Author: Wintermute Ventures (@wmt_ventures)

Translation: Deep Tide TechFlow

Deep Tide Introduction: The Wintermute Ventures team wrote this observation report after attending the Hong Kong Consensus, providing a market sentiment scan from a market maker's perspective. It is a consensus that the market is cooling down, but the value of this article lies in explaining why—narrative failure, token identity crisis, and capital rotation towards AI stocks, all these signals together point not to a short-term bear market, but to a recalibration of industry paradigms.

After returning from the Hong Kong Consensus, the Wintermute Ventures team noted that the most consistent signal from the conference was: market sentiment is becoming cautious, and almost no one is willing to pretend they know where the next obvious wave will be. The good news is that the conversations have become more specific, making it easier to distinguish real signals from cyclical narratives.

What We Heard

Sentiment is declining, and clear catalysts are hard to find

Most people do not see any obvious recent catalysts that could reverse sentiment, and many investors find it difficult to articulate where the next major wave of crypto will come from—except for a few obvious areas. Founders are feeling this shift. Several founders expressed a desire to raise funds earlier, as the bar is now higher, and investors need to see more traction before committing.

Signs of capital rotation towards AI stocks are evident, especially in Asia

Many "liquid funds" are actually family offices and proprietary capital rather than strictly fund-authorized capital. This type of capital has bet momentum on AI, defaulting to publicly traded AI stocks as new trading targets. However, this seems more like momentum behavior rather than a fundamental change in crypto investment logic.

Outside of mainstream assets, tokens are in an identity crisis

Outside of major assets, almost no one is excited about altcoins. The deeper issue is that tokens have lost their clear identity as mechanisms for trusted value accumulation and incentive alignment. Token issuance is increasingly seen as disruptive due to the noisy and rapidly departing mercenary farmer voices, making it difficult for issuances to convey lasting value or alignment signals. A direction that founders are commonly discussing is to stop replicating old scripts and instead design for real users and long-term alignment.

Opportunities focus on fundamentals and defensiveness

The market clearly favors businesses with revenue, licenses, and distribution moats. There is still a belief that crypto startups can deliver better 10x returns compared to traditional tech, as traditional tech has become slower and more consensus-driven. Meanwhile, standing out in some crowded tracks is becoming increasingly difficult: yield-aggregating products are generally considered saturated and hard to differentiate, prediction markets still have newcomers but lack new differentiation, and while options markets remain interesting, many believe the infrastructure and marginal dynamics are not yet ready.

Latin America is repeatedly mentioned as an attractive region

Latin America has shown a clear product-market fit and is moving towards stricter regulation. The winners will be teams that can navigate regulatory rules country by country and replace traditional banking rails. This track is already crowded, and differentiation is no longer simply a stablecoin perspective, but a comprehensive representation of regulatory capabilities, connectivity, and execution ability.

Despite weakening sentiment, people have not given up on crypto. Expectations have merely been raised. Investors are now demanding real evidence (which naturally repairs itself). Founders are under pressure to focus on distribution and acquiring real users. Tokens face stricter scrutiny for value capture and incentive alignment. From Wintermute Ventures' perspective, we remain optimistic. Although these resets are tough, they are healthy—this is when the most resilient companies, led by teams with true long-term beliefs, are forged.