Market Psychology 2025: When the Monetary System Must Reposition

Introduction | Industry declaration or psychological declaration?

The year 2025 will be remembered not for systemic issues, but for the disparity between economic reality and psychological perception. Messari’s annual report ( over 100,000 words, 401 minutes of reading ) highlights a strange point: the Crypto Fear & Greed Index dropped to 10 in November — a level of “extreme fear” rarely seen in over a decade.

But upon closer inspection, the surprising facts are:

• No exchanges defaulted or misused user funds
• No credit chain collapse
• Market capitalization did not fall below the previous cycle’s peak
• Stablecoin market cap even reached historic highs
• Regulatory frameworks continued to become clearer

This raises a fundamental question: If the industry isn’t collapsing, why is the sentiment plummeting so badly?

The phenomenon of doubling: Two markets, two experiences

Messari points out something very interesting. For Wall Street institutions allocating crypto assets, 2025 is the best year since they entered the space. But for those tracking prices on Telegram or Discord to find Alpha, this is the most painful year they’ve ever experienced.

The same market, two completely opposite experiences. This is not random psychological volatility, but a structural misalignment: the market is changing its main participants, but most are still using old strategies to play the new game.

Why do retail investors lose?

2025 marks the first time a long-held assumption is systematically broken:

Previously: early, diligent, high-risk tolerance would yield superior profits.

Now:

• Assets are no longer valued highly just because of “stories”
• Layer 1 growth does not automatically translate into token profits
• High volatility no longer guarantees high returns

As a result: many start to believe that if they aren’t making money, then the entire industry must have problems. But Messari concludes the opposite — the industry is becoming more like a mature financial system, no longer a machine for continuous speculative profits.

Four years of change: From debt to monetary choice

To understand more deeply, we need to look at the root causes. The global public debt chart over the past 50 years shows an unstoppable trend:

• USA: 120.8% of GDP
• Japan: 236.7% of GDP
• France: 113.1% of GDP
• UK: 101.3% of GDP
• China: 88.3% of GDP
• India: 81.3% of GDP
• Germany: 63.9% of GDP

This is not the fault of any specific country but a common outcome crossing administrative and political boundaries. Whether democratic or authoritarian, public debt is growing faster than economic output.

When debt grows faster than economic growth, the system has only three options: inflation, prolonged low real interest rates, or fiscal austerity. Whatever path is chosen, the costs are borne by savers.

Messari writes cautiously: “When debt outpaces output, savings are definitely the ones sacrificed.”

2025: When collective awakening occurs

The psychological collapse in 2025 is because more and more people are consciously aware of this for the first time. Previously, people still believed in old assumptions:

• Inflation is temporary
• Cash is always safe
• Fiat currency is stable long-term

But reality continuously contradicts:

• Hard work ≠ Asset preservation
• Savings are constantly eroded
• Asset allocation becomes more difficult

The psychological collapse does not originate from Crypto, but from the shaken confidence in the entire financial system. Crypto is just the first place where this shock is felt.

Why isn’t Crypto just a “money-making ticket”?

A common misconception: Crypto was created to promise higher returns. In fact, its core value is:

• Predictable rules
• Monetary policy not arbitrarily changed by a single organization
• Assets that can be self-custodied
• Value that can cross borders without permission

It is not a “money-making tool,” but: Restoring individual monetary sovereignty in a high-debt, low-uncertainty world.

BTC: Money chosen, not won

A common misunderstanding: Bitcoin is winning over other assets. The reality is more complex — money is not a technical issue, but a social consensus.

BTC doesn’t need to be “faster,” “cheaper,” or “more functional.” It only needs to be regarded as a long-term store of value, stable.

Data from 12/1/2022 to 11/2025 clearly shows:

• BTC up 429%
• Market cap: from $318 billion → $1.81 trillion
• BTC.D increased from 36.6% → 57.3%

In theory, this is the “altcoin boom era,” but capital flows are continuously returning to BTC. This is a market reclassification of assets.

ETFs and DAT (digital assets) not only create “new purchases,” but also change who buys, why they buy, and how long they can hold:

• ETFs legitimize BTC as a legal asset
• DAT integrates BTC into corporate balance sheets
• National reserves elevate BTC to a “strategic asset”

Once BTC is held this way, it is no longer “highly volatile assets that can be sold at any time,” but a monetary asset to be held long-term. Money, when treated this way, becomes very hard to revert.

“Boring” is proof that BTC is money

In 2025, BTC has:

• No new applications
• No recurring stories
• No ecosystem narratives
• No “milestones” or “achievements”

But precisely because of that, it meets the criteria of money:

• Not dependent on future promises
• No need for growth stories
• No need for continuous delivery teams
• Just not making mistakes

In a high-debt, low-uncertainty world, “not making mistakes” is a scarce asset.

L1: From “future money” to “what is it really?”

When BTC establishes its monetary role, L1 faces a tougher question. By the end of 2025:

• BTC: $1.80 trillion USD
• Other L1s: about $0.83 trillion USD
• Remaining assets: less than $0.63 trillion USD

81% of crypto market cap is valued as “money” or “potential to become money.”

But here lies the problem: Messari data shows a sharp contradiction. Removing anomalies like TRON:

• Total revenue of L1 continually declines
• But valuation multiples keep increasing

Adjusted P/S:

• 2021: 40x
• 2022: 212x
• 2023: 137x
• 2024: 205x
• 2025: 536x

Meanwhile, total revenue of L1:

• 2021: $12.3 billion
• 2022: $4.9 billion
• 2023: $2.7 billion
• 2024: $3.6 billion
• 2025 (estimate): $1.7 billion

This gap cannot be explained by “future growth.” The market is not mispricing L1s, but reducing their imaginary monetary space.

Solana: Evidence of a new frontier

SOL is one of the few L1s outperforming BTC in 2025. Its ecosystem grew 20-30 times, but its price only surpassed BTC by 87%.

To achieve clear superior returns, L1s need a boom in ecosystem scale that is entirely different. This is not “lack of effort,” but the profit function has been rewritten.

As BTC becomes “money,” the burden on L1s grows. Previously, L1s could say: “It will become money in the future.” But now, BTC’s role is established. The market no longer wants to pay the same premium for a “second currency.”

Once the “monetary story” is gone, L1s must accept real-world constraints. This is the direct root of many people’s psychological collapse in 2025.

Conclusion | From psychology to structure, then to money

The psychological collapse of 2025 is not without reason. It reflects a fundamental shift:

• Surface phenomenon: Alpha declines, easy profit opportunities disappear
• Underlying process: Participation models change, old strategies lose effectiveness
• Root cause: The global monetary system is unbalanced, Crypto is no longer a “profit machine” but a “monetary solution”

Psychology does not reveal the truth of the system. Extreme pessimism does not mean failure, but more and more people realize the problems of the old system are real. This is not an end, but a repositioning.