Beijing, Jianguomen. I met a VC friend at a café downstairs, with the unique, crisp gray sky of February outside the floor-to-ceiling windows. This was my first coffee chat with someone from the crypto circle in a long time, and I felt it was a signal in itself. Sure enough, as soon as my friend sat down, she gave me a helpless look: "How long do you think the bear market will last? We haven't made a move in six months."
Six months is almost equivalent to a century in an industry that measures iteration speed in days.
She told me it wasn't because no one was starting businesses; they still talked to many entrepreneurs every month, but they were confused and didn't know what good directions and opportunities were left.
Stirring her coffee, she smiled wryly: "Sigh, my boss wants me to look into AI, but I still have faith in crypto."
In that statement, I heard the last struggle and reluctance of a practitioner. When the capital's wind vane has clearly turned, faith has become the cheapest yet most luxurious thing.
The next day, Kyle Samani, co-founder of Multicoin Capital, once known as the "High Priest of Solana" and a proponent of "thesis-driven investment," announced on social media that he was leaving the industry; the high priest had renounced his faith.
When the smartest minds in an industry and the most sensitive capital choose to exit simultaneously, I realized we were entering a serious moment.
The Great Retreat
For the past decade, the story of cryptocurrency has been written on the flood of global liquidity. Now, the tide is receding, but what is being washed ashore is not just cryptocurrency.
February 2026 is a nightmare for all holders of risk assets globally. What we see is no longer a seesaw effect; U.S. stocks, gold, and cryptocurrencies—assets that previously had varying risk appetites—are now holding hands and 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 close our eyes and believe "tomorrow will be better," has officially come to an end.
Economist Hyman Minsky once said that the end of prosperity is often 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 quantitative easing period, near-zero interest rates flooded the global market with hot money seeking high returns. This money surged into any asset class that could tell a sexy story, and cryptocurrency was undoubtedly the sexiest of them all.
However, when hawkish figure Kevin Warsh was nominated as the next Federal Reserve Chair, when the Fed began to shrink its balance sheet, when the dollar index strengthened, and when global funding costs rose, the tide receded. The first to be exposed were those assets most reliant on stories 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 Application, dedicated to the next generation of the internet, Web3. Now, they have both collapsed almost simultaneously.
First, let's look at the Temple of Value. Since the birth of Satoshi Nakamoto's white paper in 2008, digital gold has been the core and most robust narrative of Bitcoin. It is considered an inflation hedge, decentralized, and a store of value independent of sovereign states.
However, when a real crisis strikes, the market votes with money. With Bitcoin being accepted by various mainstream institutions in recent years, its correlation with U.S. tech stocks once climbed to 0.8. This means that it is no longer a hedge against risk but rather an amplifier of risk. It is not a safe haven but the eye of the storm. When the Nasdaq sneezes, Bitcoin might end up in the ICU.
As the Temple of Value teeters, what about the Temple of Application?
To understand the collapse of the Temple of Application, we must grasp a broader context: the foundational narrative of technology has changed in recent years.
From 2010 to 2020, blockchain technology was almost the only "future technology" that could ignite the imagination of capital. It was the protagonist of that era's narrative of technological innovation, a game that all VCs could not afford to miss. The rise of Bitcoin was not just a monetary phenomenon but also a reflection of the value of this technological foundation.
But now, the protagonist has changed. AI has become the new deity.
The rise of AI acts like a mirror, reflecting the emptiness of Web3 applications. Initially, when the wave of AI surged, the crypto industry had a glimmer of optimistic fantasy. We tried to combine the two, creating a beautiful narrative of "AI as productivity, blockchain as production relations." But now it seems that was merely wishful self-comfort. AI does not need blockchain to prove its value; capital and talent will always flow to the place that is easiest to understand, the sexiest, and the most bubble-prone. And today, that place is AI.
This mirror has also left believers like Kyle Samani feeling despair. Samani and his founded Multicoin were once the most devout evangelists of Web3. They were among the earliest and most important supporters of Solana, and their DePIN paper was once considered the most viable path for Web3 to enter the real world.
However, when this high priest finally admitted that the essence of blockchain is merely an asset ledger, it was tantamount to declaring the collapse of the Temple of Application. We once thought we were building a future Rome, only to find that we were merely changing chips and carpets for a casino time and again.
The more serious issue is that the industry is losing its most precious asset: the imagination of the future.
Top developers and young talent are voting with their feet, moving from an industry that keeps repeating Ponzi schemes to other sectors. When the wind vane of various startup incubators no longer points to Web3, we know that an era may have come to an end.
However, technology never disappears because of the collapse of narratives. Decentralized ledgers, smart contracts, and breakthroughs in cryptography—these technologies still quietly lie there.
Only at this moment does no one know where their true home is. Perhaps they are destined not to reshape the world with great fanfare like AI technology but to solve specific problems in more concrete scenarios. Yet such stories are no longer sexy and can no longer attract hot money and followers.
The Human Condition
The collapse of grand narratives ultimately affects every individual. When the temples turn to ruins, we see a bleak picture of the human condition.
In January 2026, the decentralized custody startup Entropy, hailed as the most hardcore in technology, announced its closure after four years of operation; also in January, the trading platform Bit[.]com announced it would gradually shut down; in February, the compliant exchange Gemini, founded by the Winklevoss brothers, announced a 25% layoff and a complete exit from the UK, EU, and Australian markets, shrinking its business back to the U.S. Since its peak in 2022, the company's total number of employees has decreased by over 70%.
I opened social media and saw developers who once filled their profiles with WAGMI and added ".eth" to their names now signing off with "Building with LLMs."
I opened Twitter and saw a former colleague reminiscing about the stories we shared in a café four years ago, and many old friends posting about the industry's past prosperity and interesting moments.
When an industry begins to collectively reminisce, it indicates that it has lost sight of the future. We start to long for the summer of 2021, when the total market value of global cryptocurrency reached $3 trillion, when a picture of a monkey could sell for over a million dollars, and when the illusion of money being as accessible as air was prevalent.
During an avalanche, every snowflake feels innocent. But we are not snowflakes; we once created the snow ourselves and now watch it melt in our hands.
Will There Be Consensus at the Consensus Conference?
Next week, under the brilliant lights of Victoria Harbor, the Consensus conference will be held in Hong Kong. It is easy to imagine that crypto believers from around the world will gather again. They will be dressed in suits, and they will speak of consensus. But will there still be consensus in the venue?
This gives me a strong sense of absurdity. In an industry that has lost the two foundational narratives of digital gold and Web3, in a winter where cheap capital is no longer available and high priests are renouncing their faith, what consensus can we reach? Is it a consensus of warming together or a consensus of admitting failure?
Perhaps true consensus is never reached in the noisy conference halls but rather in the quiet introspection of each practitioner, in the courage to restart after acknowledging the shattering of illusions.
This industry needs a thorough, top-to-bottom self-cleansing. But cleansing does not equal destruction. When the tide recedes, something will always remain on the ruins.
Those who truly believe in decentralized technology may find a spark in the ruins, but it will no longer be a flame that changes the world; it will be a glimmer that solves problems. Perhaps in the next decade, we will see blockchain applications that are truly rooted in industries, serving specific groups, and not aiming for hundredfold returns. They may appear in supply chain finance, in digital identity verification, or in corners we cannot imagine today.
These will be smaller, slower, but also more real stories. They will no longer require grand narratives or myths of overnight wealth; all they need is patience and time. For those still at the table, this may be the only hope.
As I write this, I look out the window. The Beijing morning sky is still gray, just like the current state of this industry.
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