With 100 billion dollars evaporating and faith collapsing, how can crypto believers maintain their foothold in the cold winter?
Author: Vanity Fair
Compiled by Moni
Original title: VIP followers in the crypto winter: 100 billion dollars have evaporated, why are they still holding on to it?
“I really can't stand it anymore.”
In the first few days of February this year, the Signal inbox of a major crypto market maker was filled with dozens of such messages. The crypto market plummeted 15% again — in just a few days, the $400 billion market value went up in smoke. In the previous four months, under the influence of Bitcoin, the total cryptocurrency market capitalization plummeted by nearly 50%, while Ethereum and Solana both declined by nearly 60%. The crash erased about $2 trillion in value and dragged the industry into a bear market. The crypto community called it a “cold winter” — a slightly nerdy metaphor that paid homage to the unsettling line in “Game of Thrones”: “Winter is coming.” (Winter is coming.)
The founders of the project panicked: some tried privatization urgently, some hastily initiated emergency equity financing, and others simply abandoned the ship and left the market. Frankly speaking, crypto veterans have experienced an even harsher decline — the market has plummeted 80% or even 90%, but this time, the chill was quite different.
While battling with regulators in Washington, Coinbase CEO Brain Armstrong watched his net worth evaporate around $100 million. There is an undercurrent of internal conflict in Ethereum, and co-founder Vitalik Buterin tweeted a series of french fries to express concern about how the platform is being scaled; as an early supporter of Polymarket, he expressed disgust with blockchain predicting the direction of extreme addiction in the market. Ordinary traders are denounced as “tourists” by industry veterans. They either panic and sell off, or switch to more trendy hot spots such as artificial intelligence and prediction markets.
Technology without faith and spiritual sustenance is nothing. What we have established is a religious movement
“They're all cowards.”
Meltem Demirors, an early crypto investor and current founder of Crucible Capital, said this about peers who fled in fear. She wears a diamond cross layered on her body, a black sports suit, and the company slogan “Keep the Faith” on her hips.
In the midst of this crypto winter, she's starting to buy Bitcoin again.
On the afternoon of February one afternoon, as the market continued to decline, a small group of true believers gathered at an art landmark in Lower East Manhattan — a bank once known as the “Temple of Capitalism,” which has now spent $300 million to transform it into the Nine Orchard Hotel, and Michael Novogratz, CEO of Galaxy Digital, became its new co-owner.
After the book wealth collectively shrunk by several billion dollars, Michael Novogratz, Meltem Demirors, and key crypto leaders such as Olaf Carlson-Wee, “Sister Wood” Cathie Wood, and Danny Ryan gathered to exchange experiences — they were not talking about what they sold, but what they were buying.
Cathie Wood holds a wealth of exclusive research data, Olaf Carlson-Wee insists that she never follows the news, and both are continuing to increase their Bitcoin positions. Danny Ryan doesn't care about everyday fluctuations: “I'm a Luddite (Luddite),” he claims, “I need to know what I need to know, and of course people will tell me.”
“Technology without faith,” Meltem Demirors emphasized again, “Technology without a spiritual core is worth nothing.” Unlike disciples who doubt the resurrection of Jesus, the faithful followers of cryptography have never wavered. “Seriously, what we created was a religious movement.”
Gold, commodities, real estate, bonds, equities — all asset classes answer the same question: where does value come from? In fact, they are the product of social consensus, and they have meaning only because of collective approval.
Gold: value comes from nature and scarcity; bonds: from institutional trust; real estate: from land and permanence; commodities: from matter itself; stocks: from human creativity.
Every asset requires a creation myth, from scarcity to capitalism itself. And in the eyes of those who believe that cryptocurrencies are the “sixth asset class,” the value of cryptocurrencies goes far beyond the financial level. “Since the dollar was decoupled from gold in 1971, I've been waiting for this day.” Cathie Wood recalls that Arthur Laffer, an authority on economics and the proponent of the Rough Curve in the Reagan era, once said this to her. Cathie Wood's actively managed ETF is heavily stealing disruptive technology. She asked Arthur Laffer, “How big can this idea really be?” The other party's answer revealed the ultimate fantasy of early crypto believers: “How big is America's monetary base, you say?”
