Original Article Title: "Crypto Market [What Happened] and [What Will Happen] (February 2025)"

Original Article Author: 0xTodd, Partner at Nothing Research

Over the past week, many friends have called me to inquire about the market situation. I feel it is necessary to publicly share my thoughts and disclose my views on the current market — [What has changed] and [Future developments].

Long-time followers of mine know that I am a long-term investor. Therefore, starting from 2019, I have had an annually updated strategic plan, and 2024-2025 is roughly outlined in this article for discussion with my family and followers.

1. DeepSeek Pierces the Bubble

When DeepSeek emerged, regardless of whether it actually used $5 million to train such an AI, the narrative is this: [Algorithmic improvement] has at least temporarily triumphed over [Hashrate increase].

Do not dwell on whether this is true — since the market unanimously acknowledges the $5 million event, you must treat it as such. As we approach the end of 2024 in the crypto industry, apart from memes, I reluctantly admit that objectively only one narrative remains: the AI Agent, which is seen as the village's hope. However, no one foresaw that the AI Agent would be ruthlessly defeated by DeepSeek from the neighboring genuine AI track. Teams like DS are filled with true IQ 200 individuals, fresh graduates from top universities, and recipients of math Olympiad awards.

In contrast, in our industry, we idolize second-rate programmers who are idle at home, AI engineers laid off by tech giants or engaging in side hustles. Hence, sometimes we are forced to operate at IQ 50 levels. So...

On January 27th, with tears in my eyes, I liquidated all my AI token positions. I didn't sell at the peak and sold at a significant retracement, and it hurts to say I'm not regretful. But the even crueler fact is that this incident turned our entire AI Agent track into a joke. This fact is probably true. The reason "narrative" is placed before "fact" is that this "fact" has not yet materialized and can only rely on "narrative." Once the story cannot be continued, the irreversible decline of the track is a real possibility.

2. The President and the President's Rabble

I don't know how everyone felt during the Chinese New Year, but my physical experience was that many relatives and friends were asking how to register on BN or OKX because they wanted to buy TrumpCoin. The last time they were so crazy was during National Day when they rushed into A-shares accounts.

Shanghai Composite Index Trend Source: Tencent Securities

If I remember correctly, those warriors who entered the market on October 8th are still hanging on that mountain peak. After the profit-taking AI, to be honest, the more I think about it, the more scared I become, and then I saw this post.

Roughly speaking: The president seems to have lost money, but there are two possible reasons:

1. He is not making money in the way you can see;

2. He is an idiot;

Anyway, I know for sure that the answer cannot be 2. Yes! Meme is now what the president is playing with, and he can also make money through channels unknown to us. Let's face it, can our meme play match with Trump sitting at the same table? A Thai hippo, an American squirrel, a bottle of longevity medicine that extends the life of flies, can they really sit at the same table as Trump who occupies the Oval Office stably?

During the Chinese New Year, the adults sit at one table, and the children sit at another. Adults drink famous wines, and children only deserve to drink Sprite. So, that day, I basically sold off all the memes in my hand. My meme position once had a huge unrealized profit, but because I voluntarily lowered my IQ to 50, I did not complete the great retreat, but have always been part of the great revolution. What a dream-like feeling.

Three, a Top Signal: High School Brother Makes Millions

I believe that all meme-playing family members, even those who don't play memes, have heard of this legendary story recently. A high school brother, sat dry for a month, suddenly hit Jelly, betted millions with ultra-low cost.

Of course, as it spread, it became more and more outrageous, with more and more rumors. I'm not 100% sure this is true, but I know the vibe is right.

Looking back at the 69K historical peak of 2021, 1-3 days before, I was amazed:

· Interns easily outperformed fund managers in terms of returns;

· ENS grassroots community contributors received millions just from airdrops;

At that moment, it was just like this moment.

I liked this post, where a TIME editor (possibly a hacker) was able to immediately reap countless SOL tokens with just one fake tweet. I ask you, what does this mean?

