Crypto has spent most of its life underneath one convenient dismissal: \u201cit\u2019s just a\u00a0bubble.\u201d<\/p>\n
It\u2019s a comforting story if you\u2019re sitting on the sidelines. If it\u2019s a bubble, you get to be right eventually. If it isn\u2019t, you have to explain why a parallel financial system bootstrapped itself in front of you and you stayed in\u00a0T\u2011bills.<\/p>\n
What\u2019s more interesting than \u201cbubble or not\u201d is a different set of questions: has crypto actually found product\u2013market fit, how does it compare to AI as a technology and capital cycle, and what would it take for crypto to grow non\u2011linearly in a world filled with AI\u00a0agents?<\/p>\n
This essay is my attempt to answer those, or at least give us a cleaner way to think about\u00a0them.<\/p>\n
Every important technology looks like a bubble from the outside. The pattern is almost boring: a new rail appears, money pours in, stories outpace cash flows, and then gravity reasserts itself.<\/p>\n
Minsky and Kindleberger broke this down long before tokens existed.\u00b9 \u00b2 First you get displacement<\/strong>\u200a\u2014\u200arailways, the internet, generative AI, Bitcoin\u200a\u2014\u200asomething that makes the old way of doing things obviously worse. Then a boom<\/strong> as capital and attention chase the upside: higher prices are explained away as \u201cthe market finally gets it.\u201d At some point you slide into euphoria<\/strong>: people stop asking what the asset does and start asking only whether someone else will pay more. That\u2019s when the thing itself turns into a vehicle for leverage, storytelling, and career risk. Eventually the people closest to the plumbing step back, you hit profit\u2011taking<\/strong>, and the rest of the market discovers the narrowness of the\u00a0exit.<\/p>\n Richard Bernstein\u2019s checklist is the modern risk manager\u2019s shortcut: if you see too much liquidity, too much leverage, universal access, a flood of new issuance and crazy turnover, you\u2019re probably in a bubble, not just a repricing.\u00b3<\/p>\n Crypto has hit those conditions before. 2017 and 2021 weren\u2019t \u201cmisunderstood value plays.\u201d They were classic displacement\u2011to\u2011euphoria arcs sitting on genuinely new rails. What matters now is whether, in 2026, we\u2019re still in that zone\u200a\u2014\u200aor whether crypto has quietly shifted categories from \u201cpure bubble\u201d to \u201cnew infrastructure with periodic blow\u2011offs.\u201d<\/p>\n To get past vibes, four questions are enough to \u201chealth check\u201d the market each\u00a0cycle:<\/p>\n Strain<\/strong>\u200a\u2014\u200aHow much capital is going in versus how much revenue is coming\u00a0out?PMF<\/strong>\u200a\u2014\u200aAre there real users with real jobs-to-be-done that persist through\u00a0cycles?Structure<\/strong>\u200a\u2014\u200aWho is holding the risk: short\u2011term tourists, long\u2011term institutions, or big balance sheets that don\u2019t panic instantly?Cycle<\/strong>\u200a\u2014\u200aWhere are we on the boom \u2192 euphoria \u2192 profit\u2011taking \u2192 panic spectrum right\u00a0now?<\/p>\n This is loosely inspired by Azeem Azhar\u2019s AI \u201cboom vs bubble\u201d dashboard, where he tracks economic strain, industry strain (revenues vs capex), revenue momentum, valuation heat and funding quality for AI. He lays this out in Exponential View\u2019s \u201cIs AI a bubble?\u201d and in follow\u2011up discussions of his five\u2011gauge AI dashboard.\u2074<\/p>\n For crypto, we can steal the structure without copying the\u00a0details.<\/p>\n If you mute the price charts and just watch behavior, one answer is obvious: the world has found product\u2013market fit for dollar rails that do not depend on your local\u00a0bank.