In the realm of cryptocurrency, Ryan Watkins, who previously served as a Senior Research Analyst at Messari, observes that the market is currently experiencing the most significant shift since his entry into the field eight years ago. In a lengthy discussion posted on X titled “The Twilight Zone: On the Cryptoeconomy in 2026 & Beyond”, he articulated that the inflated crypto valuations seen during the 2021 cycle are gradually being reevaluated, culminating in a four-year period centered on rationalization.

This period has allowed quality assets to stabilize at more viable price points, even as market sentiment remains low due to an extended downturn in altcoins.

Challenges of Bear Markets, Burnout, and New Opportunities

Watkins pointed out that regulatory uncertainty in the United States has historically hindered both institutional and business participation in the market. Various structural weaknesses, including the dual equity-token ownership, poor transparency practices, fluctuating revenues, and a lack of common valuation benchmarks, have all played a role in the significant performance decline of numerous tokens post-2021.

He also mentioned that these inherent flaws have magnified the effects of unrealistic expectations, resulting in substantial price declines, psychological fatigue among investors, and the departure of speculative capital that viewed cryptocurrencies as an easy pathway to wealth.

Watkins stated that this cleansing of the market has been both necessary and beneficial, as the pre-2022 landscape allowed fragile projects to enjoy disproportionately high returns, which he argues were not sustainable. He noted that many of these challenges are now being tackled as regulatory conditions improve, tensions between token holders and insiders align better, and transparency standards advance in conjunction with third-party data services.

Furthermore, Watkins identified a burgeoning array of crypto applications that continue to thrive independently of price fluctuations, such as peer-to-peer financial solutions, digital currencies, permissionless exchanges, derivative markets, global collateral frameworks, on-chain fundraising, tokenized asset offerings, and decentralized physical infrastructure systems.

He emphasized the growing consensus that most crypto assets should ultimately yield cash flows, while Bitcoin and Ethereum remain notable exceptions as stores of value. The self-sovereign control of on-chain cash flows marks a paradigm shift.

Emerging Blockchains and Business Growth

According to Watkins, premier blockchains like Ethereum, Solana, and Hyperliquid are cementing their roles as the foundational standards for upcoming ventures and businesses, due to their open-access design and effectiveness in capital usage. He has observed an uptick in both Wall Street and Silicon Valley companies launching production-ready blockchain solutions, particularly focusing on tokenization and stablecoins, with this momentum escalating as regulatory clarity optimizes their business focus towards growth and efficiency.

Despite these advancements, many analysts are still estimating modest growth rates below 20%, neglecting what Watkins views as an undervalued multi-year opportunity for leading projects. He noted that the appeal of cryptocurrencies is expected to grow in light of diminishing trust in established institutions, rising sovereign debt, and weakening currencies.

Conclusion

However, with intensified competition and escalated expectations, it is likely that weaker projects will be pushed aside, leading to the emergence of only a few dominant forces.

“The cryptoeconomy is not a single market maturing in unison, but a collection of products and businesses moving along different adoption curves. And perhaps more importantly, speculation doesn’t disappear when a technology enters its growth phase, it just ebbs and flows with shifts in sentiment and the pace of innovation. Anyone telling you the speculative days are over is probably just jaded or doesn’t understand history.”