On Halloween 2008, six weeks after the bankruptcy of Lehman Brothers, America's fourth-largest investment bank, the myth of institutional security completely collapsed. A mysterious person under the pseudonym Satoshi Nakamoto quietly sent a 9-page PDF document to a small number of cryptographers entitled “Bitcoin: A Peer-to-Peer Electronic Cash System.” This “white paper” outlines a new financial system that completely bypasses central institutions such as banks, governments, and the Federal Reserve, and frees ordinary people from inflation, asset freezing, and monetary policy. Bitcoin achieves self-security through “mining” — dedicated computers compete to solve cryptographic puzzles — and asset access relies on a string of exclusive mnemonic words: lost mnemonic words, funds disappear forever; if you keep that in mind, you can retrieve your wealth without permission anywhere in the world.
In 2009, Satoshi turned Bitcoin from theory to reality and unearthed the genesis block. After the rules were established, the anti-counterfeiting mechanism was implemented, and Bitcoin began to circulate (it was still worthless at the time), he completely disappeared. This retreat not only deepened Bitcoin's mythology, but also gave it true decentralization: there was no omnipotent controller, and this experiment belonged to everyone, and no one.
“I fell in love with Bitcoin at first sight.” Erik Voorhees, founder of the ShapeShift exchange and artificial intelligence in Venice, said. In 2011, while participating in a liberal free state project in New Hampshire, he discovered Bitcoin. “I think Bitcoin may conquer the world; it cannot be depreciated, no one person or institution can control it, and no one can stop it.”
The movement took root on the margins of society, and its followers were a group of post-financial crisis rebels: disappointed with reality and thirsty for social and political change. The early believers were young, male, and deeply addicted to the internet. They were cryptopunks on the forum, building their own information cocoon, believing that cryptography could do what regulators never did: redistribute power — Michael Novogratz, dressed in a new Valentino red suit, described “Bitcoin is like the rebels in “Star Wars.”
From “marginal rebels” to mainstream power
“Once you really understand Bitcoin,” said Carlson-Wee, founder of crypto hedge fund Polychain Capital. In 2011, as a senior at Vassar College, he first came into contact with Bitcoin on an online forum, quickly convinced that cryptocurrency is the future of global finance, and even convinced his thesis mentor to allow him to write his graduation thesis on this topic. After graduation, Carlson-Wee worked as a lumberjack in Washington State and cold-e-mailed her resume and thesis to Coinbase, a startup that was still operating in a San Francisco apartment at the time. Within a few days, she was hired and became the company's first employee. “In those early years, it was like everyone was keeping a secret that the whole world didn't know yet.”
When the “Occupy Wall Street” campaign sounded a wake-up call for a growing gap between the rich and the poor in America, the idea of financial autonomy and global financial inclusion advocated by cryptocurrencies resonated with a generation — they saw trillions of dollars of household wealth evaporate, while the government bailed out banks. “My first day on the trading floor was the day after Lehman Brothers went bankrupt.” Arthur Hayes said. At the time, he was stranded on a remote island in Japan. Heavy snow sealed the door, his beard was unshaved, and he was wearing a red warm T-shirt. “Starting a career in finance this way is very special.”
Arthur Hayes was deeply rooted in traditional finance: Wharton School, Deutsche Bank, Citigroup. But when the market crashed, he saw his colleague get laid off, making him switch to assets he could control himself — first gold, then Bitcoin in 2013. In 2014, he lost his job and stayed on a friend's couch.
Arthur Hayes, 28, co-founded BitMEX to introduce Wall Street level leverage and derivatives into crypto trading, eventually creating a “perpetual contract.” Traders don't need to hold Bitcoin; they only need to bet on the rise or fall of its price with 5x, 50x, or even 100x leverage. “Some went bankrupt; others became rich overnight.” Arthur Hayes said bluntly that the fate of early believers often settled within a few minutes.
