I feel like this doesn't really answer the "why," it just describes the situation. Almost everything said here could apply to anything in the VC-funded world; what makes the crypto space uniquely vulnerable to this cycle?
Crypto has had a lot of fads. NFTs, GameFi, memecoins, airdrops... these had no fundamental demand so if you missed the fad you got nothing. There's durable demand for no-KYC leveraged trading and stablecoin issuing and that's about it.