It's not that making money is impossible—experts can always make money, even at the bottom of a bear market. But when the subject changes to ordinary people: the intern making big money, the ENS contribution guy making big money, the high schooler making big money, the editor making big money.

It means: [At this moment, everyone's hands are particularly loose] Friends who often play cards know that only when the unrealized gains are very high do hands become loose.

This represents the greed index reaching a true peak. This is a super top signal.

So, on the 30th, I liquidated almost all of my altcoins, leaving only BTC, and a small portion of mainstream coins like ETH/SOL/DOGE/exchange coins. Despite still experiencing losses, I ultimately retained some gains. I admire the brilliant moves of the high schooler and I also equally respect the market iron law of this alternative investment.

Four, Doubts About BN and BN's Response

Ah, to be honest, I don't want to discuss this topic.

As a former CEX practitioner, I've seen this advisor-listing-dumping routine too many times, from the initial anger to later gradual numbness, and I'm no longer surprised.

However, in the past, this kind of thing was done under the table, part of the "small greed, minor corruption as a lubricant for development";

part of "clear water has no fish," with a slight murkiness below the surface, it could be considered part of the game's rules.

After all, we don't live in a utopia, nor in a vacuum hometown. But the most taboo thing about this is to bring it from under the table to the surface. I have no intention of criticizing BN or the leading sister, because this matter exists in almost every CEX.

If this were in the traditional world, exaggeratedly speaking, it would be a huge scandal that could immediately lead to hundreds of people being laid off and dozens of people being arrested. Maybe the leading sister is better off not responding, learning from the stars to handle it coldly, and giving retail investors some hope. However, our industry is full of skeptics from the start, a huge scandal is a heavy blow, hitting hard on the heart of every holder.

It has shattered the faith of many. Our industry really needs "gods" because it is sustained by consensus.

However, when everyone discovered that even the servants of God wanted to make a quick buck, faith suddenly vanished, and quickly shifted to the realm of the divine—all meme coins are now facing immense scrutiny and skepticism from retail investors.

Five, The Future Script

If we follow the perspective of Seeking a Sword on a Boat at Night, this current dip resembles the events of May 19th, and I suggest everyone personally review the trends post May 19th.

Price action after 519 in 2021, source: Bitfinex

If we stick to the script of May 19th, what follows is a prolonged two-month period of oscillation, repeatedly shaking out even the most loyal, leading to a new $Bitcoin ATH.

Of course, some suspect this to be a replay of December 4th, AKA the start of the bear market.

From a personal perspective, I hope this is May 19th. After all, Bitcoin's inclusion in the U.S. national strategic reserve is becoming clearer, and the immense impact of this development should never be underestimated, really. Even if Bitcoin reaches 85K-88K, I am willing to add to my position.

Six, My Portfolio Allocation

My current allocation is as follows:

40% BTC; 20% blue-chip coins (ETH, SOL, DOGE, BNB/MNT); 40% stablecoin yield farming;

Bitcoin is my eternal faith. I believe I will never sell BTC, nor engage in trading. The reason for holding ETH: truth be told, my belief in ETH is diminishing.

However, objectively speaking, the President's DeFi project is buying ETH.

I'm not sure how many here dabble in the stock market, many regret not copying the orders of Nancy 'Stock Market Goddess' Pelosi.

Image source: World Magazine

Nancy Pelosi's shining moment was when she was Speaker of the House, which is only the third position in American politics.

Now, Trump is the bona fide President, this crypto President, is holding a large amount of ETH in his wallet (although it has been transferred to an untraceable Coinbase custody), and this amount is not negligible.

Secondly, ETH has dropped to today's position, and I think it has reached the FUD extreme, perhaps with the idea of what goes down must come up. I can't buy when no one cares, at least don't sell when no one cares.

Reasons for holding SOL: There is a small probability of an ETF; however, the cooling of AI narratives and the short-term downturn of MEME could be seen as two small clouds on the horizon.

