It’s actually simple and obvious, but I’ll spell it out -
Crypto has found a vast majority of its product-market fit by $ value from being alternative or speculative store-of-value. This is why BTC is still dominant, 15 years in. ETH has also found monetary properties circa 2020. Both combined command over 75% of the market excluding stablecoins, and even higher in terms of liquidity. Tokens such as XRP and ADA have also found not-insignificant lasting demand.
Over the years, people have had a multitude of theses about crypto - doomer theories about imminent global economic collapse have been pretty common. Ironically, the global economy has proven to be very resilient, and continued to grow, with productivity reaching new highs year after year. This has led to greater demand for alternative stores-of-value like BTC or ETH. No matter the thesis, crypto has continued to ride high on the monetary demand vector.
This has created a new economy based on BTC and ETH. The problem is, there’s very little productivity in this new economy. Which is to be expected when the vast majority of value comes from simply holding and speculation.
And here, speculation becomes the key. You’ll find 70 crypto tokens worth $1B or more. Many of these have been around for years with negligible product-market fit. They have made a dozen pivots and still failed to find any productive use. New tokens that clearly have very limited product-market fit potential for the foreseeable future are inflated up to billions. The end result is tokens that fundamentally should be worth a few million at best end up on the low probability they are worth something some day being worth billions; and hundreds of tokens that are very obviously worth zero continue to be worth millions - because of a massive speculative premium derived from the backbone of the industry, the store-of-value. There’s also the small matter of people mistaking infra as being the demand driver, rather than money and speculation, but I’ve beaten that horse to death on my blog.
To be clear, there are a couple of actually productive assets in the space, but these are massive outliers, and hilariously most of them are undervalued even relative to value stocks.
So, what’s the solution? There’s no solution - this is the very nature of this industry. Gamble on random rubbish, rotate back to an asset that you deem to be a store-of-value.
Of course, there’s a demand ceiling for all assets. We’ve seen BTC’s exponential growth come to an end in 2017, and it has seen only modest growth since, barely keeping up with NASDAQ. Diminishing returns will continue, until it comes to a point where the market for an alternative store-of-value and related monetary properties is near saturated. It’ll take many years of going sideways that’ll lead to a slow bleed to near-zero for all of these grotesquely overvalued tokens.
In the here and now, though, the crypto market remains the craziest, most utterly-detached-from-reality, unhinged casino market the world has ever seen, and will probably remain so longer than anyone with the bare minimum of sense may expect.