Post-Crypto Era Outlook: Asset Valuation Returns, What to Watch in the Next Decade?

Original article by Syncracy Capital co-founder Ryan Watkins

Compiled by: Odaily Planet Daily, Qin Xiaofeng (@QinXiaofeng 888)

Editor’s Note: Ryan Watkins, co-founder of Syncracy Capital, recently published an article titled "Twilight Zone: Outlook for the Crypto Economy in 2026 and Beyond." He mentioned that crypto assets were over-leveraged in 2021, and since then, valuations have been returning to rationality, with the valuations of quality assets now approaching reasonable levels; the growth of the entire crypto economy is shifting from cyclical drivers to long-term trend drivers, and the industry has spawned several applications with real value beyond Bitcoin. "Nothing is as powerful as a well-timed idea, and the emergence of the crypto economy has never been more unstoppable than it is now."

Below is the original content, compiled by Odaily Planet Daily. Enjoy~

The crypto economy is undergoing the biggest transformation I have witnessed in my eight years in the industry.

Institutions are continuously accumulating digital assets, while early crypto-punk pioneers are decentralizing wealth and cashing out. Companies are gearing up for S-curve growth, while disillusioned native players are exhausted. Governments around the world are pushing the global financial system onto a blockchain track, while day traders remain anxious over a few K-lines on the charts. Emerging markets are celebrating financial democratization, while cynical Americans lament that it’s all just a big casino.

Recently, there have been many discussions about which historical period the current crypto economy resembles the most.

Optimists compare it to the recovery period after the burst of the internet bubble, believing that the speculative era of the industry has come to an end, and long-term winners like Google and Amazon will emerge and climb the S-curve. Pessimists liken it to emerging markets, like China in the 2010s, arguing that weak investor protections and a lack of patience, with long-term capital only buying and not selling, could lead to poor asset price performance even if the industry thrives.

Both views have their merits. After all, history is the best guide for investors aside from personal experience. However, the role of analogy is ultimately limited. We also need to understand the crypto economy within its unique macroeconomic and technological context. Markets are not monolithic—they are composed of numerous characters and stories, interconnected yet distinct.

Here are my best judgments about the past and the future.

"The Red Queen's Race"

In British author Lewis Carroll's "Alice's Adventures in Wonderland," the Red Queen tells Alice: "You see, here you must run as fast as you can just to stay in the same place. If you want to get somewhere else, you must run at least twice as fast!" Evolutionary biologist L. van Valen proposed the "Red Queen Hypothesis" in 1973, aptly describing the fierce survival competition in nature: not advancing is equivalent to retreating, and stagnation equals extinction.

In many ways, the only thing that matters in financial markets is expectations. Exceeding expectations leads to price increases; falling short leads to price declines. Over time, expectations swing like a pendulum, and long-term returns are often negatively correlated with them.

In 2021, the expectations that the crypto economy over-leveraged far exceeded most people's understanding. In some respects, this was evident, such as the price-to-sales ratio of DeFi blue chips reaching 500 times, or the valuations of eight smart contract platforms exceeding $100 billion. Not to mention the dizzying absurdities of the metaverse and NFTs. But the most telling indicator is still the Bitcoin-to-gold ratio chart.

Despite the progress we have made, Bitcoin's price relative to gold has not reached new highs since 2021; in fact, it has declined since then. Who would have thought that in the "cryptocurrency capital" under Trump, after the most successful ETF issuance in history, and amid the systemic devaluation of the dollar, Bitcoin's performance as digital gold would be worse than four years ago?

For other varieties, the situation is much worse. Most projects started this cycle with numerous structural issues, compounded by challenges in dealing with extreme expectations:

• Most projects' revenues are highly cyclical and predicated on continuously rising asset prices.
• Regulatory uncertainty hinders institutional and enterprise-level participation.
• Dual ownership structures lead to misalignment of interests between insiders and public market token investors.
• Weak information disclosure practices create information asymmetry between project teams and communities.
• Lack of a common valuation framework leads to excessive volatility and no fundamental price floor.

