The End of AI and Free Money Era in Crypto

⚖️ The Macro Environment Reset: How Politics and Liquidity Killed the Free Money Era

The crypto market didn’t collapse the way many expected. The shift in the macro environment made the correction slow and almost invisible.

There was no Terra moment, no FTX shockwave, no violent wipeout. Instead, it simply deflated. It lost heat slowly, quietly, almost invisibly. And by the time most people realized what was happening, the energy was already gone.

There are 2 main reasons:

The first was political.

When Trump returned, the macro environment shifted sharply, and liquidity realigned. Capital that once flowed freely into crypto started redirecting toward new interest groups. And when a market becomes too influenced, too “managed,” it loses its charm. Experienced investors can smell when the casino is being adjusted behind the curtains, and they pull back long before retail notices.

The second shift was the rise of AI.

Smart money never exits with fireworks; it rotates in silence. This time, it rotated away from tokens and toward compute, data centers, and large-scale models, which are assets with tangible demand and clearer monetization.

That’s why we didn’t see a dramatic crash. What we got instead was controlled venting, prices slid gradually, sentiment cooled, etc. The skeleton of the market still stands, but the speculative fuel that once animated it is gone.

After years of reckless expansion, the new macro environment pushed crypto into a consolidation phase.

Projects with no purpose are fading out. Teams with no real users are merging or shutting down. Even large, well-funded groups are cutting staff because the free-money environment that kept them alive no longer exists.

At this stage, no one cares about your airdrop, because the belief that you could make free money just by showing up has completely disappeared. VC backing doesn’t guarantee survival or a loud community means nothing if nobody actually uses the product. To survive now, a project needs three things:

• real users

• a real monetization plan

• a real problem to solve.

If even one is missing, the project is already dying - the market just hasn’t priced it in yet.

Another symptom of this shift is the shrinking of the crypto-native circle. Conferences feel like reunions of the same few hundred faces making deals with each other. That’s a loop built on the illusion that everyone in the room could somehow make free money off each other, and in a post-bubble world, those loops collapse fast

Meanwhile, Web2 builders are stepping in. They don’t care about hype or cult memes. They know how to build products, acquire users, and make revenue. They don’t need to cosplay as influencers to stay relevant.

Crypto-native teams, on the other hand, were raised in an era where mistakes didn’t matter and runway was infinite, and everyone believed you could somehow make free money simply by launching tokens.

That era is gone.

A token doesn’t make you a business,
A DAO doesn’t make you decentralized.
A runway doesn’t make your product necessary.

But this quiet season is also the best time to watch closely. This is when the real builders appear. They’re not loud. They’re not hyping anything. They’re just creating value while everyone else is waiting for the next narrative.

Thomas L. Friedman’s The World Is Flat argues that in the digital era - Globalization 3.0 - the Internet and collaborative technologies have leveled the global playing field. In this new environment, speed of adaptation becomes the ultimate competitive advantage. Individuals and organizations that quickly leverage these “flattening forces” shape their operational systems first, optimize global efficiency, and capture market share while the landscape is still forming.

Those who arrive late face a brutally competitive, saturated environment. They must meet higher performance standards, differentiate more aggressively, and avoid being replaced by automation, outsourcing, or platforms that scale faster than they can. In a flat world, success belongs to those who combine talent, connectivity, and unique value, not those who rely on geography or timing.

Crypto follows the same pattern. Think of the 2015 - 2019 period as the dropshipping boom: a phase where almost anyone entering the game could make free money with minimal effort. Early entrants captured oversized returns simply because the ecosystem was young and inefficient. But once the foundational giants were established, the easy phase ended.

The latecomers now face a mature system with defined power players, strict rules, and far higher expectations. To break through, they need sharper differentiation, stronger execution, and genuine value creation. Without that, they fade out, just like late-stage dropshipping stores.

Crypto isn’t dying. It’s shedding its old story. The next phase is the real game: tougher, cleaner, more disciplined, and finally honest. Only those who can adapt to this new reality will survive, and only those who create real value will rise.

Anyone replaying 2021 will get wiped. Anyone adapting to the new macro environment will own the next cycle.

