2026 Crypto Industry's First Snowfall
Beijing, Jianguomen. I had arranged to meet a VC friend at a coffee shop downstairs, where the floor-to-ceiling windows offered a view of the unique clear gray sky of February. This was the first time in a long while that I had met up with someone from the Crypto community for a coffee chat, and I felt that in itself was a signal. Sure enough, as soon as my friend sat down, they gave me a look of resignation and said, "How long do you think this bear market will last? We haven't made any moves in six months."
For an industry that measures iteration speed in days, six months is almost like a century.
My friend told me that it's not because there are no startups anymore. They still talk to many founders every month, but now they are puzzled, not knowing what good directions and opportunities are left.
Stirring her coffee cup, she smiled wryly and said, "Well, my boss wants me to look into AI, but I still have faith in crypto."
In that statement, I heard a professional's final struggle and reluctance. When the direction of capital has clearly shifted, faith has become the cheapest and most lavish thing.
The next day, Kyle Samani, the co-founder of Multicoin Capital, once hailed as the "Solana High Priest" and a flag bearer of "Thesis-Driven Investing," announced on social media that he was leaving the circle, the High Priest had apostatized.
When the industry's brightest minds and most sensitive capital simultaneously choose to exit, I realized that we are facing a serious moment.
The Great Retreat
Over the past decade, the story of cryptocurrency was written on the overwhelming global liquidity flood. Now, as the flood recedes, it's not just cryptocurrency that is being stranded.
February 2026 was a nightmare for all holders of global risk assets. What we are witnessing is no longer a seesaw effect. U.S. stocks, gold, cryptocurrency—these assets, with varying risk preferences in the past, are now holding hands, jumping into the abyss together.
Behind this comprehensive decline is a fact we have long foreseen but were unwilling to believe: the era of cheap capital where we could blindly believe "tomorrow will be better" has officially come to an end.
Economist Minsky once said that at the peak of prosperity lies the starting point of collapse. Now, that moment has arrived. The source of this crisis is the tightening faucet in Washington. During the decade-long period of quantitative easing, near-zero interest rates flooded the global market with hot money seeking high returns. Like a flood breaching a dam, this money flowed into every asset category that could tell a sexy story, and undoubtedly, cryptocurrency was one of the sexiest.
However, as hawkish figure Kevin Warsh was nominated as the next Fed Chair, as the Fed started to unwind its balance sheet, as the US Dollar Index surged, and as global funding costs rose, the tide receded. The first to be exposed must be those assets that rely most on story rather than value.
The Collapse of Two Temples
The crypto world has two temples. One is the Temple of Value, dedicated to digital gold Bitcoin; the other is the Temple of Use, dedicated to the next-generation Internet Web3. Now, they are both collapsing almost simultaneously.
First, look at the Temple of Value. Since the creation of Satoshi Nakamoto's whitepaper in 2008, digital gold has been Bitcoin's most core, most robust narrative. It is seen as an anti-inflationary, decentralized, sovereign-state-independent store of value.
However, when a real crisis hits, the market votes with money. With Bitcoin's acceptance by various mainstream institutions in recent years, Bitcoin's correlation with US tech stocks once climbed to 0.8. This means that it is not a hedge against risk; it is an amplifier of risk. It is not a safe haven; it is the eye of the storm. If the Nasdaq sneezes, Bitcoin might be checked into the ICU.
While the Temple of Value is crumbling, what about the Temple of Use?
To understand the collapse of the Temple of Use, we must understand a broader context: the foundation of the tech narrative has shifted in recent years.
From 2010 to 2020, blockchain technology was almost the only "future technology" that could ignite capital imagination. It was the protagonist of the tech innovation narrative of that era, the card game that all VCs couldn't afford to miss. Bitcoin's rise was not just a monetary phenomenon but also a value mapping of this tech fundamental.
But now, there's a new leading role. AI has become the new deity.
The rise of AI, like a mirror, revealed the emptiness of Web3 applications. Initially, when the AI wave arrived, the crypto industry still had a glimmer of optimistic fantasy. We tried to combine the two, creating the beautiful narrative of "AI is productivity, and blockchain is relations of production." However, now it seems that this was just wishful self-comfort. AI doesn't need blockchain to prove its value; capital and talent will always flow to the easiest-to-understand, most attractive, and best-hyped place. And today, that place is AI.