The “perpetual contract” product has exploded the market, created trillions of dollars, and spawned a new generation of “crypto gamblers” — willing to take huge risks and occasionally win millions in wealth.
Cryptocurrency has thus become a casino.
No one is in control, who will decide the future? This is the core of cryptography, and a fatal flaw. From ethical application scenarios to whether the Bitcoin ecosystem should expand into new tokens, differences are everywhere. But it was this mixed coalition — liberals, venture capitalists, builders, traders, and crooks — that eventually brought cryptocurrencies into the mainstream.
In the same year that Arthur Hayes made Bitcoin more like gambling than gold, 20-year-old Vitalik Buterin — thin, Tyr scholarship recipient, who looked like he should have gone on the Balenciaga show in the Demba era — completely disrupted the industry.
One day in 2014, Joseph Lubin took Michael Novogratz to Brooklyn to meet with members of the Ethereum Foundation — the following year, the Ethereum platform was officially launched. Through “smart contracts” — automatically executed code running on the blockchain, Ethereum allows developers to build a complete financial system: a lending platform, a digital art market, and an autonomous organization. No banks, no corporate hegemony, only code.
“Joseph Lubin almost experienced a religious conversion.” Michael Novogratz said, “Ethereum will change the world and save the world.” The entire economic system moved up the chain, stablecoins supported weak third world currencies, and open source finance replaced traditional banks with opacity. “I'm already rich and don't need the world to be saved, but I think Ethereum is kind of interesting.”
“I don't have an epiphany with Bitcoin.” Danny Ryan, co-founder and president of Etherealize, said. At freezing temperatures in New York, he has long braided hair, a thin black t-shirt and denim jacket, and a plastic yellow nose ring that claims to help him breathe. Danny Ryan woke up in 2016, when he discovered Ethereum, and in January 2017, he was fully committed to the VitaLik Buterin Foundation and was soon hired — coinciding with the explosion of cryptocurrencies into the mainstream.
“It was a crazy golden age.” Meltem Demirors recollections.
At a conference in November 2017, she watched Ethereum “geeks” wearing unicorn T-shirts and Hawaiian shirts help Goldman Sachs and a16z investors set up MetaMask wallets and participate in initial coin offerings.
Bitcoin then surpassed $10,000, and the total cryptocurrency market capitalization soared from $16 billion to a peak of $535 billion, with an annual growth rate of over 3200%.
With the advent of Ethereum, the crypto world no longer has only one type of token, one creation myth, and one idea. Anyone can build anything, breaking unity and tearing cohesion. The US government has always been helpless against this industry, which is aimed at circumventing centralization. In the eyes of regulators, cryptocurrencies are a group of internet scams that are difficult to penetrate.
Over the next ten years, the market fluctuated over and over again between fanaticism and collapse, and countless people lost their life savings, and enabled a few people who accurately stepped on the cusp to create wealth for generations. Within the crypto ecosystem, the rift is huge: veterans vs. tourists, idealists vs. crooks, builders vs. traders.
Two types of people in the crypto community: believers and scammers
There are two types of people in the crypto community —
The first type is believers: people who philosophically agree with the original concept of Bitcoin and care about decentralization, privacy, and individual sovereignty. They have been vilified simply because the principles they adhere to are contrary to many modern institutions (especially the government and its allied statutory banks).
The second type is a scammer: they sell meme coins using Lamborghinis without any principles, and they usually only enter the market after 2017. From outright liars, to slightly speculative, to ignorant fools.
A crypto holder with the pseudonym “Moose” pulled out a Palauan ID — a US $200 certificate of the Pacific island nation of Micronesia that he bought online, and this was his proof of access to an offshore derivatives platform unusable by US users. “Everybody does it.” he said. The 27-year-old, like a man of the same age, first came into contact with cryptocurrencies in the mid-2010s when he bought drugs and fake ID cards on the Silk Road website. His idol was not an athlete or movie star, but an anonymous Twitter account — anime avatars, hidden profiles, and fans faithfully followed his trading trends.
