Regarding the tokenization of U.S. stocks, one perspective is that the crackdown on crypto projects is fatal, leaving no room for altcoins to thrive. The reason is that funds previously invested in crypto would be diverted to high-quality U.S. stocks. Admittedly, some of the funds that were originally in crypto will flow into tokenized U.S. stocks. However, this is only one side of the coin—there is another side.
Because asset tokenization, including the tokenization of the U.S. dollar, U.S. bonds, U.S. stocks, physical gold, etc., will greatly increase the volume of on-chain assets. The composability of the crypto ecosystem, coupled with Ethereum's scaling and solutions to issues like privacy, could lead to an explosion in on-chain transactions. This includes not only DEXs, perpetual contracts, prediction markets, but also the possibility that some funds originally invested in U.S. stocks will flow into the crypto market. Additionally, funds that wanted to invest in U.S. stocks but lacked the opportunity may also join, thereby expanding overall liquidity.
More importantly, the circulation of U.S. stocks on-chain is not entirely one-way; it could be bidirectional. However, the concern is that crypto projects lack solid revenue and cannot compete. But wealth effects are not solely determined by revenue; there are industries with revenue but low market capitalization in this world.
Of course, this also inevitably means the complete end of the kind of widespread altcoin seasons seen in the previous two cycles. However, high-quality altcoins and on-chain infrastructure, including public chains like Ethereum, DeFi, oracles, privacy technologies, digital identity, wallets, etc., will still be in demand. There is even a high probability that combinations like crypto AI agents and asset tokenization will give rise to new innovations, potentially creating new sectors similar to prediction markets or perpetual contracts.
The core idea here is not to assume that the tokenization of U.S. stocks will inevitably lead to doom and the siphoning of liquidity. Once stablecoins and tokenized U.S. stocks are on-chain, they will not simply lie idle; liquidity will inevitably emerge, and the composability of crypto will be fully utilized. Once there is a compelling narrative or promising projects, not only will funds from the crypto space flow in, but external funds will also enter. This is merely a matter of competing on the same field.
A few high-quality projects in the crypto space, once they gain a narrative, may not necessarily underperform compared to U.S. stocks. In the next cycle, it is highly likely that projects similar to prediction markets or perpetual contracts will emerge—projects that do not exist in traditional financial markets but carry the crypto-specific "dream valuation." Believe in the power of new on-chain liquidity and composability. The thirst for wealth and the pursuit of innovation are so urgent that they drive the bottom-up creation of new crypto species.
Moreover, expecting a repeat of the altcoin seasons of previous cycles is already unlikely. Even without the tokenization of U.S. stocks, the kind of comprehensive altcoin seasons seen in the last two cycles has already exited the crypto stage. However, a small number of high-quality crypto projects still have opportunities, especially those serving as infrastructure or applications for the tokenization of U.S. stocks.
Finally, each cycle has its "version darling." The version darlings of the cycle before last, the last cycle, and this cycle are all different, and the next cycle will be no exception.
The golden Wild West era of the crypto space is gradually coming to an end. With the entry of institutions, the crypto field has entered a new stage of financial innovation.
In this stage, there are still opportunities for significant returns, though the probability of hitting them is much smaller compared to the golden era. However, it is not impossible. Perhaps the version darling of the next cycle is still in their fourth year of university, or has suffered losses in this cycle, lying low and waiting for the opportunity to soar in the next cycle.
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