Winter Crypto or New Money of the Bull Run? The Legal Role in the Market Cycle

The crypto market is entering a new phase of sharp correction. Prices are crashing, sentiment is heavy, and the familiar question arises: are we witnessing a new crypto winter? But this time, the answer isn’t simple, because the current bull run is driven by factors entirely different from the past, especially legal interventions and macroeconomic environments.

How Crypto Winter Comes About: From Major Events to Psychological Collapse

History shows that each downturn cycle follows a clear pattern: a major event triggers a collapse of confidence, leading builders to leave the industry.

In 2014, Mt. Gox was hacked and hundreds of thousands of BTC disappeared, shattering initial trust. In 2018, the ICO wave exposed scams and frauds, combined with tightening regulations, resulting in a prolonged bubble burst until 2020. In 2022, a series of events—Terra-Luna collapse, followed by Celsius, 3AC, and FTX—deeply damaged the entire industry structure. Each time, not only prices fell but also the builders left to seek opportunities elsewhere, such as in fintech or AI.

Current Market: Familiar Signs of a Downturn Cycle

From an external perspective, many signals seem unfamiliar to the typical winter cycle. Meme coins related to politics surged to a market cap of $27 billion in a single day, then nearly 90% wiped out. In mid-October, new US tax policies triggered record liquidations on major exchanges. Within the community, discussions about “building the next thing” are gradually replaced by debates and finger-pointing. Capital is also flowing into AI, promising faster wealth creation opportunities.

What’s Different This Time: When Legal and Macro Factors Decide the Bull Run

However, a closer look reveals that the current situation isn’t a true crypto winter. The main difference lies in the origin of these fluctuations.

Previous downturns stemmed from internal industry issues: hacks, scams, exchange failures, project bankruptcies. This time is entirely different. The bull run was initiated by Bitcoin ETFs—tools approved through legal channels. Meanwhile, the current decline is driven by Fed interest rate hikes, government tax policies, and other macro factors. In other words, external forces pushed the market up, and now they’re pulling it down.

More notably, builders haven’t given up. New narratives like RWA (real-world assets), perp DEX, prediction markets, InfoFi, and privacy continue to emerge. While they aren’t yet strong enough to move the entire market like DeFi Summer 2020, they are still being built. The industry isn’t collapsing; the environment around it has just changed.

Crypto Has Layered: Three Different Zones in One Market

After regulatory crackdowns, crypto is no longer a monolith. The market has split into three distinct layers, each with its own characteristics and rules.

Regulated zone focuses on RWA, legitimate exchanges, custodial institutions, and compliant DeFi models. Growth is slower, volatility is lower, but capital flows are large, stable, and sustainable.

Unregulated zone includes meme coins, experimental products, and new narratives. Volatility is extremely high: prices can increase ten or even a hundred times rapidly, but can also fall 90% just as fast. This is the testing ground for new ideas, where innovations are born before being “upgraded” into the regulated zone.

Shared infrastructure includes stablecoins like USDC, oracles, and payment infrastructure. One USDC can be used for large institutional RWA or for trading meme coins on decentralized platforms. As the market stratifies, capital no longer flows broadly—it stays within the layer it just entered.

Why Is Bitcoin Rising Strong While Altcoins Remain Stagnant?

A strange phenomenon compared to previous cycles is: Bitcoin surges, but most altcoins remain flat. Previously, when Bitcoin rose, funds trickled down into other coins. Now, that’s no longer the case.

Capital from Bitcoin ETFs remains in Bitcoin. Institutional investments compliant with regulations don’t automatically flow into experimental projects or meme coins in the unregulated zone. Liquidity concentrates where value has been proven. Bitcoin is currently at $68,010, up 0.23% in 24 hours, but this doesn’t necessarily pull altcoins along. Therefore, Bitcoin can continue to rise sharply while most altcoins stay still, waiting.

What Does the Next Bull Run Need? New Use Cases and a Favorable Macro Environment

For a true bull run to start, two elements are still missing.

First, a strong enough use case that creates real value, similar to DeFi Summer 2020. Currently, AI agents, InfoFi, social onchain have potential, but they aren’t yet big enough to lift the entire market. Second, the macro environment must support growth. Fed interest rates and liquidity remain key factors. No matter how well crypto develops, it cannot control the global macro environment.

Conclusion: Adapting to a Changed Market

A “crypto season” like the old days, where everything rises in sync, is unlikely to return. The market has fragmented into different layers, each influenced by regulation, macro factors, and capital flows differently.

A bull run will come, but not everyone will benefit equally. The most important thing is to understand which layer of the market you’re in and play by its rules. Those in the regulated zone will benefit from supportive legal frameworks, but growth will be slower. Those in the unregulated zone have higher potential gains but also higher risks. This understanding, more than ever, is the key to adapting and surviving in the new generation of crypto.