The next bull market requires two conditions: the emergence of killer applications in the non-compliant zone + a macro environment that turns supportive.
Author: Ryan Yoon
Translation: Deep Tide TechFlow
Deep Tide Introduction: As the market enters a downward cycle, skepticism about the crypto market is growing. Tiger Research believes this time is different: past winters were triggered by internal issues (Mt. Gox hack, ICO scams, FTX collapse), while this time the fluctuations are driven by external factors (ETF approvals leading to a bull market, tariff policies and interest rates causing declines).
The post-regulation market has split into three layers: compliant zone, non-compliant zone, and shared infrastructure, with funds no longer flowing in a "trickle-down effect" as they did in the past. ETF funds remain in Bitcoin and no longer flow into altcoins.
The next bull market requires two conditions: the emergence of killer applications in the non-compliant zone + a macro environment that turns supportive.
The full text is as follows:
As the market enters a downward cycle, skepticism about the crypto market is growing. The question now is whether we have entered a crypto winter.
Core Insights
- Crypto winters follow a sequence: major events → trust collapse → talent loss
- Past winters were caused by internal issues; current fluctuations are driven by external factors; it is neither a winter nor a spring
- The post-regulation market has split into three layers: compliant zone, non-compliant zone, shared infrastructure; the trickle-down effect has disappeared
- ETF funds remain in Bitcoin; they do not flow out of the compliant zone
- The next bull market requires killer use cases + a supportive macro environment
1. How did previous crypto winters unfold?
The first winter occurred in 2014. Mt. Gox was the exchange handling 70% of global Bitcoin trading volume at the time. About 850,000 BTC disappeared in a hack, leading to a collapse of market trust. New exchanges with internal controls and auditing functions emerged, and trust began to be restored. Ethereum also entered the world through ICOs, opening up new possibilities for vision and funding.
This ICO became the catalyst for the next bull market. When anyone could issue tokens and raise funds, the boom of 2017 was ignited. Projects raised billions based solely on a white paper, but most had no substantial content.
In 2018, regulatory measures poured out from South Korea, China, and the United States, the bubble burst, and the second winter arrived. This winter lasted until 2020. After COVID, liquidity surged, and DeFi protocols like Uniswap, Compound, and Aave gained attention, leading to a return of funds.
The third winter was the harshest. When Terra-Luna collapsed in 2022, Celsius, Three Arrows Capital, and FTX followed suit. This was not just a simple price drop; the structure of the industry itself was shaken. In January 2024, the U.S. SEC approved a spot Bitcoin ETF, followed by Bitcoin halving and Trump's pro-crypto policies, and funds began to flow in again.
2. The crypto winter model: major events → trust collapse → talent loss
All three winters followed the same sequence. A major event occurs, trust collapses, and talent leaves.
It always starts with a major event. The Mt. Gox hack, ICO regulations, and the FTX bankruptcy after the Terra-Luna collapse. Each event varies in scale and form, but the outcome is the same. The entire market is left in shock.
The shock quickly spreads into a collapse of trust. Those who had been discussing what to build next began to question whether cryptocurrency was truly a meaningful technology. The collaborative atmosphere among builders disappeared, and they began to blame each other for the failures.
Doubt leads to talent loss. Builders who had been creating new momentum in blockchain became skeptical. 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.
3. Is it currently a crypto winter?
The patterns of past crypto winters are also visible today.
- Major events:
- Trump's tariff policies triggered market turbulence
- The Federal Reserve's interest rate policy shifted
- The overall decline of the crypto market
- Trust collapse: Doubt spread within the industry. The focus shifted from what to build next to mutual blame.
- Talent loss pressure: The rapid growth of the AI industry. Promises of faster exits and greater wealth than crypto.
However, it is difficult to call this a crypto winter. Past winters erupted from within the industry. The Mt. Gox hack, most ICO projects being revealed as scams, and the FTX collapse. The industry itself lost trust.
Now it is different.
ETF approvals opened the door to a bull market, while tariff policies and interest rates pushed it down. External factors lifted the market, and external factors also depressed it.
Builders have not left either.
RWA, perpDEX (perpetual contract decentralized exchanges), prediction markets, InfoFi, privacy. New narratives continue to emerge, and they are still being created. They have not yet pulled the entire market like DeFi did, but they have not disappeared either. The industry has not collapsed; the external environment has changed.
We have not created a spring, so there is no winter.
4. Changes in market structure post-regulation
Behind this is a significant shift in market structure post-regulation. The market has split into three layers: 1) compliant zone, 2) non-compliant zone, and 3) shared infrastructure.
The compliant zone includes RWA tokenization, exchanges, institutional custody, prediction markets, and compliance-based DeFi. They undergo audits, disclosures, and legal protections. Growth is slow, but the capital scale is large and stable.
However, once in the compliant zone, it is hard to expect explosive returns like in the past. Volatility decreases, and upside potential is limited. But downside risks are also limited.
On the other hand, the non-compliant zone will become more speculative in the future. The entry threshold is low, and the speed is fast. Situations of 100x in one day and -90% the next day will become more frequent.
However, this space is not without meaning. 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 now doing the same. It serves as a testing ground. But the non-compliant zone will increasingly separate from compliant zone businesses.
Shared infrastructure includes stablecoins and oracles. They are used in both the compliant and non-compliant zones. The same USDC is used for institutional RWA payments and for trading on Pump.fun. Oracles provide data for validating tokenized government bonds and also for clearing anonymous DEXs.
In other words, as the market splits, the flow of funds has also changed.
In the past, when Bitcoin rose, altcoins also rose through the trickle-down effect. It is different now. Institutional capital entering through ETFs remains in Bitcoin, and that’s it. Capital from the compliant zone does not flow into the non-compliant zone. Liquidity only stays where value has been proven. And even Bitcoin, relative to risk assets, has not yet proven its value as a safe-haven asset.
5. Conditions for the next bull market
Regulation is being sorted out. Builders are still building. So two things remain.
First, new killer use cases must emerge from the non-compliant zone. Something that creates previously non-existent value 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 validating experiments in the non-compliant zone and entering the compliant zone must be recreated. DeFi did this, and prediction markets are now doing this.
Second, the macroeconomic environment. Even if regulation is sorted out, builders are building, and infrastructure is accumulating, if the macroeconomic environment does not support it, the upside potential is also limited. The DeFi Summer of 2020 exploded during the liquidity release after COVID. The rise after the ETF approval in 2024 also coincided with expectations of interest rate cuts. Regardless of how the crypto industry performs, it cannot control interest rates and liquidity. For what the industry builds to gain credibility, the macroeconomic environment must turn supportive.
The "crypto season" where everything rises together like in the past is unlikely to happen again. Because the market has already split. The compliant zone grows steadily, while the non-compliant zone experiences wild ups and downs.
The next bull market will come. But it will not come for everyone.
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