Shocking Claims from a Former Chinese Crypto Exchange Founder: “The Inevitable End Is Coming”
CoinEX founder Yang Haipo, in a comprehensive analysis he published, made rather pessimistic assessments about the future of the sector.
Haipo argued that the current structure of the cryptocurrency market, particularly Bitcoin, is unsustainable, suggesting that a sharp decline from the trillion-dollar market capitalization is “inevitable.” Yang Haipo stated that Bitcoin offers no productivity, carries no consumption value, and provides no real monetary function, making it difficult for this structure to survive in the long term. Arguing that comparisons to gold are invalid, Haipo claimed that gold occupies a different position due to both its physical uses and its historical role as a currency.
Haipo noted that Bitcoin previously had use cases for dark web payments, cross-border transfers, and micro-payments, but these functions were largely abandoned following the block size debates. According to Haipo, this turning point transformed Bitcoin from a “flawed currency” into a purely speculative instrument. Haipo also drew attention to the network’s security model, stating that as block rewards decrease, the system will become entirely dependent on transaction fees, which contradicts the “HODL” (holding) narrative.
One of the most striking points in Haipo’s analysis was his criticism of the economic structure of the crypto sector. Describing the sector as a “negative-sum system,” Haipo stated that a fixed cost of between $35 and $50 billion leaves the system each year.
Haipo stated that these costs are distributed among mining, exchanges, project teams, and other service providers, arguing that the actual revenue the sector receives from the outside world is extremely limited. He noted that transaction fees and the token economy largely create an “internal loop,” and that the system is primarily dependent on the influx of new investors.
Haipo, likening the crypto market to the casino industry, described exchanges as “casinos,” miners as “infrastructure providers,” and projects as “gambling tables.” However, he argued that presenting crypto with narratives like “revolution” or “the future of finance” distorts investors’ risk perception.
Related News Bitcoin (BTC) Is Gaining Momentum Again - Is the Recent Rally a Bull Trap or a Sign of New Rallies to Come?
According to Yang Haipo, the total operational costs incurred in the crypto sector to date have reached approximately $500 billion. Furthermore, when individual investor spending, hacking incidents, and penalties are added, the total “dead weight loss” is estimated to exceed $1 trillion.
Haipo argued that mining operations, in particular, have largely become about electricity and equipment costs, and that these expenditures do not generate lasting value, stating that the sector’s resource consumption has reached unsustainable levels.
Haipo calculated that the current cryptocurrency market capitalization of approximately $2.5 trillion actually has a lower “circulating value,” estimated at around $1.6 trillion. In contrast, the total value of stablecoin and fiat balances representing liquidity in the system is approximately $200 billion.
Haipo stated that this situation means approximately eight times effective leverage, and argued that even if only a small portion of investors wanted to exit, the market could face a serious liquidity crisis.
One of the most critical findings of the analysis was the assessment that the sustainability of the market is entirely dependent on new capital inflows. According to Haipo, ETFs and institutional investors represent the “last major wave of capital” entering the sector.
Haipo argued that if new entries slow down, the system will experience a “net loss of value,” ultimately leading to a massive decline in the cryptocurrency market. However, Haipo added that crypto assets would not be completely wiped out; a certain floor value would be established due to features such as censorship resistance and permissionless transfers. But he argued that maintaining the current trillion-dollar levels would be difficult.
*This is not investment advice.