<\/p>\n Stablecoins are the clearest example. a16z\u2019s State of Crypto 2025<\/em> report and follow\u2011up coverage point to tens of trillions of dollars<\/strong> in gross stablecoin transaction volume over the last year, with roughly 9 trillion dollars of \u201creal\u201d adjusted volume<\/strong> in 2025 alone\u200a\u2014\u200amore than PayPal and in the same conversation as Visa.\u2075 \u2076 TRM Labs\u2019 2025 Crypto Adoption and Stablecoin Usage Report<\/em> and Chainalysis\u2019 2025 Global Crypto Adoption Index<\/em> both show that a lot of this isn\u2019t just wash trading between exchanges; it\u2019s remittances, savings, and payments in places like India, Nigeria, Brazil and Turkey, where the alternative is capital controls and double\u2011digit inflation.\u2077 \u2078<\/p>\n People aren\u2019t routing that kind of volume through stablecoins because it\u2019s funny. They\u2019re doing it because it works better than their\u00a0banks.<\/p>\n On top of that, DeFi has quietly rebuilt itself. Total value locked has climbed back above the 200 billion\u2011dollar mark, with late\u20112025 industry reports putting DeFi TVL around 237 billion dollars<\/strong> and documenting a strong recovery in lending and derivatives.\u2079 Exchange and analytics reports (for example, Phemex and AInvest) now show double\u2011digit billions<\/strong> in annual protocol revenue across lending markets, perps and DEXs.\u00b9\u2070 \u00b9\u00b9 Stablecoin issuers like Tether, in their own financial statements, report multi\u2011billion\u2011dollar profits on reserves.\u00b9\u00b2<\/p>\n That is what early, messy product\u2013market fit looks like for financial infrastructure: the casino layer can be way up or way down, but the pipes stay in use and the toll booths keep charging.<\/p>\n If you had to grade it: stablecoins and exchanges are clearly across the PMF line; DeFi \u201cblue chips\u201d are in strong emerging PMF territory; NFTs, gaming, and most new L1s are still in the prove\u2011you\u2019re\u2011not\u2011just\u2011beta phase.<\/p>\n Run the four\u2011question test.<\/p>\n On strain<\/strong>, the picture is more sober than in previous cycles. Galaxy Digital\u2019s Q4 2025 crypto VC report, for example, estimates on the order of 20 billion dollars of venture capital<\/strong> going into crypto and blockchain across roughly 1,600 deals for the year.\u00b9\u00b3 On the other side of the ledger, DeFi revenue reports and stablecoin profit disclosures put 2025 protocol and platform revenue in the mid\u2011teens of billions<\/strong>, dominated by stablecoins, centralized exchanges, perps and lending markets.\u00b9\u2070 \u00b9\u00b9 \u00b9\u00b2 That\u2019s not a perfect match, but it\u2019s at least the same ballpark. This is very different to 2017, when investment and token issuance dwarfed any notion of real cash\u00a0flows.<\/p>\n On PMF<\/strong>, the key is that usage doesn\u2019t go to zero when price does. Stablecoin supply and volumes compressed in the last drawdown but didn\u2019t collapse. DeFi kept clearing trades. Global ownership counts continued to grow, especially in emerging markets. TRM Labs and Chainalysis both highlight that adoption is now broad\u2011based across income levels and regions, not just a US\/EU retail phenomenon.\u2077 \u2078<\/p>\n On structure<\/strong>, we\u2019ve shifted from \u201cyour barber is levered long on altcoins\u201d to a more layered holder base. There are spot ETFs and ETPs absorbing institutional and retirement money; corporates and funds experimenting with stablecoin treasury and tokenized treasuries (see Amundi\u2019s Cryptocurrencies Break Into The Mainstream 2025<\/em> and Henley & Partners\u2019 Crypto Wealth Report 2025<\/em>); and banks and fintechs quietly embedding on\u2011 and off\u2011ramps.\u00b9\u2074 \u00b9\u2075 Retail is still here, but it\u2019s not the only pillar under the market. That matters for how panics play\u00a0out.<\/p>\n On cycle<\/strong>, 2025 clearly had euphoric pockets: reflexive low\u2011float tokens, meme seasons, the usual suspects\u200a\u2014\u200aplenty of exchange and media pieces framed it as \u201cCrypto Bubble 2025?