⚖️ The AI Liquidity Drain and Crypto’s Controlled Deflation

Speculation dominates modern markets far more than it did 40 years ago, largely because the macro environment rewards narrative more than fundamentals. Between 1980 and 2008, the financial system shifted from productive investment to narrative-driven capital.

During this period, the share of global market value tied to tangible assets dropped from over $37.5T to under $15.5T, while intangible narrative-driven assets exploded. Investors discovered that hype yields faster returns than fundamentals, especially when information spreads instantly across digital networks.

This shift created a long chain of bubbles:

• The dot-com bubble in 2000 wiped out $5 trillion in market value.

• The 2008 crisis erased $19.2 trillion in household wealth.

• The 2017 crypto bubble pushed Bitcoin $BTC.X ( ▼ 0.17% ) up +1,900% in one year.

• The 2021 NFTs alone ballooned to $17B in traded volume before collapsing more than 90% a year later.

Now the cycle has shifted toward AI?

Today, nearly 58% of all global private investment inflows are going into AI-related ventures from chips to data centers to foundation models. Nvidia, the face of the AI trade, grew its market cap by over $2 trillion in 24 months.

The S&P 500’s performance is now so dependent on AI narratives that the top 7 AI-heavy companies (The Magnificent 7 $MAG7.SSI.X ( ▼ 2.17% ) ) contributed over 60% of the index’s gains in 2023 - 2024. This is not broad economic growth. It is concentrated speculative enthusiasm.

But the AI bubble is already showing early stress signals, a classic reaction when the macro environment overheats demand faster than value can form. Compute costs are rising faster than revenue. Model training budgets now exceed $1B per model for leading labs.

Electricity demand from AI data centers is projected to grow 160% by 2030. Yet monetization remains narrow, with fewer than 5% of AI companies generating meaningful profit. These are the same warning signs we saw in every cycle where people thought they could make free money forever, right before the bubble burst.

Meanwhile, big money has learned how to rotate faster. The same funds that pumped DeFi in 2020, NFTs in 2021, and memecoins in 2023 exited early and quietly.

Today, they are reallocating into AI infrastructure, sovereign AI initiatives, and large compute clusters. They don’t stay to clean up the aftermath. Some are already preparing new “post-AI narratives”, which could be quantum computing, synthetic biology, robotics, or tokenized RWA.

AI will eventually burst too, it’s following the same curve: exponential capital inflow, unsustainable expectations, narrowing real adoption, and rising operational cost.

Crypto, on the other hand, already completed its deflation. It didn’t collapse violently; it deflated gradually, which is why many didn’t feel the shift until it was too late.

The next cycle belongs to teams who can grow without hype and without selling fantasies about how users can make free money by joining early.

⚡ Key Takeaway

• The macro environment ended the free-money era, causing crypto to deflate quietly instead of crashing. Liquidity dried up slowly, removing the belief that markets would always let everyone make free money without real value creation.

• Political rotation under Trump reshaped the macro environment and redirected liquidity away from crypto. Investors pulled back once they sensed the market was being managed, killing the old expectation that anyone could make free money by simply joining early.

• AI absorbed global liquidity as the new speculative narrative, reshaping the macro environment. Capital moved into compute, chips, and data centers because they looked like the next place people might make free money during a new bubble cycle.

• Crypto entered a consolidation phase where only real users, revenue, and utility matter. Projects built on hype or the promise of make free money mechanics are fading because the macro environment no longer subsidizes weak teams.

• The crypto-native circle shrank as Web2 builders stepped in with real business experience. They focus on products, not memes, and don’t rely on illusions that communities can make free money off each other.

• AI is showing early bubble stress, repeating the same macro environment patterns seen in past crashes. Rising compute costs and weak monetization prove that no sector can sustainably help investors make free money forever.

• Big capital rotates faster than ever, abandoning hype markets before they burst. Funds moved from DeFi to NFTs to AI, proving the macro environment rewards mobility, not loyalty.

• The next cycle belongs to builders who can survive without hype. Those who adapt to the macro environment will lead the next wave, while those replaying 2021 will be eliminated.

⚠ This newsletter is for informational purposes only and should not be considered investment advice. Traders should conduct thorough research, understand the risks, and carefully evaluate their decisions before investing in cryptocurrency.

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