Foreword

In the past few cycles, I have become more and more inclined to understand the market from a structural rather than a cyclical perspective.

Because in many cases, what really affects the long-term evolution of the industry is not a certain meeting, a certain interest rate cut, or a certain quarter's data, but those slower but more profound changes.

Today's global high interest rate environment seems to me to be exactly the same.

It represents a more basic reality: capital has a real opportunity cost again. When this happens, the way the industry understands value, risk, and innovation will need to be recalibrated.

These are some of my observations and thoughts on this recalibration.

Core insights

● The structural rise in global capital costs is fundamentally changing the valuation logic of crypto assets

● The market is shifting from narrative driven to capital efficiency driven: real revenue, real users and verifiable business models are taking the place of stories

● Crypto ETFs mark the maturity of the industry and also mean acceptance of the disciplines of mainstream capital markets

● The convergence of AI and crypto is a valuable long-term direction, but the market is accelerating in distinguishing true builders from labeled speculators

● Privacy technologies are gaining increasing strategic importance as encryption deepens its integration into the regulated financial system

● During the industry screening period, the core responsibility of exchanges is shifting from providing channels to helping users truly understand the market

Narrative used to be the answer, but its boundaries have changed

Looking back at the past few market cycles, I have an observation that continues to hold true: every window of loose liquidity will spawn a group of assets that rely on narrative rather than fundamentals to survive.

This is inherently reasonable in an environment where the cost of capital is close to zero. When risk-free assets offer little return, investors are willing to pay a premium for a "future possibility" - a compelling vision, an as-yet-unproven market opportunity that is enough to attract early-stage capital. Where is the product, who are the users, and where does the revenue come from? These questions can be left to the "next round" to answer.

But when low-risk assets began to provide real returns again, this logic ran into its own limits.

Capital does not care whether the story is moving or not. What capital cares about is whether the risk premium here is reasonable relative to alternatives with higher certainty.

Based on my many years of observation in this industry, projects with sustainable income, real users and clear value propositions are receiving more stable capital support. Those assets that rely on sentiment cycles and lack real demand are accelerating their structural vulnerability in a high interest rate environment.

This is not pessimism. This is a market that is maturing.

In the next cycle, verification will be rewarded and imagination will no longer be rewarded

Across the industry, I have observed an increasingly consistent voice: practitioners who have experienced multiple cycles are using similar language to describe the same change - "prove it to me" has replaced "tell me your vision."

This change is real and structural.

In a narrative-driven environment, a project can obtain financing based on a "next generation public chain" or "DeFi new paradigm" without showing any operational data. In an environment driven by capital efficiency, these statements are no longer sufficient. The question the market is now asking is more direct: Who are the users? Did they pay? Will they come back?

It is worth noting that this does not mean that there is no room for innovation. In my opinion, the high cost of capital environment may actually be a net positive for the industry - it accelerates a long overdue filter: differentiating projects that are truly solving real problems from narratives that consume liquidity but lack substantial value.

Projects that answer those direct questions often go further than those that avoid them.

AI and encryption: in the right direction, but labels don’t equal infrastructure

The integration of AI and encryption is a direction I will continue to pay attention to in the medium to long term. But this area needs a clearer perspective.

I have observed the same pattern in every popular narrative cycle: projects that are truly building relevant infrastructure and projects that borrow narrative labels but still essentially rely on emotional premium are often difficult to distinguish early on. The same is true in the field of AI encryption.

But market screening is ongoing. Some projects are starting to show verifiable usage and real revenue, while others are still largely narrative-driven. This divergence, in my view, is no accident—it is a sign that capital efficiency standards are starting to really work.

In the long run, the truly valuable part of this field is infrastructure that is driven by real needs, not just guided by market stories.

Privacy Infrastructure: An Underrated Strategic Direction

There is one area that has been relatively overlooked in current market discussions, but whose strategic importance I believe is being underestimated: privacy technologies.

As cryptoassets become more integrated into the regulated financial system, privacy infrastructure is taking on an increasingly critical functional role. This is not an abstract technical proposition - it is a practical need faced by institutional capital when entering the on-chain world, and a technical path that cannot be bypassed when finding a balance between regulatory framework and on-chain transparency.

In my opinion, this is a direction where functional requirements appear before market awareness. Its strategic value may not be fully reflected in market pricing for a long time. Worth continuing to observe.

Crypto ETF: Joining the mainstream means accepting the discipline of the mainstream

Crypto ETFs are one of the clearest outside signals of the industry’s maturation. It brings broader participation channels, deeper institutional capital, and regulatory legitimacy to the asset class.

But entering the mainstream capital market always means accepting the rules of the mainstream capital market.

As institutional funds hold crypto assets through ETFs, the pricing logic of this market is being more deeply embedded in the macro-financial system. Shifts in central bank policy, loosening of global liquidity, and institutional risk rebalancing—these variables are increasingly directly affecting the direction of crypto prices, rather than just existing as background noise.

Maturity always comes with responsibility. I don’t think it’s the cost, but the process this industry has to go through to finally be taken seriously.

Some thoughts on the role of exchanges

I have said in public that the measure of success is not how many users you have, but whether they truly trust you and are willing to trade on your platform.

During the industry selection period, this sentence took on a more specific meaning for me.

In the past, the core competitiveness of exchanges was speed and coverage. These are still important. But in my increasingly clear judgment, helping users truly understand the market structure—understanding the source of liquidity, understanding the nature of risk, and understanding the relationship between the macro background and asset pricing—is equally important, or even more fundamental, than providing the trading channel itself.

The screening of the market is taking place. The rights of ordinary users to participate need to be supported by true understanding and education, not just guaranteed by low-threshold entrances.

Conclusion

In every market cycle I experience, a core question is constantly being re-posed: What is worth risking capital?

In the era of low interest rates, the threshold for this problem is very low, because not taking risks is itself a cost. In an era when capital has regained its cost, the question has become more serious—and more valuable.

High interest rates will not end this industry. It will complete a necessary screening: compress the premium of inefficient narratives, expose projects that lack substantial demand, and make innovations that truly create value become clearly visible in a cleaner competitive environment.

Narrative helped build this industry. And validation may ultimately help it mature.

Capital restarts requiring proof. In the long term, this may be the healthiest change the crypto industry has ever experienced.

Disclaimer

This article represents only the author's personal views and does not constitute any form of investment advice or financial advice. The crypto asset market is highly volatile and carries extremely high risks, and investors may lose their entire principal. Before making any investment decisions, please fully understand the associated risks and consult a professional licensed financial advisor if necessary. Past performance is not indicative of future earnings. The data and market analysis referenced in this article are obtained from publicly available third-party sources and MEXC makes no guarantee as to their accuracy or completeness.

About the author

Vugar Usi is currently the CEO of MEXC, responsible for leading the company's global strategy, business growth and long-term vision, and is committed to building a more open and inclusive digital asset ecosystem. Prior to joining MEXC, he served as Chief Operating Officer of Bitget. In this position, he led the platform’s global operational expansion and user growth, bringing Bitget into the top five crypto exchanges in the world. Vugar has over 15 years of experience in marketing, branding and communications strategy for leading global brands such as Carlsberg, Facebook, Coca-Cola, Twitter and more. He holds a master's degree in public administration from Harvard University and serves as an adviser on minority issues to the Office of the United Nations High Commissioner for Human Rights.