Reasons for holding DOGE: Grayscale has launched a Dogecoin Trust, and Doge also has a small probability of an ETF;

Additionally, Musk is working hard on the Dogecoin (D.O.G.E) project; and being in the same car as the world's richest man and "U.S. Director of Economic Reform," I think I can sleep well.

Reasons for holding exchange tokens: To be blunt, exchanges have no possibility of stepping onto a bigger stage. Coinbase will not list BNB, and Binance will not list MNT. However, exchanges are the only institutions in our industry that can make money and provide benefits; if a bear market really comes, exchange tokens are relatively more resistant to decline, and an occasional IEO may bring back some gains, the bear market can only be survived by depending on this.

7. Harsh Viewpoint: The good times for the old crypto folks are over

Other than the above, in the short term, I probably won't hold a significant amount of any more altcoins—the reason is also very simple, the inflation is too fast.

The speed at which new users and new funds enter cannot match the speed at which these coin issuing maniacs print.

Source: Decrypt

A few days ago, there was a statistic, the most bullish account on Pump Fun sent out 17,000 coins in 3 months. Not 170, not 1,700, but 17,000! His contribution alone may exceed the total amount of tokens issued during the entire 2017 bull market. Why have the investment strategies of the old crypto folks failed?

There are too many choices! There are too many perspectives!

With N CAs occupying even the same niche, when will it be the turn of the old Dens to create a copycat?

The favorite strategy of the old Dens: Buy a mid-range copycat at 100M, 200M position. Hold it for 2-3 months, betting on it outperforming Bitcoin. However, now it's probably unable to even keep up with ETH.

And the favorite strategy of General P: Buy a project valued at 10K in the internal market. Run away after 30 minutes. A real man never looks back at explosions. Obviously, in today's world of token hyperinflation, General P far outperforms the old Dens. I'm not urging everyone to become a P warrior, just hoping that everyone at least doesn't become an old Den.

Eight, Optimal Position: 50% BTC + 50% Stablecoin Yield Farming

Additionally, I sincerely recommend everyone to hold a certain amount of U to get through the upcoming time. You have to accept one fact, no one can truly sell at the super top.

One peak every 4 years, allowing you to find a day to sell within over a thousand days, a 1/1000 probability, something that very few can achieve, all of them being super lucky ones. At this stage, a half position is the best choice. Allocate 50% of your principal to yield farming, where we don't talk about rushing into mining or arbitrage.

Let's just do the simplest one, Ethena USDE. Now Pendle can still offer an 18% interest rate. If Pendle isn't bothered, just throw it into AAVE or mainstream CEX for yield farming, still yielding 10%. The other 50% should be focused on Bitcoin, quietly waiting for the day when the U.S. Bitcoin strategic reserve arrives.

You have interest cash flow, dreams, and beliefs, ensuring your comfort.

Of course, you can then allocate another 5% to invest in a meme coin you truly believe in, whether it's ETH, SOL, DOGE, or any other coin of your faith. Allocate another 5% of your funds to PvP a little, win and feel good, lose and treat it as an expense, maintaining your touch, isn't it beautiful?

Finally, achieving a distribution resembling a Tai Chi diagram.

PS: This is also the form I gradually want to adjust my portfolio to. Source: 0xTodd

Nine, Conclusion

I am relatively satisfied with my current position, after all, this is my 8th year in the crypto industry, having experienced many ups and downs. The only slight regret is that during the Chinese New Year, I have been playing in Osaka these days, slacking off, failing to sort out these thoughts and post them in a timely manner.

The same strategy, spoken a few days ago, may have helped many people, but if spoken a few days later, it becomes a post-mortem analysis. Nevertheless, it's better late than never.

I hope every member of the family can achieve their own great results in the cryptocurrency market. Of course, if you can't achieve great results, then holding onto some small results, earning more spiritual wealth, social wealth, is also not in vain. Finally, I wish the family—a year of the Snake, with the Golden Snake dancing wildly.

Todd

February 5, 2025

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