In late December 2024, Zhao Changpeng (CZ)'s judgment that "the crypto industry is still in its very early stages" once again became the focus of market attention. This judgment is not an emotional outburst but is based on a long-term perspective grounded in cyclical experience, infrastructure evolution, and changes in institutional behavior, providing a narrative coordinate that is distinctly different from price noise for the crypto world, which is on the brink of the next round of large-scale adoption.
Still Early: CZ's "Counter-Cycle" Judgment
● Lifecycle Perspective: CZ examines the crypto industry within a decades-long technology adoption curve, emphasizing that the current stage is closer to the "1990s of the Internet" rather than the "mature phase of mobile internet." In his view, even though leading assets have rewritten historical highs multiple times, the industry as a whole is still in the stage of "experimentation by a few and limited institutional layout" in terms of key indicators such as user penetration, infrastructure completeness, and the degree of compliance integration into finance.
● Users and Penetration Rate: The briefing shows that while the global number of participants in crypto assets is estimated to be in the hundreds of millions by a loose standard, compared to the billions of global internet users and traditional financial account holders, the penetration rate remains in the single digits. CZ uses the metaphor of "not yet out of the circle" to point out that most applications today still primarily serve the trading and speculative needs within the crypto circle, rather than large-scale daily payments, corporate settlements, or government-level applications.
● Incomplete Infrastructure: In terms of on-chain performance, cross-chain interoperability, secure custody, and compliance review, the data still shows a fragile structure where "a single point of failure can shake the entire system." The briefing mentions that in the past two years, single security incidents have caused losses of hundreds of millions of dollars, indicating that from smart contract audits to multi-signature management and on-chain monitoring, a mature system similar to traditional finance with multiple buffers and firewalls has yet to be formed.
● Regulation and Institutional Participation: Although since 2024, many countries have clarified the legal status of crypto assets, and some jurisdictions allow derivatives, spot trading, or fund products to be open to qualified investors, the briefing points out that the participation rate of large traditional institutions remains limited, appearing more in the form of pilot funds, experimental products, or indirect allocations, far from forming a consensus of "a must-have option for asset allocation."
● Illusion of Price and Cycle: CZ warns the market not to be misled by price fluctuations of several times or even dozens of times, mistaking the cycle peak for a mature endpoint. He repeatedly emphasizes that a price surge does not equate to mature foundational adoption; in the absence of stable cash flow support and clear application scenarios, the dramatic price fluctuations are more characteristic of early-stage technology assets rather than a signal that the industry has entered a "stable period."
Positions and Demands of Various Parties
● CZ: Long-termism and Infrastructure Development
His core demand is to extract the crypto industry from the short-term speculative narrative of "heroes based on coins" and shift towards a storyline centered on improving infrastructure, advancing compliance processes, and landing real use cases. He continually emphasizes:
● Exchanges, chains, wallets, and development frameworks are all infrastructure, not endpoint products;
● The industry needs more time to reconcile regulation, risk control, and user experience, rather than rushing for explosive returns within a year;
● For individual participants, "surviving long enough" is more important than "making the most in the short term," which is also the underlying logic he repeatedly reminds to control risk exposure and diversify allocations.
● Regulators: Risk Control and Order Shaping
The position of regulators is summarized in the briefing as "preventing systemic risk + anti-money laundering + investor protection." In their design framework:
● Crypto assets must be incorporated into anti-money laundering (AML) and know your customer (KYC) systems to prevent them from becoming channels for capital flight and illegal financing;
● High-leverage derivatives aimed at retail investors are seen as potential "sources of social stability risk," thus limiting their upper bounds and raising licensing thresholds are expected directions;
● For key nodes such as exchanges, custodians, and asset management institutions, they are required to gradually align their capital, auditing, and information disclosure standards with traditional finance, thereby compressing "black box operations" and "runaway risks" into a controllable range.
● Institutional Funds: Risk-Return and Compliance Red Lines
The demands of traditional institutions are more pragmatic: to obtain excess returns or diversified portfolio returns within acceptable compliance and reputational risks. The briefing points out:
● Some institutions have quietly entered the crypto market through structured products, indexed allocations, and over-the-counter derivatives;
● What truly limits their large-scale entry is not skepticism about the technology itself, but rather that custody security, accounting treatment, tax compliance, and regulatory attribution details have not yet been fully resolved;
● Once key jurisdictions clarify the rules regarding crypto assets in terms of capital adequacy, accounting measurement, and taxation, institutional behavior is likely to shift from "marginal experimentation" to "systematic allocation."
● Retail Investors and Entrepreneurs: Opportunities, Dividends, and Survival Anxiety
Retail investors are more attracted by asset volatility and wealth myths, yet they bear the highest costs of information asymmetry and emotional fluctuations; entrepreneurs are seeking gaps under the triple pressure of financing withdrawal, tightening regulation, and concentrated traffic:
● On one hand, they hope for clear boundaries from regulators to plan product routes long-term;
● On the other hand, they worry that excessive compliance will raise entry barriers, causing innovative teams to lose speed advantages in competition with large institutions;
● For them, "the early industry" means both dividend space and a higher rate of trial-and-error elimination.