This mirror also made believers like Kyle Samani despair. Samani and his creation of Multicoin were once the most devout advocates of Web3. They were the earliest and most crucial supporters of Solana, and their DePIN paper was once thought to be the most viable path for Web3 to enter the real world.
However, when the High Priest finally acknowledged that the essence of blockchain was merely an asset ledger, it was tantamount to declaring the collapse of the Temple of Application. We thought we were constructing a future Rome, only to discover in the end that we were merely swapping chips and carpets in a casino over and over again.
A more serious issue is that the industry is losing its most valuable asset: imagination of the future.
Top developers and young talent are voting with their feet, moving from an industry that is constantly replaying a Ponzi scheme to other industries. When the compass of every startup accelerator no longer points towards Web3, we know that an era may be coming to an end.
However, technology never disappears because of a narrative collapse. Decentralized ledgers, smart contracts, breakthroughs in cryptography — these technologies themselves still lie quietly there.
It's just that at this moment, no one knows exactly where they belong. Perhaps, they are destined not to dramatically reshape the world like AI technology, but to be used to solve a more practical issue in a more specific scenario. It's just that this kind of story is no longer sexy, nor can it attract hot money and believers anymore.
Human Condition
The collapse of the grand narrative will eventually trickle down to each individual. As the temple turns into ruins, what we see is a poignant human condition.
In January 2026, Entropy, hailed as the most hardcore decentralized custody startup, announced its closure after four years of operation; also in January, the Bit[.]com trading platform announced its gradual closure; in February, the compliance exchange Gemini founded by the Winklevoss brothers announced a 25% workforce reduction and a complete withdrawal from the UK, EU, and Australian markets, shrinking its operations back to the US. Since its peak in 2022, the total number of employees in this company has decreased by over 70%.
I opened social media and saw those developers who once filled their profiles with WAGMI, appended ".eth" to their names, now signing off as Building with LLMs.
Opening Twitter, I saw the Countess reminiscing about the coffee shop where we envisioned the future of the industry four years ago, and many old friends recounting the industry's past prosperity and fun.
When an industry begins to collectively reminisce, it means it has lost sight of the future. We start to long for the summer of 2021, for the peak when the global cryptocurrency market cap reached $3 trillion, for the madness where a picture of a monkey could sell for millions, for that illusion where money was as easily accessible as air.
When the avalanche comes, every snowflake thinks they are innocent. But we are not snowflakes; we once created the snow ourselves, and now we watch it melt in our hands.
Will There Still Be Consensus at the Consensus Conference
Next week, under the dazzling lights of Victoria Harbour, the Consensus conference is set to take place in Hong Kong. One can imagine crypto enthusiasts from around the world gathering once again. In their suits and ties, they always speak of consensus. But will there really be consensus at the venue?
This situation gives me a strong sense of absurdity. In an industry that has lost the two cornerstones of digital gold and Web3 narrative, in a winter where cheap money is no more, and high priests are all turning apostate, what kind of consensus can we still reach? Will it be a consensus to huddle together for warmth, or a consensus to acknowledge failure?
Perhaps true consensus is never reached in a bustling conference hall but in the quiet introspection of each practitioner, in the courage to start anew after admitting the shattering of illusions.
What this industry needs is a thorough top-to-bottom self-reckoning. However, reckoning does not mean destruction. When the tide recedes, something will always be left amidst the ruins.
Those who truly believe in decentralized technology may perhaps find a spark in the rubble, but it will no longer be the flame that changes the world, rather a faint light to solve problems. Perhaps in the next decade, we will see blockchain applications deeply rooted in industries, serving specific communities, not aiming for a hundredfold coin. They may appear in supply chain finance, digital identity authentication, or in corners we cannot imagine today.
These will be smaller, slower but more authentic stories. They will no longer need grand narratives or overnight riches myths; all they will require is patience and time. For those still at the table, this may be the only hope.
As I write this, I gaze out the window. The Beijing morning sky remains gray, much like the current state of this industry.
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