The funding dilemma and structural changes in the crypto market

Recently, the crypto market has shown some new characteristics that are worth our in-depth discussion. Looking back at past bull markets, whether in the A-share market or the crypto market, they have followed a similar speculation logic: from core assets to high market capitalization, then to medium and low market capitalization, and finally to theme and concept speculation. However, the current market environment has undergone significant changes.

![Is the encryption over? Crypto circle 618? What is the main issue with this round of market?](https://img-cdn.gateio.im/webp-social/moments-f10f214639b8a380a0651a3985be9407.webp01

Insufficient liquidity

The most prominent feature of this round of market trends is the lack of liquidity, leading to a poor profit effect. Although the approval of the Bitcoin ETF has injected strong momentum into the market, this liquidity seems difficult to transmit to other sectors. While there are expectations for the Federal Reserve to cut interest rates, its actual impact on the crypto market remains uncertain.

In this case, the market presents an extreme state: core assets are rising, while the prices of other assets are stagnating or even declining. Short-term speculative funds have driven a temporary increase in certain concept coins, but such rises are often difficult to sustain.

![Is encryption over? Crypto market 618? What is the main issue of this round of market?])https://img-cdn.gateio.im/webp-social/moments-1cf49975142f1f81ab584f2a2ae7dbc2.webp(

Changes in the Capital Transmission Mechanism

The fundamental problem in the current market is that the flow and transmission mechanism of funds has undergone structural changes. The funds brought by ETFs are mainly concentrated in top assets such as Bitcoin and Ethereum, and cannot overflow naturally to other sectors as they used to. This situation can be likened to a layered reservoir system, where only when the upper layer is full will it overflow to the lower layers.

Pressure in the Primary Market Intensifies

The funding shortage in the secondary market has also had a negative impact on the primary market. Many investors are turning to the primary market in search of opportunities, but they overlook that without a secondary market to take over, the significance of the primary market is greatly diminished. For ordinary investors, making a profit in the current primary market is becoming increasingly difficult.

In addition, the high valuations of some newly listed tokens have further compressed the liquidity of the market. These tokens occupied a large amount of capital at the time of their listing, limiting the upside potential of other assets.

![Is encryption over? Crypto market 618? What is the main issue with this round of market trend?])https://img-cdn.gateio.im/webp-social/moments-66ed5f7441c03e91abc2f5b021d4fda8.webp(

High FDV ) Fully Diluted Valuation ( Issues

Recently, there has been a trend of token issuance with low circulation and high valuation in the market. In this case, although it may push up the coin price in the short term, it may require a large amount of capital to maintain the price level in the long term. The impact of high FDV varies for different market participants:

• Project parties may benefit from the potential high market value
• Venture capital may achieve better performance as a result.
• Little impact on the exchange
• Retail investors may be reluctant to take over due to high FDV and instead invest in fully circulated concept coins.

This has led to a peculiar market state of "mutual non-acceptance": retail investors are unwilling to take on tokens with high FDV, while institutions show little interest in conceptual coins.

![Has encryption ended? Crypto market 618? What is the main issue with this round of market trend?])https://img-cdn.gateio.im/webp-social/moments-18997a47b027a647b8177b141f9422d3.webp(

Conclusion

The core issues facing the current crypto market are insufficient funding and high valuations with low liquidity. These factors have collectively led to a decline in the market's profit-making effect and triggered a chain reaction in the primary market. To usher in a true bull market, the market may need to gradually address these issues. In the meantime, investors should carefully assess the market conditions and adjust their investment strategies to adapt to the new market environment.