Jordan Fish is at another level in the same circle. The screen name is “Cobie,” and his Telegram profile picture is a jumping white puppy. He profitted with the Ethereum staking agreement Lido in his early years and later founded the membership-based crypto investment platform Echo, which is valued at over $300 million. “It was pretty cool to be CryptoBro in 2019, but now, it's not cool at all.”
As crypto moves from the margins to the mainstream and becomes a cultural laughing stock, its promise of disruptive innovation gradually fades. People who once claimed to be rebellious are becoming more and more like other young people who are deeply addicted to the internet: playing games, playing tricks, trading — the bad image is even worse.
In 2023, Arthur Hayes's carnival party at the TOKEN2049 conference in Singapore attracted thousands of people and ran out of alcohol in the first hour. Eventually, security guards had to fend off people who were drunk and insisted on entering. They almost had to break through the wall. Two years later, at the same conference in Dubai, Carlson-Wee traveled between California and the UAE (supposedly a collaborative project with the local government), partying on a Lotus superyacht. He was also accompanied by DogeOS CEO Jordan Jefferson, who was wearing the “Habibi Doge” t-shirt he had in his mouth — a Shiba Inu wearing a traditional Emirati headscarf. (A UAE affiliate injected $500 million into the family's crypto project before Trump took office.)
“Everyone thought that if they made money in the crypto world, they would ride a yacht in Miami and be surrounded by 100 prostitutes. I spent three days in a row at La Guerite during the Ethereum conference in Cannes.” Meltem Demirors said, “I was so drunk that I prostrated down the table. Ethereum believers hate good things and hate pleasure; they just want you to eat tofu, wear organic cotton, and torture yourself.”
There is another type of creature in the crypto world: the “giant whale”
The giant whale is the behemoth of the Bitcoin world.
In crypto slang, giant whales refer to people who hold more than 1,000 bitcoins. They often have digital assets worth over $10 billion, and a single transaction can shake up the market. These giant whales are completely anonymous, never attend meetings, host parties, or post controversial tweets: the loudest voice in the crypto industry has never been the richest.
Anonymity, once opposed the ideological idea of centralization, is now necessary for survival. To make a name for yourself in the crypto world is to get in trouble. Every year, there are dozens of violent incidents in the industry: kidnappings, house robberies, and armed robberies. Large-scale data breaches revealed asset holdings and turned digital wealth into real targets of attack. Last year, a Nolita crypto holder claimed to have been kidnapped and managed to escape after being tortured for two weeks to ask for his password.
“I'm not a public figure anymore.” Fish said because “it's likely to be personally dangerous.” When OpenSea co-founder De Devin Finzer and his wife Yu-Chi Lyra Kuo were traveling, they were accompanied by a bodyguard who looked big like a Viking pirate rather than a Secret Service agent. “That's our bodyguard.
There is a rule for long-term survival in the crypto world. The secret is: never be the protagonist. I'm a supporting character, and everyone knows me, but no one really knows why I exist.
On the morning of the day “Vanity Fair” magazine filmed the party, Cathie Wood didn't recognize Meltem Demirors she hadn't seen in ten years. “Instead, you're younger.” Cathie Wood hugged her. “Because I'm rich now.” Meltem Demirors responded with a bad laugh. Carlson-Wee met an idol like a little boy and gently introduced himself to Cathie Wood. The two immediately talked about the years when everyone saw them as crazy, and firmly believed “buy when the market falls” — gently avoiding the reality that cryptocurrencies plummeted by nearly 50% in three months.
Michael Novogratz walked in in a long silver down jacket, greeted him warmly, and immediately complained that he was on the second day of a severe hangover — he described the Saturday night bash, which culminated at 4 a.m., at 4 a.m., at the New York nightclub Gospël, where he prayed that his 30-year-old daughter and new husband, who lived nearby, hadn't seen the scene.