The interplay of these issues has caused most tokens to bleed continuously, with only a few able to sniff the scent of the 2021 highs. The psychological impact is enormous, as there are few things more disheartening in life than to keep putting in effort without reward.

For those speculators and opportunists who thought crypto assets were a shortcut to wealth, this sense of loss is particularly profound. Over time, this struggle has triggered widespread fatigue throughout the industry.

This is, of course, a healthy development. Weak efforts should not yield extraordinary returns as they did in the past. The era before 2022, where massive wealth could be accumulated merely through conceptual embellishments, is clearly unsustainable.

Nevertheless, a glimmer of hope lies in the fact that these issues are now widely recognized, and prices reflect this. Today, aside from Bitcoin, almost no crypto-native players are willing to seriously consider the long-term fundamental narratives of any other assets. After four years of hardship, this asset class now possesses the necessary conditions to surprise us with another rally.

The Awakening Crypto Economy

As mentioned in the previous section, the crypto economy faced numerous structural issues at the start of this cycle. The good news is that everyone now recognizes this, and many of these problems are becoming relics of the past.

First, aside from digital gold, many application scenarios are showing compound growth, with even more scenarios in transition. Over the past few years, the crypto economy has spawned:

• Peer-to-peer internet platforms that allow users to execute transactions and enforce contractual relationships without government or corporate intermediaries.
• Digital dollars that can be stored and transferred anywhere in the world with internet access, providing cheap and reliable currency for billions.
• Permissionless exchanges that allow anyone to trade any asset class globally 24/7 in a single, transparent venue.
• Innovative derivatives, such as event contracts and perpetual swaps, which provide valuable predictive insights for society and a more efficient price discovery mechanism.
• A global collateral market that allows users to access credit without permission through transparent, automated infrastructure, significantly reducing counterparty risk.
• Democratized asset creation platforms that enable any individual or institution to issue publicly tradable assets at very low costs.
• Open financing platforms that allow anyone in the world to raise capital for their ventures, breaking free from local economic constraints.
• Physical infrastructure networks that build more scalable and resilient infrastructure by crowdfunding capital and distributing operations to independent operators.

This is not an exhaustive list of all the valuable application scenarios the industry has built to date. The key is that many of these scenarios are demonstrating real value and are continuing to grow regardless of how crypto asset prices fluctuate.

At the same time, as regulatory pressures ease and founders realize the costs of misaligned interests, the dual model of equity and tokens is being corrected. Many existing projects are integrating assets and revenues into a single token, while others are clearly delineating: on-chain revenues belong to token holders, while off-chain revenues belong to equity holders. Additionally, as third-party data providers mature, information disclosure practices are improving, reducing information asymmetry and enabling more reliable analysis.

Alongside this, a consensus is forming around a simple principle: 99.9% of assets need to generate cash flow, with only value-storing assets like BTC and ETH being rare exceptions. As more fundamentally-driven investors enter this asset class, these frameworks will only strengthen further, and rationality will gradually increase.

In fact, after a sufficiently long time, self-sovereign holding of on-chain cash flow may be understood as an unlocking equivalent to self-sovereign digital value storage. Ask yourself, when in history have you been able to hold a digital bearer asset that autonomously receives payments whenever the program is invoked anywhere in the world?

In this context, winning blockchains are becoming the monetary and financial foundation layer of the internet. Day by day, the network effects of Ethereum, Solana, and Hyperliquid are becoming more entrenched with their expanding ecosystems of assets, applications, enterprises, and users. Their permissionless design and global distribution place their applications among the fastest-growing enterprises worldwide, with unparalleled capital efficiency and revenue velocity. In the long run, these platforms are likely to support the total potential market of "financial super applications" that almost all leading fintech companies aspire to share.

In this context, established giants from Wall Street and Silicon Valley are unsurprisingly accelerating their blockchain-related layouts. Nowadays, there is hardly a week without a wave of new product launches, ranging from tokenization to stablecoins. Notably, unlike previous periods in the crypto economy, these efforts are no longer experiments. They are production-level products, mostly built on public blockchains rather than isolated, closed private systems.