\u201d\u00b9\u2076 The subsequent washout has already taken a lot of heat out. Derivatives recaps like the CoinGlass\/Pi42 2025 trends report and KuCoin\u2019s perps market analyses show that open interest and leverage were materially flushed into early 2026.\u00b9\u2077 \u00b9\u2078 On\u2011chain analysts tracking valuation metrics like NVT, MVRV and NUPL through dashboards such as Woobull, Bitbo, Glassnode and Bitcoin Magazine Pro have likewise pointed out that those metrics, while elevated, are not at the extremes seen at prior cycle tops.\u00b9\u2079\u00a0\u00b2\u2070<\/p>\n Put together: parts of crypto are perpetually bubbly, but the ecosystem as a whole increasingly resembles a high\u2011beta growth sector with real revenue and recurring use, not a singular, terminal bubble waiting to\u00a0pop.<\/p>\n Crypto keeps getting yoked to AI in narratives because both attract capital and attention. Under the hood, they\u2019re exposed to different failure\u00a0modes.<\/p>\n AI is fundamentally a capex story. Hyperscalers and large tech firms are pouring hundreds of billions into GPUs, data centers and networking. Azhar\u2019s AI dashboard work notes that AI capex as a share of GDP and sector revenue is exploding, while AI\u2011specific revenues are still catching up; in his framing, AI\u2019s industry strain<\/em>\u200a\u2014\u200athe ratio of AI revenue to AI capex\u200a\u2014\u200asits somewhere in \u201camber flirting with red,\u201d with multiple dollars of investment for every dollar of current AI revenue.\u2074 A mainstream synthesis of this is Fortune\u2019s \u201cAI isn\u2019t a bubble\u200a\u2014\u200abut it\u2019s showing warning signs.\u201d\u00b2\u00b9<\/p>\n Crypto, by contrast, is protocol\u2011first. Its \u201ccapex\u201d is largely R&D, incentives, startup burn and some infra; its revenues are native and visible: CEX and DEX fees, lending spreads, stablecoin income, blockspace fees. The main systemic risk is not \u201cwe built too many data centers,\u201d it is \u201cwe allowed too much of the revenue stack to depend on one macro regime and one product vertical\u201d\u200a\u2014\u200anamely, high interest rates making stablecoin reserves extremely profitable and USD rails dominating everything. Stablecoin profit and volume coverage in 2024\u20132025\u200a\u2014\u200afrom Tether\u2019s own profit disclosures to \u201cstablecoin payments hit $9T in 2025\u201d\u2011type pieces and reports that stablecoin volumes now rival or exceed Visa and PayPal\u200a\u2014\u200amakes this dependence very obvious.\u2075 \u2076 \u00b9\u00b2\u00a0\u00b2\u00b2<\/p>\n One\u2011line version: AI is in danger of a capex bubble; crypto is in danger of a concentration problem.<\/p>\n Escaping the four\u2011year halving\/ETF\/halving\/ETF loop requires demand that doesn\u2019t care about what Crypto Twitter thinks on a given day. There are at least three obvious\u00a0paths.<\/p>\n The first is AI agents as native economic actors<\/strong>. Take the simplest version: a software agent that can reason, hold a wallet, and call APIs. That agent needs to pay for compute, data, other agents, and humans. It needs to manage working capital. It needs to settle millions of tiny transactions at all hours, with no human in the loop. ACH, SWIFT and card networks are not built for that. Public blockchains with programmable money are. Early experiments connecting LLM agents to wallets and on\u2011chain protocols\u200a\u2014\u200athe \u201cagentic DeFi\u201d and autonomous agent experiments you see in dev circles\u200a\u2014\u200aare the pre\u2011alpha of this\u00a0world.<\/p>\n The second is machine\u2011to\u2011machine payments<\/strong> more broadly. IoT devices paying each other for bandwidth, storage, or live data; microservices paying other microservices for results; bots paying for order flow and execution. Once the average transaction size drops below what card networks can handle economically, but the total count explodes, crypto\u2019s settlement and composability advantages start to dominate. Derivatives and infrastructure reports already show that algorithmic and automated flow is a large share of volume; it\u2019s not a stretch to go from \u201cbots trading\u201d to \u201cagents doing everything.