Ryan stayed in the corner of the room, watching with a funny and frightened look. Meltem Demirors and assistant look through the costumes brought. Michael Novogratz was torn between a diamond-studded black suit and Valentino, while Ryan only brought two pairs of pants. His favorite one had a hole in the crotch, and he still wore them. “It's so hot.” He complained while barefoot, and the stylist dried his long, shoulder-length hair.
“Where's Devin Finzer?” Meltem Demirors asked.
Devin Finzer and his wife Yu-Chi Lyra Kuo are in a private fourth-floor suite with exclusive assistants, security, star makeup artist, and surrounded by haute couture clothing.
In the end, after considering multi-million dollar high-definition clothing, Yu-Chi Lyra Kuo chose a non-fancy Armani dress and didn't wear JAR jewelry.
In 2017, Devin Finzer founded the NFT marketplace OpenSea — in the eyes of a crypto veteran and even his wife, he missed the critical threshold of becoming an OG. He came from a Silicon Valley mother's dream: grew up outside of San Francisco, graduated from Brown University, majored in computer science and math, and was a software engineer at Pinterest.
When the crypto market exploded, Devin Finzer and his friend Alex Atallah decided to create a digital asset version of eBay. Inspired by the tokenization of Ethereum, and in particular, the boom in the digital cat trading platform CryptoKitties, OpenSea was born.
Soon after, the COVID-19 pandemic broke out. Hundreds of bored young people poured into the crypto universe, and NFTs skyrocketed.
In 2021, Beeple's NFT art sold for $69 million at Christie's, and avatars such as Bored Ape Yacht Club and CryptoPunks became identity symbols comparable to Rolex and Porsche. Some people even spent more than 1 million dollars to buy a stone clipart.
In January 2022, OpenSea's valuation soared to $13 billion. In the same year, young Devin Finzer was struggling with a rapidly expanding company and suddenly became one of Silicon Valley's top social circles and met Yu-Chi Lyra Kuo.
“Yu-Chi Lyra Kuo is like a hot girl with a Ferrari engine in her body.” Devin Finzer said.
Yu-Chi Lyra Kuo said she had expressed her concerns about OpenSea to Devin Finzer long before the crypto crash and the NFT bubble burst in 2022, but no one listened. In her opinion, OpenSea followed suit too much, and Devin Finzer was immature, short-sighted, and failed to move in a more lasting direction in time.
“Everyone is touting Devin Finzer, the cover of Forbes, 29, good-looking, and everyone wants to charter a plane to take him to the Super Bowl and every dinner party.” Yu-Chi Lyra Kuo pauses, “I'm not interested in this.”
“It's been a humble journey.” Devin Finzer softly added, “Even if everyone takes you to heaven, you still have so much to learn.”
The collapse of the market has been in the making for months --
In 2021, Bitcoin dropped from a peak of $69,000 to $1.6 million, starting the industry's harshest winter. OpenSea's valuation plummeted by around 90%.
In May 2022, Terra/Luna crashed, erasing more than $40 billion in ecological value within 72 hours, leaving retail investors around the world without return. Three Arrows Capital, one of crypto's largest hedge funds, immediately went out of business.
In November 2022, FTX, the industry darling SBF exchange, crashed and was destroyed within a week. He was eventually arrested and convicted of seven counts of fraud and conspiracy, stealing up to $10 billion of customer funds.
“Devin Finzer wasn't the first genius teenager I mentored.” Yu-Chi Lyra Kuo didn't elaborate. As the company collapsed and the NFT bubble burst, Yu-Chi Lyra Kuo became Devin Finzer's “product mom,” and she treated Devin Finzer as a “custom bear.” Today, they claim to relaunch OpenSea with a bigger vision.
However, not everyone has this certainty of Devin Finzer and Yu-Chi Lyra Kuo.
The more mature the blockchain infrastructure, the harder it is to explain that OpenSea can provide features that trading platforms such as Coinbase and Gemini don't have. Successful projects have raised the bar — such as Hyperliquid and Uniswap, now share revenue with token holders. Most tokens cannot compete with it. Issuance is mainly used for governance. Holders can only vote on agreement decisions and have no direct financial interest.
