Why Memes Have Attracted 70% of the Crypto Industry's Trading Volume and Will Continue to Grow in 2024
In a Twitter thread, the hedge fund Gotbit explains why memes have captured such a significant portion of the crypto trading volume and predicts their continued growth in 2024.
📉The Fall of Tier-1 Projects
According to Gotbit, top-tier crypto projects are failing their investors in 2024. The once-profitable "buy at listing" strategy, which worked exceptionally well from 2018 to 2022, now leads to losses. For instance, the token $W has dropped by 85% since its listing.
💡Simple Reasons Behind the Decline
Projects now undergo 4-5 venture capital (VC) rounds before listing, starting from a $10M Pre-seed round to a Series B round exceeding $1B. By the time of listing, valuations can range from $2B to over $15B.
VCs can achieve liquid returns of 5-10 times their investment by the time of listing. They can also sell on over-the-counter (OTC) markets at a 30-50% discount, receive airdrops accounting for a few percent of the supply, and manipulate token prices through market-making (MM) loans, resulting in a catastrophic overhang for retail investors who end up being the exit liquidity.
The Retail Investor Exodus 🚶♂️🚶♀️
As this vicious cycle continues, retail investors experience significant losses, such as -85% in $W and -70% in $STRK. Disillusioned retail investors then shift their focus to meme coins. Each subsequent project listing attracts fewer retail investors than the previous one.
🤑The Appeal of Meme Coins
Meanwhile, meme coins continue to attract retail investors with life-changing stories of massive returns—**buying for $100 and earning $100,000**. In the world of memes, retail investors are no longer exit liquidity but early participants with potential for substantial gains.
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