There are three dimensions of encryption market demand: attention, adoption, and liquidity

The key to success is being willing to accept possible mistakes for profit. This article is based on a piece by Andrey Didovskiy, compiled, translated, and written by Baihua Blockchain. (Background: BTC drops to $90850, market in 'extreme fear,' Ethereum falls below $2500, Trump: tariffs on Mexico to be imposed next week) (Additional context: Wall Street's largest market maker Citadel Securities plans to enter the encryption market, responding to the Trump administration's friendly regulation) There is a universal economic law that governs all markets: supply and demand. In the field of Cryptocurrency, this law also applies, and the supply of encryption is extremely abundant. Tokens, Non-fungible Tokens, Stablecoins, Governance Tokens, meme coins, Proof of Work, Proof of Stake... Every day, a large number of new Tokens emerge, with a wide variety. To better understand, there were approximately 10,000 encryption assets in 2017. By February 2025, the number had exceeded 11.5 million, and this rise seems to be accelerating. When supply exceeds demand, market attention is divided, Liquidity becomes uneven, leading to thin order books, prices becoming unusually sensitive to selling pressure, resulting in sharp downward Fluctuations (often irreversible). When demand exceeds supply and continues to do so, we see the emergence of BTC. Through carefully designed economic models, considering the dynamics of supply, coupled with strong and concise technology that aligns with social philosophy, it can cultivate a loyal community, drive the Liquidity flywheel effect, continuously create genuine demand in Liquidity, ultimately converging on real assets. There's no magic. The only factor that distinguishes quality and ultimately determines success is demand, without a doubt. Superficially simple demand is, in fact, a multidimensional principle that includes layers of interdependence and subtle differences. In other words, it is hierarchical. 1. Domino effect of demand Demand generally flows evenly among various assets based on the fundamental elements of projects, products, or economies. Demand comes in two basic types: direct demand and indirect demand. Direct demand refers to the demand originating from a niche area. For example, the desire to use a particular application generates demand for the application's Token, which further translates into demand for the network it relies on, ultimately leading to demand for the network Token. Indirect demand is driven by macro factors such as monetary policy, Interest Rates, government policies, and political systems. These two types of demand are interdependent. For Cryptocurrency, the fundamental driver of demand comes from two basic human motives: the pursuit of happiness and the avoidance of pain, both driven by stories and narratives. The mainstream narrative behind these two motives is 'sovereignty' - protecting oneself from government interference or resisting government control. The narrative of pursuing happiness includes desires like Lamborghini, Rolex, luxury travel, attracting attention, gaining recognition from family and friends, etc. This is the desire for correctness and profit-making; we call this behavior 'gambling.' The narrative of avoiding pain refers to the fear of missing out. Seeing others change their lives through investments can trigger emotions of not wanting to be considered foolish or left behind. We call this behavior 'surrender' (losing oneself, eager to clear the investment portfolio). 2. Who is driving demand? To understand how demand is driven, we first need to understand its sources. Since demand is usually measured through buying and selling pressure and Liquidity, the key question to identify the source of demand is: who is driving it? For simplicity, we can divide 'who' into three categories: 1) Builders: This category includes individual developers creating tools, companies building products that generate actual revenue, hackers finding system vulnerabilities, content creators disseminating information, small teams building Decentralized Exchange (DEX) platforms and bridge protocols in garages, and various smart contract developers. 2) Retail Investors: This category represents the vast majority of the market, including respondents and Key Opinion Leaders on encryption Twitter, meme coin investors, Non-fungible Token enthusiasts, speculators, and 'hundredfold investors' doubling down on bets. These individuals are also often referred to as 'bag holders' or 'exit Liquidity.' They are people who aim to make higher returns through speculation, escape the conventional framework, and integrate into the community. 3) Institutions: This category includes companies that incorporate Cryptocurrency into their asset allocation, enterprises deploying Tokenized debt instruments, and governments turning volcanoes into BTC Mining Farms. Here, we omit a large number of intermediary roles such as market makers, trading platforms, Node infrastructure, and cloud server service providers. 3. Factors influencing demand driving So, how is demand in Cryptocurrency actually driven? Apparently, by propping up a meme coin with internal Liquidity, gaining endorsements from influential figures, and using 'community' bots to boost comments... Just kidding. In reality, the driving force of demand in Cryptocurrency is not much different from other fields, with marketing at its core. We do not intend to delve into the ethical issues of marketing, but it is essential to note that marketing fundamentally aims to achieve goals by influencing emotions. To cater to human nature, marketing methods can be categorized into two types: attraction and compulsion. Attraction involves organically building excellent products and communities, gradually establishing trust. This takes a long time but can have lasting effects, ultimately forming a self-sustaining, sustainable super system. Compulsion involves using unethical means to create the illusion that something is more valuable than it actually is. While these methods are low-cost and short-term, they are highly destructive, as seen in numerous stories of meme coins in Argentina and Pump.fun. Regardless of the marketing method used to drive demand, the key lies in the characteristics of the demand itself; here, we discuss various factors measuring demand adoption. 1) Demand measurement The most common and often mistaken way to measure demand is through price. A slightly better way is to measure it through Liquidity. Liquidity is the cornerstone of the financial market and the most crucial indicator when assessing the economic health of assets or asset classes. That is, Liquidity represents the desire to buy (desire to own) and the desire to sell (reluctance to let go). When the price of Cryptocurrency rises, a strong loop is formed in people's minds, making everyone feel that the Cryptocurrency must be valuable, thus becoming a self-fulfilling prophecy of rising prices. Conversely, when prices fall, people usually believe that the project no longer has demand. Although this phenomenon has its rationality, it cannot fully reflect the actual situation. As a technology-first, pseudo-economic innovation, the demand for Cryptocurrency is far more complex than we imagine, involving multiple dimensions of finance and technology. Here is an incomplete list: Monthly Active Users (MAU), Daily Active Users (DAU), total on-chain Addresses, total smart contracts, total transactions, total developers, hash rate, number of Miners, total staked Tokens, total Nodes, on-chain volume, Total Value Locked (TVL). This list is extensive, and there are many ways to interpret this data. ...