1. What caused the popularity?

There is only one reason for a track to become popular, which is that more people can know about it and participate in it, so the following influencing factors are all analyzed around this point. It should be noted that the reason why a track can become popular does not necessarily include all the factors below.

1. Low threshold for participation

The low threshold for participation includes the following key points:

  • The principle is simple and easy to understand

Simple principles mean that even outsiders who don’t understand the blockchain industry can quickly accept it, so it is easier to spread than projects with complex principles. When we searched for the word "out of the circle" in some blockchain media, the most related tracks that appeared were NFT and blockchain games. Things like blockchain games that were originally Web2 or TradFi are easier for outsiders to understand and accept. Complex principles are walls that block outsiders, as stated in VISA's research report "Cryptocurrency Phenomenon: Consumer Attitudes and Usage": "55% of non-crypto users believe that the steep learning curve is the reason why they have not invested in cryptocurrency."

  • No restrictions on participation conditions or low cost

Participation in many projects has a prerequisite, which is to hold certain NFTs or its tokens, etc. Although this shows the popularity of the project and increases the value of its NFTs and tokens, it also excludes more players because the gradually rising prices reduce the willingness of users to participate.

  • Improvement of relevant infrastructure

Whether the infrastructure of a track is complete determines the simplicity of operation and the user experience it brings. If the operation is too complicated, it will greatly increase the learning cost for users outside the circle.

2. Have ongoing discussions

  • Money-making effect

The money-making effect is the best marketing. Whether it is GameFi or SocialFi, they are not as good as the projects in Web2 from the perspective of user experience. The reason why users use them is just the profitable speculation. The hot money in the market always follows the entropy increase principle of funds: funds always flow from places with low money-making efficiency to places with high money-making efficiency.

  • Cultural attributes

Cultural attributes can increase market discussion and community cohesion, which is particularly evident in Meme and NFT projects. Such projects generally have obvious community culture and cultural symbols, such as Milady's anti-idol culture and Dogecoin's Shiba Inu symbol. However, cultural attributes can only serve as icing on the cake, because the participants are still mainly speculative, and after the price drops, no one will continue to generate power for love.

3. Let a hundred flowers bloom instead of one flower blooming

This factor may not be applicable to some meme tracks, because it mainly applies to some practical fields. More projects mean more intense competition, which will bring more business innovation and competition in product discounts. This is particularly evident in DeFi Summer, where various protocols have adopted token incentives, launched LP pools with higher APRs, and business innovations.

4. Especially reflects the word "new"

There is an old saying in the cryptocurrency circle: "Play with the new, not the old." The new track has greater room for imagination. Because of its "newness," the new track often does not have a complete valuation system, that is, there is no predictable market value, so there is greater room for growth, which essentially gives ordinary people the opportunity to obtain low-priced chips. Because the old track has a reasonable estimation system, the "death-level" projects invested by VCs have high valuations as soon as they go online, and it is difficult to have a big profit opportunity in the secondary market. Only a small number of people can enjoy the dividends of track development. Can anyone still play this track?

5. The track concept is imaginative

The Metaverse is probably the best example of this factor. The Metaverse is a grand concept. As an extension and expansion of the real world, people are very much looking forward to the huge opportunities and revolutionary role of the Metaverse, which has opened up the "Metaverse" craze. Metaverse-related tokens such as $Mana and $Sand have performed well in the last bull market.

6. Active publicity by the project owner and the community

The popularity of a project depends on the promotion of the community project owner and the community. For example, the recent Ethereum token $ETHS and BRC-20's $rats, etc., their respective communities are frantically attracting traffic and building momentum for their own projects.

2. How can we safely exit the carnival?

The profile of crypto users has not changed. Most of them are speculating to make money, and this will not change in the short term. As long as the FOMO sentiment in the market is ignited, crypto users will actively embrace the bubble. Since it is a bubble and speculation, it also determines that no die-hard fans will hold their tokens wholeheartedly.

When a new bull market comes, the most dazzling ones are definitely the projects that can bring the most benefits, and behind them are leverage and Ponzi schemes. Once the market turns, they are the ones who rise the fastest and fall the fastest, directly transforming from "blue chips" to "rotten chips".

