Crypto's Great Split

Crypto is splitting into two worlds, and only one of them is winning.

Alternative finance, DeFi, self-custody, NFTs, DAOs, builds a separate system.

Efficient finance, stablecoins, tokenisation, neobanks, makes the existing system better.

This weekend I read a great piece from Mert, CEO of Helius, and I want to echo his thoughts because I'm seeing the exact same dynamic play out in every conversation I'm having.

Since 2023, the momentum has decisively shifted toward efficient finance. Companies are adding crypto to their balance sheets. ETFs have arrived. Regulation like the CLARITY Act is moving forward. Meanwhile, alternative finance no longer commands the mindshare it once had.

Look at the arc of each cycle: first it was Bitcoin as a store of value, then ICOs, then DeFi and NFTs. But this cycle? It's been dominated by the incumbents of the existing financial system stepping in and adopting the technology at the fastest pace I've ever seen.

The signals are everywhere. VC funding for alternative crypto ventures is drying up. Teams are shrinking. At the same time, major financial institutions are leaning in harder than ever.

I think this trend, making the existing system more efficient rather than replacing it, is here to stay for the remainder of the 2020s.

So what does that mean for you?

You need to think like a VC. Be selective. The era of meme coins and shitcoins is over. There's a tremendous amount of opportunity in crypto right now, but most people miss it because they still associate crypto with the alternative.

Efficient finance is where the capital, the talent, and the momentum are heading.

Position yourself accordingly.

Cheers,

Louis Sykes
Senior Crypto Analyst, All Star Charts