\u201d\u00b9\u2077 \u00b9\u2078<\/p>\n The third is boring institutional plumbing<\/strong>. Tokenized treasuries being used as collateral. Cross\u2011border B2B settlement moving from correspondent banking to stablecoins. Fund subscriptions and redemptions happening on\u2011chain for auditability and speed. Research from firms like Amundi, Henley, and various bank outlooks all point in this direction: crypto slowly but steadily embedding itself as backend infrastructure rather than front\u2011of\u2011house speculation.\u00b9\u2074 \u00b9\u2075<\/p>\n None of these rely on another memecoin season. All of them rely on crypto doing what it\u2019s actually good at: being an always\u2011on, programmable, global settlement layer.<\/p>\n The relationship that will matter most over the next decade may not be human\u2011to\u2011human at all. It will be agent\u2011to\u2011agent, agent\u2011to\u2011protocol, and agent\u2011to\u2011marketplace. In that world, \u201cidentity\u201d is mostly an on\u2011chain reputation curve. \u201cCredit\u201d is a function of behavior across thousands of transactions, not a PDF loan application. \u201cCounterparty risk\u201d is quantifiable history, not\u00a0vibes.<\/p>\n Crypto is oddly well suited to that reality. Histories are public. Contracts are code. Access is permissionless. You can build reputation, credit, coordination, and ownership directly on top of that substrate.<\/p>\n If we still manage to turn that<\/em> into a bubble, it won\u2019t be because humans got too excited about dog coins a third time. It\u2019ll be because we underestimated how quickly machines would start needing blockspace, liquidity, and programmable money\u200a\u2014\u200aand how bad humans are at pricing that\u00a0future.<\/p>\n Economic bubble\u200a\u2014\u200aWikipedia Crypto, Bubbles, and The Coming Agent Economy<\/a> was originally published in Coinmonks<\/a> on Medium, where people are continuing the conversation by highlighting and responding to this story.<\/p>","protected":false},"excerpt":{"rendered":" Why crypto\u2019s boom-and-bust cycles look less like a terminal bubble and more like the messy monetization phase of a new financial rail. Crypto has spent most of its life underneath one convenient dismissal: \u201cit\u2019s just a\u00a0bubble.\u201d It\u2019s a comforting story if you\u2019re sitting on the sidelines. If it\u2019s a bubble, you get to be right […]<\/p>\n","protected":false},"author":0,"featured_media":135544,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":["post-135543","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-interesting"],"_links":{"self":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts\/135543"}],"collection":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=135543"}],"version-history":[{"count":0,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts\/135543\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/media\/135544"}],"wp:attachment":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=135543"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=135543"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=135543"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}A Simple Mental Model For The Crypto\u00a0Market<\/h3>\n
Has Crypto Actually Found Product\u2013Market Fit?<\/h3>\n
Is Crypto A Bubble Right\u00a0Now?<\/h3>\n
Crypto vs AI: two different risk\u00a0profiles<\/h3>\n
Escape velocity: how crypto grows 10\u00d7 from\u00a0here<\/h3>\n
Agents, Relationships, And What Crypto Is Really\u00a0For<\/h3>\n
Citations<\/h3>\n
https:\/\/en.wikipedia.org\/wiki\/Economic_bubble<\/a>\u201cUnderstanding the 5 Stages of an Economic Bubble\u201d\u200a\u2014\u200aInvestopedia