When Multiple Narratives Intertwine: The True Texture of the Early Cycle
As the sword of Damocles of regulation hangs high, the reverse operations of whales, CZ's long-term rhetoric, and the emotional peaks of retail investors together weave the complex narrative of the current crypto market. On one side, policy trials and law enforcement cases continue to emerge, reminding all participants that this is not a "legal vacuum"; on the other side, leading funds continue to accumulate during price corrections and public pessimism, using real buy orders to hedge emotional panic.
The briefing shows that at multiple key points in time, on-chain monitoring data has captured the phenomenon of large addresses net inflowing into mainstream assets when market sentiment is extremely low. This "counter-cyclical layout" model aligns closely with the long-term adoption curve depicted by CZ: those truly betting on future infrastructure care more about whether the system can survive under macro and regulatory pressures, rather than the K-line patterns of the next month or quarter.
At the same time, the growing pains brought by the compliance process are becoming evident—some high-leverage platforms are exiting the mainstream market, and some projects that once operated in regulatory gray areas are being washed out. However, from a lifecycle perspective, this "crowding-out effect" is precisely a common path for the early industry to transition to maturity. Speculative websites and low-quality portals during the internet bubble ultimately were shuffled out under the triple influence of regulation, technology, and user choice, leaving only the infrastructure and applications that can provide sustained value.
In this context, CZ's "still in the early stages" is not a glossing over of real risks but rather a reminder of the industry's tolerance space and growth curve: the current stage's instability and dramatic fluctuations are external manifestations of a process that has yet to be institutionalized, infrastructured, and self-governed. The earlier this is recognized, the clearer one can see the undervalued indicators that are truly related to long-term structures—such as developer activity, the proportion of real on-chain transactions, the number of compliant products, and the gradual coupling with real-world assets—after the noise subsides.
The Essential Game: Who Will Define the Next Generation of Financial Order
The essence of this confrontation is far from short-term price fluctuations; it concerns the survival of power structures and methods of value distribution. The struggle over crypto assets is essentially a multi-layered game about "who defines the units of currency and asset accounting, who controls the payment and settlement infrastructure, and who can occupy bargaining power in global capital flows."
● For the traditional financial system, crypto technology is both an efficiency tool and a potential order challenger:
● Central banks and regulatory agencies hope to incorporate on-chain technology into the existing framework to enhance payment and settlement efficiency through controllable digital currencies and regulated on-chain finance;
● At the same time, they must prevent unauthorized global liquidity networks from bypassing national currencies and regulatory systems, eroding their control over capital projects and monetary policy.
● For crypto natives and decentralization advocates, this game concerns the boundaries of autonomous space:
● They hope to preserve the soil for permissionless innovation and maintain the possibility of open-source collaboration and free flow of global funds;
● But they must also accept that once the scale reaches a level capable of impacting macro-financial stability, regulation will inevitably intervene to reshape the rules of the game.
● For industry leaders like CZ, the essential game lies in finding a sustainable balance between compliance and decentralization:
● On one hand, they must actively embrace regulations from various countries and negotiate clearer standards with regulatory agencies to allow mainstream institutions and the general public to enter with confidence;
● On the other hand, they must avoid reducing the industry to a "centralized system + new technology shell," thereby losing the original intent of decentralization and anti-monopoly.
In this sense, "we are still in the early stages" is not only a judgment of the time dimension but also an acknowledgment that the power restructuring is not yet complete. Institutional boundaries have yet to be defined, technological routes are still diverging, and market patterns are far from solidified; any hasty "endgame theory" is more like an emotional outburst than a conclusion based on structural analysis.
How to Position in the Early Industry: Strategies of Time and Structure
In the future, compliance and institutionalization will continue to be the main theme of the crypto industry, rather than an "external variable" that can be ignored. Looking back at the past few cycles from the perspective of the end of 2024, a clear pattern can be seen: every significant regulatory advancement—whether loosening or tightening—ultimately forces the industry to raise thresholds in infrastructure, security standards, and governance structures.
For individual and institutional participants, more pragmatic strategies may include:
● Shifting focus from single coin prices to the progress rhythm of infrastructure and compliance frameworks, viewing regulatory milestones as dividing lines for medium- to long-term risks and opportunities;
● In asset allocation, placing greater emphasis on survival probability and anti-cyclical capability—projects that can withstand policy reviews, technological iterations, and liquidity exhaustion often do not excel in short-term gains but survive after each round of reshuffling;
● Paying attention to "slow variables" such as developer ecosystems, the number of compliant products, and the proportion of real on-chain transactions, rather than being led by "fast variables" driven by social media and emotions;
● Accepting the premise that "early industries inevitably accompany high volatility and policy uncertainty," viewing position management and risk hedging as part of the participation ticket rather than a remedial measure afterward.
When CZ says "we are still in the early stages," he is not pointing to another round of price myths but to a global financial and value network that is still in the structural building phase. If the last technological revolution reshaped the production and dissemination of information, this time, it is reshaping the generation, accounting, circulation, and governance of value. True long-term players often do not measure an industry's maturity by a few months of ups and downs but by whether it still exists after multiple rounds of regulatory games and macro shocks, and whether it is stronger, more transparent, and more institutionalized than the previous round.
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