are all driven by external factors; it is neither winter nor spring.
• The post-regulatory market splits into three layers: compliant zone, non-compliant zone, shared infrastructure; trickle-down effect disappears
• ETF funds remain in Bitcoin; no outflow from the regulated area
• The next bull run needs a killer use case + supportive macro environment

The first winter of crypto happened in 2014. Mt. Gox was the exchange handling 70% of global Bitcoin volume at the time. Approximately 850,000 BTC vanished in a hack, and market trust collapsed. New exchanges with internal controls and audit functions emerged, and trust began to recover. Ethereum also entered the world through an ICO, opening up new possibilities for visions and fundraising methods.

This ICO became the spark for the next bull market. When anyone could issue tokens and raise funds, the 2017 boom was ignited. Projects flooded in, raising hundreds of billions with just a white paper, but most had no real substance.

In 2018, South Korea, China, and the United States poured out regulatory measures, the bubble burst, and the second winter came. This winter lasted until 2020. After the COVID, liquidity poured in, DeFi protocols such as Uniswap, Compound, and Aave attracted attention, and capital flowed back.

The third harsh winter was the most severe. When Terra-Luna collapsed in 2022, Celsius, Three Arrows Capital, and FTX followed in succession. This was not just a price drop; the structure of the industry itself was shaken. In January 2024, the U.S. SEC approved a spot bitcoin ETF, followed by the bitcoin halving and Trump's pro-crypto policies, and capital began flowing in again.

All three winters follow the same sequence. Major events occur, trust collapses, and talent leaves.

It always starts with a major event. Mt. Gox hack, ICO regulations, and the FTX bankruptcy after the Terra-Luna collapse. Each event differs in scale and form, but the result is the same. The entire market falls into shock.

Shock quickly spread into a breakdown of trust. Those who had been discussing what to build next began to question whether cryptocurrency was really a meaningful technology. The atmosphere of collaboration among builders disappeared, and they started to blame each other for who was to blame.

Doubt leads to talent drain. The builders who have been creating new momentum in the blockchain fall into doubt. In 2014, they turned to fintech and big tech companies. In 2018, they turned to institutions and AI. They went to places that seemed more certain.

The pattern of the past crypto winter is visible today as well.

• Major Event:
• Trump's tariff policy triggers market turmoil
• The Federal Reserve's interest rate policy shift
• The overall cryptocurrency market is declining.
• Collapse of trustDoubt spreads within the industry. The focus shifts from what to build next to mutual blame.
• Brain drain pressureThe AI industry is growing rapidly. It promises faster exits and greater wealth than crypto.

However, it is hard to call this a crypto winter. Past winters erupted from within the industry. Mt. Gox was hacked, most ICO projects were exposed as scams, and FTX collapsed. The industry lost trust on its own.

It's different now.

The ETF approval triggered a bull market, while tariff policies and interest rates drove the decline.External factors have raised the market, and external factors have also lowered the market.

The builders did not leave either.

RWA, perpDEX (perpetual contract decentralized exchange), prediction markets, InfoFi, privacy. New narratives keep emerging, and they are still being created. They haven't pulled the entire market like DeFi did, but they haven't disappeared either. The industry hasn't crashed; the external environment has changed.

We did not create spring, so there is no harsh winter.

This is a major shift in the post-regulatory market structure. The market has already split into three layers: 1) the compliant zone, 2) the non-compliant zone, and 3) shared infrastructure.

The compliance zone includes RWA tokenization, exchanges, institutional custody, prediction markets, and compliance-based DeFi. They undergo audits, make disclosures, and receive legal protection. Growth is slow, but the capital scale is large and stable.

However, once entering the compliance zone, it is difficult to expect explosive returns as in the past. Volatility is reduced and the upside potential is limited. But the downside risk is also limited.

On the other hand, non-compliant areas will become more speculative in the future.Low entry barriers, fast speed. Situations where you gain 100 times in one day and lose 90% the next will happen more frequently.

However, this space is not meaningless. Industries born in the non-compliant zone are creative, and once validated, they will enter the compliant zone. DeFi has done this, and prediction markets are doing so now. It serves as an experimental field. But the non-compliant zone itself will become increasingly separated from the compliant zone business.

Shared infrastructure includes stablecoins and oracles. They are used in both compliant and non-compliant areas. The same USDC used for institutional RWA payments is also used for Pump.fun transactions. Oracles provide data for tokenized treasury bond verification as well as for anonymous DEX liquidations.

In other words, as the market fragmented, the flow of capital also changed.

In the past, when Bitcoin went up, altcoins also rose through the trickle-down effect. That's different now. Institutional capital entering through ETFs stays with Bitcoin, and that's where it ends. Compliant capital doesn't flow into non-compliant areas. Liquidity only remains where value has already been proven. And even Bitcoin, relative to risk assets, has yet to prove its value as a safe-haven asset.

Regulation is already in the process of being organized. Builders are still building. So there are still two things left.

First, a new killer use case must emerge from the non-compliant zone. Something that creates value that did not exist before, like the DeFi Summer of 2020. AI agents, InfoFi, and on-chain social are candidates, but they have not yet reached the scale to drive the entire market. The process of experiments in the non-compliant zone being validated and entering the compliant zone must be created again. DeFi did this, and prediction markets are doing this now.

Second, the macroeconomic environment. Even if regulations are in place, builders are building, and infrastructure is accumulating, if the macroeconomic environment does not support it, the upside potential is limited. The 2020 DeFi Summer erupted when liquidity was released after the pandemic. The rise after the 2024 ETF approval also coincided with expectations of interest rate cuts. No matter how the crypto industry performs, it cannot control interest rates and liquidity. For the things built by the industry to be convincing, the macroeconomic environment must shift.

The "crypto season" where everything rises together as in the past is unlikely to happen again. Because the market has already fragmented. The compliant sector grows steadily, while the non-compliant sector experiences sharp ups and downs.

The next bull market will come. But it will not come for everyone.