What signals can guide us to exit safely before the bubble bursts?

  • Reinventing the wheel without innovation, funds and enthusiasm are dispersed

After a project becomes popular, there will definitely be other projects copying it, which are generally simple imitations and repetitions of the leader. This will only distract the market's attention and funds, and will not have a positive effect on the development of the track. When the number of copycats gradually increases, the money-making effect is also consumed by these copycats, and the decline of the track is also natural. For example, in DeFi Summer, after Sushi launched a vampire attack on Uniswap, many other protocols stole liquidity through high emission of tokens, which played a role in the development of the track. It was just a zero-sum game between different projects.

  • The popularity and price of leading brands have cooled down, and there is no stable increase.

The leading role that the track leader can play is unquestionable. If the popularity and price of the track leader begin to cool down, it will easily cause a collapse of market sentiment, and the related copycat stocks will inevitably result in "collective punishment".

The hottest topic recently is definitely the topic related to Bitcoin ecology, especially various inscriptions. The huge wealth effect has attracted many people. This round of market is inseparable from the boosting effect of Bitcoin's rise on the sentiment of the crypto market, but why can various inscription tokens stand out among many tracks? We will analyze it based on the above factors.

In terms of participation threshold, complex principles and imperfect infrastructure have limited its further spread, but fair first-level participation opportunities have become its major selling point, and retail investors have created this small bull market that has nothing to do with VC;

In terms of discussion, inscription tokens undoubtedly have a huge money-making effect. Whether it is the early $ordi, $sats, or some recent $atom and $pipe, they have brought huge returns to holders. In addition, the BRC-20 token has also opened a round of "zoo" market with obvious cultural attributes. A bunch of inscriptions named after animals are very popular, such as $rats, $bear, $cats, etc., as well as inscriptions from previous NFT communities, such as $MMSS for black cats and $UCAT for angry cats;

In terms of richness, the Bitcoin ecosystem is not prosperous enough. Although there are many innovative protocols, there is no opportunity for ordinary players to participate. It is still in a relatively early stage. Moreover, from the perspective of various inscriptions, there is a phenomenon of reinventing the wheel, which not only exists in the Bitcoin chain, but other chains also have their own inscription protocols. As a result, market attention and funds are dispersed, and it is difficult for inscriptions on other chains to achieve the prosperity of Bitcoin inscriptions.

In terms of novelty, inscriptions are a new form of asset, a new concept proposed in the transition from a bear market to a bull market, and have not yet experienced a complete bull market, so they meet the "new" standard;

In terms of track imagination, Bitcoin is the most well-known chain, but its ecosystem is pitifully small compared to Ethereum. Ethereum originally took over the task of supporting the development of smart contracts for Bitcoin, and now the development of Bitcoin's ecosystem has attracted the attention of the entire crypto market, attracting funds and developers to enter, and its future development space is unimaginable.

In terms of the publicity of the project and the community, everyone should have some experience in this regard. When a Twitter blogger talks about which inscriptions to buy, some communities will organize community members to flood the comment area with their own tokens after discovering it, such as the $rats army flooding the screen, and the withdrawal campaign started after discovering the exchange data crash, etc. The well-known CX coin Π coin, I heard that the community also has its own token $piin, and live broadcasts and purchases on platforms such as Douyin and Kuaishou have attracted many grandpas and aunts.

In summary, the main reasons for the explosion of Bitcoin ecology are: the participation threshold is very fair, the money-making effect and the cultural attributes of some inscriptions have brought about extensive discussions, the track is novel and has room for imagination, and the inscription communities have actively spread it, etc. However, in the short term, the deployment of inscriptions on multiple chains has led to the dispersion of funds and enthusiasm, and the inscriptions on the Bitcoin chain have cooled down. However, the Bitcoin ecology is not only about inscriptions, but also about RGB, Lightning Network, BitVM and other protocols. These protocols are still in the early stages of development and have not yet shown their due brilliance, so we have reason to believe that the Bitcoin ecology will shine in this round of bull market.