The collapse of FTX not only plunged the entire industry into the abyss, but also triggered what the crypto community called a “witch hunt”: regulators joined forces to try to stifle technology they neither understood nor controlled. Regulators, on the other hand, believe that the crypto world is a wild west, and even if the rules aren't perfect, protecting American investors is a good start.
Biden has appointed Gary Gensler to head the US Securities and Exchange Commission — a former Goldman Sachs partner and professor of blockchain at MIT who knows cryptocurrencies better than any other regulator. Gary Gensler's goal is to tame the industry, and the core question is: are cryptocurrencies securities or commodities? The answer is everything: securities are regulated by the US Securities and Exchange Commission, and exchanges and token issuers are required to register, disclose, and abide by investor protection rules designed for stocks — these rules were created by centralized institutions, not assets that can be transferred globally without banks, brokers, or borders.
Applying traditional financial supervision models to technology centered on autonomy, privacy, anonymity, and breaking global boundaries is bound to fail. The crypto community calls it “enforcement regulation”: Gary Gensler accuses several companies of violating securities laws and forcefully squeezing crypto-friendly banks out of the system.
“At the time, the SEC wanted to get rid of crypto through a lawsuit.” Ryan said. He recalled his son receiving a summons while setting up the dinner table on Easter Sunday 2024. “I'm the person with the highest position in the US at the Ethereum Foundation.”
Arthur Hayes, for his part, was jailed at home for six months in May 2022, after admitting that BitMEX deliberately failed to implement anti-money laundering controls — specifically, BitMEX allows US customers to access the platform through a VPN. He boasted at a conference that bribing Seychelles officials was cheaper than complying with US regulations. Binance CEO CZ ended even worse. In April 2024, he was sentenced to four months in federal prison for assisting in money laundering. Binance paid $4.3 billion in fines, one of the largest corporate fines in US history.
Then Trump appeared twice. In 2021, he called Bitcoin a scam, but just three years later, he delivered a keynote address at the Bitcoin Conference, promising to make the US a “global crypto capital.” Although Trump's values run counter to the global utopian vision of crypto believers, his support for the industry is enough to win votes.
“No party in the US is inherently pro-or anti-crypto.” Arthur Hayes said. If crypto investors become single-issue voters, politicians have only one question: “Should we win them over?”
“I'm probably the only person in the crypto community who didn't vote for Trump.” Michael Novogratz said. As a major progressive donor, he tried unsuccessfully to persuade Elizabeth Warren to interview him about the industry for years. “The industry is still full of political disputes. It shouldn't have been this way; it should have been a bipartisan consensus. We need rules, we don't innovate because there are no rules.”
In the last few months before Trump was re-elected, Ryan received a letter: the case was withdrawn. Ryan's attorneys say they've never seen the SEC act this way. “The best outcome is that they don't contact you anymore.” And this time around, the securities fraud accusations simply disappeared.
According to Ryan, the Biden administration realizes that the US presidential election advantage is weak and can no longer bear the cost of alienating the entire tech industry. The crypto industry ended up investing $135 million in the 2024 election, which allegedly went mostly to Republican candidates, and supported constituencies won more than 90%.
In 2025, Trump launched his meme coin TRUMP, which once surged to $10 billion, but then plummeted 80%. After taking office, he pardoned Arthur Hayes and CZ (SBF is still in prison).
epilogue
In the eyes of many people, when cryptocurrency penetrates the mainstream system, it is either a complete betrayal of the original intention or proof of the success of the experiment. Some of the most staunch believers in decentralization are now appearing in closed White House meetings. Cryptocurrency holders are not only ordinary people, but also sovereign wealth funds, family offices, and businesses with private wealth managers. The movement that was born to make Wall Street ineffective is now its strongest lobbying force and most reliable customer.
“We won.” Moose said, “But after winning, will cryptocurrencies become another ordinary asset class?”
Has the crypto industry become what you once hated? Or is it changing the world from within?
In the midst of winter, the answers are still floating in the wind, and those believers still stand where they are, sticking to their beliefs.
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