Behind the Market Liquidity Crunch: Why Is the Altcoin Ecosystem in Trouble?

Market Liquidity Is Accelerating Its Exhaustion

Since the market events related to Trump, liquidity in the cryptocurrency market has been gradually drained. The subsequent slight rebound is essentially a sentiment-driven, phase-specific rally rather than a genuine bullish signal. Many mistakenly interpret these rebounds as bottoming out, but in reality, the entire market has long entered a deep bear cycle.

Altcoins Have Been Burdened with Debt Since TGE

The problem with altcoins is even more severe. After the Token Generation Event (TGE), these projects fall into a high-debt state. Early holders who once believed in the project have dispersed, and developers and community members focused on technical contributions are gradually disappearing. Replacing them are the proliferation of airdrop hunters, venture capital firms eager to exit, exchanges rapidly listing and pumping tokens, and project teams wanting to cash out after years of investment. The problem is clear: All stakeholders want to escape; who will buy the market?

The Halo of MEME Coins Is Fading

MEME coins were once highly anticipated and seen as a salvation plan against high FDV venture capital coins. Their zero-technical barrier design indeed attracted a large number of retail participants, and the “fair launch” narrative was also appealing. But mass production on an assembly line has created a market of indifferent competition, a mode that fundamentally cannot become a long-term value accumulation channel. The truth has proven that when lacking a technological innovation story from 0 to 1 for VC coins as a supplement, the hype around MEME coins is merely an internal PVP consumption of existing capital, ultimately leading to systemic decline in the entire industry.

“Internal Market” Reshaping the Track Pattern by Exchanges

In the past, exchanges played the role of on-chain innovation adopters and liquidity amplifiers. But the wealth effect demonstrated by innovative projects like Pumpfun, GMGN, and Hyperliquid has made top exchanges realize the threat. As a result, major platforms launched “internal market” self-rescue projects by introducing their own trading and issuance tools. When those who mined and sold the mining tools start mining gold themselves, the very existence of the entire gold rush ecosystem is fundamentally weakened.

The Bankruptcy Wave of Project Teams and VCs Has Become a Reality

More and more projects are queuing for TGE, yet no investors are willing to spend time refining their products. The root causes—market imbalance, broken capital chains, talent outflow—who exactly are they pointing to? The answer is too complex for anyone to give a precise explanation. But one thing is certain: The builders and VC institutions in the crypto space are experiencing large-scale bankruptcy and attrition. More terrifying than liquidation and zeroing out is that the entire industry is being drained from the bottom, leaving it empty.

On-Chain Innovation Is the Only Way Out

The crypto industry has lost its vitality. To break the current deadlock, only a technological innovation-driven on-chain narrative revolution starting from zero to rebuild the ecological order can do it. There are no other shortcuts.