As the lagging effects of regulatory changes continue to permeate the entire system in the coming quarters, such activities will only accelerate. Under clearer rules, enterprises and institutions can finally shift their focus from "Is this legal?" to how blockchain can expand revenue opportunities, reduce costs, and unlock new business models.

Perhaps one of the signs that better illustrates the current situation is that few analysts are modeling for exponential growth. My intuition tells me that many of my peers in sell-side and buy-side institutions even hesitate to adopt annual growth rates above 20%, fearing it may seem overly optimistic.

As valuations reset after four years of pain, a crucial point now is to ask ourselves: What if all of this really leads to exponential growth? What if daring to dream again ultimately brings rewards?

"The Yin and Yang of the Twilight Zone"

"Light a candle, and it will cast a shadow."------Ursula LeGuin.

On a cool autumn day in 2018, before another exhausting day at the investment bank began, I stopped by an old professor's office to chat about everything blockchain. After sitting down, he recounted a conversation he had with a skeptical hedge fund manager who claimed that crypto assets were entering a nuclear winter, describing them as "a solution still searching for a problem to solve."

After quickly giving me a lesson on the unsustainable burden of sovereign debt and the collapse of institutional trust, he ultimately told me what he said to that skeptic: "Ten years from now, the world will be grateful that we built this parallel system."

It has been less than ten years since then, but as crypto assets increasingly resemble a well-timed idea, his prophecy seems quite prescient.

With the same spirit, this is the essence of this article: to clarify that the world is still underestimating everything being built here. And for all of us investors, the most practically significant point is that the long-term opportunities of leading projects are now underpriced.

This last point is crucial because, although the arrival of the crypto world may be unstoppable, your favorite coin could indeed go to zero. The unstoppable nature of the crypto world also means it is attracting fiercer competition, and the pressure to deliver on promises has never been greater than it is now. As the institutional and corporate giants I mentioned earlier enter the fray, they are likely to wash out many weaker players. This does not mean they will win outright or monopolize the technology. But it does mean that only a very few native players will emerge as the big winners around which the world reanchors its order.

This is not meant to make one cynical. In all emerging technology fields, 90% of startups will fail. More failures may publicly emerge in the coming years, but this fact should not divert you from the bigger picture.

Perhaps no single technology aligns better with the spirit of our times than crypto assets. The decline of institutional trust in developed societies, the unsustainable government spending of G7 member countries, the blatant currency devaluation by the world's largest fiat currency issuer, de-globalization and the fragmentation of international order, and the growing desire for a new system that is fairer than the old—all of these are contributing factors. As software continues to consume the world, driven by the latest accelerant of AI, and as the younger generation inherits wealth from the aging baby boomer generation, now is the best time for the crypto economy to emerge from its own small bubble.

Many analysts frame the present using classic frameworks, such as the Gartner Technology Maturity Curve and Carlotta Perez's "post-hype" phase, suggesting that the optimal return period has passed, followed by a more mundane practical phase. However, the truth is far more interesting.

The crypto economy is not a neatly uniform market maturing in a straight line; it is a collection of numerous products and enterprises evolving along different adoption curves. Perhaps more importantly, when a technology enters a growth phase, speculation does not disappear; it merely ebbs and flows with shifts in sentiment and the rhythm of innovation. Anyone telling you that the era of speculation has ended is likely just disillusioned or ignorant of history.

Maintaining a skeptical mindset is reasonable, but do not become cynical. We are reimagining how currency, finance, and our most important economic systems are governed. This should be both fascinating and exciting, as well as challenging.

From now on, your task is to figure out how to best leverage this emerging reality, rather than endlessly arguing on Twitter about why everything is doomed.

Because behind the fog of disillusionment and uncertainty lies a once-in-a-lifetime opportunity, belonging to those willing to bet on the dawn of a new era rather than mourn the sunset of the old.