Author: Deep Tide TechFlow
There has always been a legend in the market that diamond hands can achieve substantial returns, and it seems that achieving financial freedom only requires two simple steps: buying and waiting.
But when it comes to personal practice, being a diamond hand requires a high level of personal willpower. People often say that “the rewards of waiting are generous,” but in reality, most of the time, they find that others’ rewards are generous while they are left with nothing but a handful of dust blown away by the wind.
Compared to the less volatile BTC, more people choose to hold a variety of “value coins” in the hope that their holdings of altcoins will be discovered in value one day and achieve returns far beyond the market.
However, recently, well-known Defi OG Ignas (@DefiIgnas) stated in a tweet that it is not reliable to choose to hold altcoins just because of their fundamentals.
The cryptocurrency market does not believe in fundamental investments, just as people in Beijing, Shanghai, and Guangzhou do not believe in tears.
Table of Contents:
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Fundamental Investments, Essentially Unprofitable
Attention is the Fundamental
Retail Investors Love “Interesting,” Institutions Seek “Useful”
Perspective:
Ignas cited the example of the solid fundamental projects Brave Browser and its $BAT token in the previous cycle:
Currently, Brave has about 73 million active users and raised $40 million in high-value financing as early as 2016 and 2017. The product is reasonable and technically solid. From a reliable perspective of a cryptocurrency project, Brave is undoubtedly successful.
However, the price of $BAT has not significantly increased, and today, the price of $BAT is similar to its initial release in 2017, while $ETH has already risen from $250 to $3,900 during the same period.
Ignas frankly stated that he used to have a very optimistic view of the $BAT vision, and it was once his largest holding of altcoins. Although he sold all of it near the peak, the price trend of $BAT still brings some insights: the success of a product does not necessarily translate into excellent long-term token price performance.
The truth in the traditional financial market that “high performance supports high stock prices” is not significant here. At the same time, buying high performance and good data may have a disastrous outcome.
Ignas also considered whether the suppression of token price was due to token unlocking, but unfortunately, $BAT is now fully circulated and has no additional issuance.
Finally, Ignas’s advice is not to easily believe in the long-term holding commitment of any project, especially for altcoins. It is essential to adjust positions in a timely manner and carefully select investment targets.
After Ignas’s tweet was posted, there were some interesting discussions in the comment section:
Some people suggested that the poor price performance of $BAT may be because the team focuses on project development and lacks marketing. At the same time, there is not much mention of the token in official tweets. Ignas also stated directly in the comment section that attention is everything in the crypto world, and the team may consider inviting some KOLs to promote $BAT while establishing a stronger community to enhance $BAT’s market awareness.
Yes, $BAT is the classic representative of “value coins”: excellent project fundamentals and fully circulated token supply. This seemingly undervalued golden egg seems to only miss being valued by the market, triggering a frenzy of buying and rising.
But the cold reality is that if a diamond hand holds $BAT for 7 years, their personal returns have long been left far behind the market.
Unlike traditional Web2 projects that focus on project technology, user data, and financing background, factors such as market hype, celebrity endorsements, and even project criticism can become the “fundamentals” that attract retail investors’ attention in the crypto world.
Persisting in the old-fashioned “fundamental investment” and waiting for value discovery may be somewhat outdated.
MEMECOIN can be said to be the most direct fundamental destroyer in the crypto market. The reason why everyone loves MEMECOIN is straightforward: it is easy to understand and can be pumped on demand.
Due to early fair chip distribution and various unique cultures, MEMECOIN has always had a fair and fun image in people’s minds.
But judging from the various price manipulation events that have occurred, it is evident that large capital is not willing to let go of the emerging money-making land of MEME. Many MEMECOINs have traces of manipulation by large institutions. See our other report for details:
Collective mischief? Insiders expose Polygon executives’ malicious manipulation of Meme coin prices
A chart provides a simple analysis of current crypto assets:
This chart shows the different nature of crypto assets: on one end, there is entertainment-driven, speculative frenzy represented by MEMECOIN, and on the other end, there are boring, practical assets represented by RWA assets.
Interesting and useful seem to be the different choices of retail investors and institutions.
Retail investors on the C end prefer a retail-driven market driven by high speculation and fun, represented by the MEMECOIN frenzy and the AI bubble in the fourth quarter of 2023. On the other hand, institutions on the B end tend to focus on practical markets that comply with regulatory requirements, such as BTC/ETH ETF + RWA assets, with a stable narrative.
But seemingly divergent, they ultimately converge.
Phantom ranks high in Google downloads in multiple countries, and the MEME craze driven by retail investors has spread worldwide. The freedom, randomness, and chaos inherent in MEME culture make retail investors willing to pay for this additional value.
Even people from various fields want to get a share of the pie, political MEME, celebrity MEME, Pump.Fun live streams… Everything can become a MEME here. The various indicators used to measure people and things are transformed into MEME coin price fluctuations, and the paradise of influence and traffic frenzy.
And from the attitude of traditional institutional money, it can be seen that from criticizing and questioning crypto assets to competing to launch BTC/ETH ETFs, “regulation” has transformed from the sword of Damocles hanging over the crypto market to a catalyst for a bull market. In the current U.S. election, the crypto market has become a weight for candidates to campaign with.
From “considering it useless” to “having to use it,” attention runs through the entire cryptocurrency world from its early stages to the mainstream.
In the crypto industry, investment logic differs significantly from traditional financial markets, and the so-called fundamentals have completely different meanings when there is or isn’t tangible business performance to support them.
Retail investors have been deceived by the stories of fundamentals too many times, so it is natural for them to choose the straightforward and crude MEMECOIN. Does institutional preference for utility coins really stem from the project’s fundamentals? Not necessarily.
Institutions naturally see the value of MEMECOIN, but when it comes to investing in MEMECOIN, institutions themselves cannot explain it well to investors. They can’t say that they invested in an emoji or a cat, right?
Investors may also prefer institutions to invest in more “serious” assets, so the fundamentals have become the packaging of serious investments.
Therefore, maybe no one is really doing pure fundamental investments, it’s just that retail investors are more direct, and institutions are more circuitous.
Therefore, the smart play may be to embrace both MEME hype and infrastructure development.
For example, Jupiter, which started as a MEME amusement park, is now expanding into the unified market, establishing the GUM Alliance with multiple projects and institutions. Whether it’s MEMECOIN, RWA, stocks, or forex, everything is welcome, emphasizing being eclectic.
Jupiter’s compatibility with various assets, whether it’s MEME or “fundamental” assets, also reflects the business logic of not just relying on fundamentals.
In this bull market, the market is no longer in a simple mode, and all participants have evolved. Basic fundamental investments with a simple structure are becoming less effective.
Lessons learned from history show that some fundamental investments don’t even outperform inflation, let alone some strong fundamental projects that are heading towards zero. The logic of market investment is gradually changing, and fundamental investments are no longer as politically correct as before.
Of course, if the time cost is extended indefinitely, there may be a different conclusion regarding value discovery investments.
But retail investors cannot afford it.
In the rapidly changing information hotspots of the crypto world, what is not lacking is new hotspots, and what is most valuable is attention. The driving force of the market is changing, and projects have less time to be discovered in terms of value.
In a recent article, well-known blogger @redphonecrypto also pointed out that the ability of tokens to attract attention is more important than other indicators. The stronger the ability to attract attention, the greater the potential for upward movement.
“Pumpmental > Fundamental” is already a consensus for most people. For retail investors who have paid real money, pumping is the best fundamental.
This article is authorized to be reproduced from Deep Tide TechFlow.
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