The next bull market requires two conditions: the emergence of killer applications in the non-compliant zone + a macro environment that shifts to support.

Author: Ryan Yoon

Translation: Deep潮 TechFlow

Deep潮 Guide: As the market enters a downtrend, 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), whereas this rise and fall are driven by external factors (ETF approvals bringing a bull run, tariffs and interest rate policies causing declines).

Post-regulation, the market has split into three layers: compliant zone, non-compliant zone, and shared infrastructure. Capital no longer flows with a “drip effect” as it did before. ETF funds remain in Bitcoin and no longer flow into altcoins.

The next bull market needs two conditions: killer applications in the non-compliant zone + a supportive macro environment.

Full Text Below:

As the market enters a downtrend, skepticism about the crypto market is increasing. The current question is whether we have already entered a crypto winter.

Core Viewpoint

• Crypto winter follows a sequence: major event → trust collapse → talent exodus
• Past winters were caused by internal issues; current rises and falls are driven by external factors; it’s neither winter nor spring
• Post-regulation, the market is split into three layers: compliant zone, non-compliant zone, and shared infrastructure; the drip effect has disappeared
• ETF funds stay in Bitcoin; they do not flow out to the compliant zone
• The next bull market requires killer use cases + a supportive macro environment

1. How did the previous crypto winters unfold?

The first winter occurred in 2014. Mt. Gox was the exchange handling 70% of global Bitcoin transactions at the time. About 850,000 BTC disappeared in a hack, causing a trust collapse. New exchanges with internal controls and auditing features emerged, beginning to restore trust. Ethereum also entered the world via ICOs, opening new possibilities for vision and fundraising.

This ICO frenzy became the fuse for the next bull run. When anyone could issue tokens and raise funds, the 2017 boom was ignited. Projects raised hundreds of billions based solely on whitepapers, but most lacked substantive content.

In 2018, regulatory crackdowns in South Korea, China, and the US burst the bubble, leading to a second winter. This winter lasted until 2020. After COVID, liquidity surged, and DeFi protocols like Uniswap, Compound, and Aave gained attention, with capital flowing back in.

The third winter was the harshest. When Terra-Luna collapsed in 2022, Celsius, Three Arrows Capital, and FTX went bankrupt one after another. It wasn’t just a price decline; the industry’s structure itself was shaken. In January 2024, the US SEC approved a spot Bitcoin ETF, followed by Bitcoin halving and pro-crypto policies from Trump, leading to another influx of capital.

2. Crypto winter pattern: Major event → Trust collapse → Talent exodus

All three winters follow 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 Terra-Luna’s collapse. The scale and form differ, but the result is the same: the entire market is stunned.

Shock quickly turns into trust collapse. Those discussing what to build next begin questioning whether cryptocurrencies are truly meaningful technology. The collaborative atmosphere among builders disappears, and blame starts to be assigned.

Skepticism leads to talent leaving. Builders who have been creating new momentum in blockchain become doubtful. In 2014, they shifted toward fintech and big tech companies. In 2018, they moved toward institutions and AI. They go to places that seem more certain.

3. Is this currently a crypto winter?

The pattern of past crypto winters is also visible today.

• Major events:
  • Trump tariffs trigger market turbulence
  • Federal Reserve interest rate policy shifts
  • Overall crypto market decline
• Trust collapse: Skepticism spreads within the industry. Focus shifts from what to build next to mutual accusations.
• Talent exodus pressure: The AI industry is growing rapidly, promising faster exits and greater wealth than crypto.

However, it’s hard to call this a crypto winter. Past winters erupted from within the industry itself. Mt. Gox hack, ICO scams, FTX collapse—industry lost trust on its own.

Now, it’s different.

ETF approvals have sparked a bull market, while tariffs and interest rates have driven declines. External factors have lifted the market, and external factors have also suppressed it.

Builders have not left either.

RWA, perpDEX (perpetual contracts decentralized exchanges), prediction markets, InfoFi, privacy. New narratives keep emerging, and they are still being created. They haven’t yet driven the entire market like DeFi did, but they haven’t disappeared either. The industry has not collapsed; the external environment has changed.

We didn’t create spring, so there’s no winter either.

4. Changes in the post-regulation market structure

Behind this is a major shift in the market structure after 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 regulation-based DeFi. They undergo audits, disclosures, and legal protections. Growth is slow but capital scale is large and stable.

However, once in the compliant zone, it’s hard to expect explosive returns like in the past. Volatility decreases, upside potential is limited, but downside risk is also limited.

On the other hand, the non-compliant zone will become more speculative in the future. Low entry barriers, fast pace. 100x gains in a day, -90% the next day will become more common.

However, this space is not meaningless. Industries born in the non-compliant zone are creative; once validated, they enter the compliant zone. DeFi achieved this, and prediction markets are doing so now. It acts as an experimental ground. But the non-compliant zone will increasingly separate from the compliant business.

Shared infrastructure includes stablecoins and oracles. They are used in both compliant and non-compliant zones. The same USDC is used for institutional RWA payments and for Pump.fun trading. Oracles provide data for verifying tokenized government bonds and for clearing anonymous DEX trades.

In other words, as the market splits, capital flows also change.

In the past, when Bitcoin rose, altcoins also rose via the drip effect. Now it’s different. Institutional capital entering through ETFs stays in Bitcoin, and that’s where it ends. Capital in the compliant zone does not flow into the non-compliant zone. Liquidity remains only where value has been proven. Even Bitcoin, relative to risk assets, has yet to prove its value as a safe haven.

5. Conditions for the next bull market

Regulation is being organized. Builders are still building. So, only two things remain.

First, killer use cases must emerge from the non-compliant zone. Something that creates value that didn’t exist before, like DeFi Summer 2020. AI agents, InfoFi, and on-chain social are candidates, but they haven’t yet reached the scale to drive the entire market. The process of validating experiments in the non-compliant zone and moving them into the compliant zone must happen again. DeFi achieved this, and prediction markets are doing so now.

Second, the macroeconomic environment. Even if regulation is organized, builders are building, and infrastructure is accumulating, if the macro environment doesn’t support it, upside potential is limited. The DeFi Summer of 2020 erupted after liquidity was released post-COVID. The rise after ETF approval in 2024 is also happening alongside rate cut expectations. No matter how the crypto industry performs, it cannot control interest rates and liquidity. For the industry’s creations to gain credibility, the macro environment must shift.

The “crypto season” where everything rises together as in the past is unlikely to happen again. Because the market has split. The compliant zone grows steadily, while the non-compliant zone experiences big swings.

The next bull market will come. But it won’t come for everyone.