https:\/\/www.investopedia.com\/articles\/stocks\/10\/5-steps-of-a-bubble.asp<\/a>\u201cBubble? 5 for 5.\u201d\u200a\u2014\u200aRichard Bernstein Advisors (PDF)
https:\/\/assets.ctfassets.net\/tpwhn4idgh34\/29rN8kzEkFbe5RhcCNF1Hp\/3204711951c436b1cb3a25a2f913fee5\/RBA_Insights_Bubble_06.21.pdf<\/a>\u201cIs AI a bubble?\u201d and AI boom\/bubble dashboard\u200a\u2014\u200aExponential View (Azeem\u00a0Azhar)\u201cState of Crypto 2025: The year crypto went mainstream\u201d\u200a\u2014\u200aa16z crypto
https:\/\/a16zcrypto.com\/posts\/article\/state-of-crypto-report-2025\/<\/a>\u201cStablecoin Payments Hit $9 Trillion in 2025, Rivaling Global Giants Like PayPal and Visa: A16z\u201d\u200a\u2014\u200aYahoo Finance
https:\/\/finance.yahoo.com\/news\/stablecoin-payments-hit-9-trillion-042534119.html<\/a>\u201c2025 Crypto Adoption and Stablecoin Usage Report\u201d\u200a\u2014\u200aTRM Labs
https:\/\/www.trmlabs.com\/reports-and-whitepapers\/2025-crypto-adoption-and-stablecoin-usage-report<\/a>\u201cThe 2025 Global Adoption Index\u201d\u200a\u2014\u200aChainalysis
https:\/\/www.chainalysis.com\/blog\/2025-global-crypto-adoption-index\/<\/a>\u201cDeFi TVL Hits Record $237B as Daily Active Wallets Plunge 22% in Q3\u201d\u200a\u2014\u200aYahoo Finance
https:\/\/finance.yahoo.com\/news\/defi-tvl-hits-record-237b-181957477.html<\/a>\u201c2025 DeFi Report Highlights Revenue Growth and Value Distribution\u201d\u200a\u2014\u200aPhemex
https:\/\/phemex.com\/news\/article\/2025-defi-report-highlights-revenue-growth-and-value-distribution-53605<\/a>\u201cCrypto Protocol Revenue Growth: A Lucrative Opportunity in DeFi and Stablecoin Ecosystems\u201d\u200a\u2014\u200aAInvest
https:\/\/www.ainvest.com\/news\/crypto-protocol-revenue-growth-lucrative-opportunity-defi-stablecoin-ecosystems-2508\/<\/a>\u201cTether Hits $13 Billion Profits for 2024 And All-Time Highs in U.S. Treasury Holdings\u2026\u201d\u200a\u2014\u200aTether
https:\/\/tether.io\/news\/tether-hits-13-billion-profits-for-2024-and-all-time-highs-in-u-s-treasury-holdings-usdt-circulation-and<\/a>\u201cCrypto & Blockchain Venture Capital\u200a\u2014\u200aQ4 2025\u201d\u200a\u2014\u200aGalaxy Digital
https:\/\/www.galaxy.com\/insights\/research\/crypto-blockchain-venture-capital-q4-2025<\/a>\u201cCryptocurrencies Break Into The Mainstream 2025\u201d\u200a\u2014\u200aAmundi
https:\/\/www.research-center.amundi.com\/article\/cryptocurrencies-break-mainstream<\/a>\u201cThe Crypto Wealth Report 2025\u201d\u200a\u2014\u200aHenley & Partners
https:\/\/www.henleyglobal.com\/publications\/crypto-wealth-report-2025<\/a>\u201cCrypto Bubble 2025: Are We in Another Speculative Frenzy or\u00a0\u2026\u201d\u200a\u2014\u200aBTCC
https:\/\/www.btcc.com\/en-US\/square\/NovaFund\/887920<\/a>\u201cCoinGlass 2025 Report: Crypto Derivatives Trends For 2026\u201d\u200a\u2014\u200aPi42
https:\/\/pi42.com\/blog\/crypto-derivatives-market-2025-report\/<\/a>\u201cPerpetual Futures Market Growth and Metrics Analysis in 2025\u20132026\u201d\u200a\u2014\u200aKuCoin
https:\/\/www.kucoin.com\/news\/flash\/perpetual-futures-market-growth-and-metrics-analysis-in-2025-2026<\/a>Bitcoin NVT Ratio\u200a\u2014\u200aWoobull Charts
https:\/\/charts.woobull.com\/bitcoin-nvt-ratio\/<\/a>Bitcoin: Net Unrealized Profit\/Loss (NUPL)\u200a\u2014\u200aBitcoin Magazine Pro
https:\/\/www.bitcoinmagazinepro.com\/charts\/relative-unrealized-profit–loss\/<\/a>\u201cAI isn\u2019t a bubble\u200a\u2014\u200abut it\u2019s showing warning signs\u201d\u200a\u2014\u200aFortune
https:\/\/fortune.com\/2025\/11\/13\/ai-boom-bubble-bust-dot-com-azeem-azhar\/<\/a>\u201cStablecoin Monthly Volumes Now Outpace Visa, PayPal As Supply Crosses $300 Billion This Year: Report\u201d\u200a\u2014\u200aStocktwits News
https:\/\/www.stocktwits.com\/news-articles\/markets\/cryptocurrency\/stablecoin-volumes-now-outpace-visa-paypal-as-supply-crosses-300-billion-this-year-report<\/a><\/p>\n