Investors who often pay attention to cryptocurrency news may not realize one thing: many of the crypto tokens that we are familiar with and discuss in our minds actually rank outside the top 100 in terms of market value, and many people are unaware of this.
For example, Kusama of Polkadot ecosystem is currently ranked 134th, Arweave, which is used for permanent storage, used to use AR network to save a lot of NFT image data, and it is ranked 137th, the well-known DeFi protocol 0x Protocol is ranked 148th, the Galxe token of web3 task platform is ranked 255th, gitcoin's token GTC is ranked 329th, and the YGG guild, which is hot in the bull market, currently has a token ranking of 453. This also shows that there are too many "mainstream coins" in the market, and some projects that everyone thinks are hot may be ranked outside the top 100.
The fate of most altcoins in the bull-bear transition
In fact, people who have been in the cryptocurrency circle for a long time know that most of the competing coins will end up returning to zero. Even if they do not return to zero, they will continue to rank lower in the bull-bear transitions and gradually be forgotten by investors. However, during the bull market from 2020 to 2021, many DeFi projects do have certain rigid demands in actual application scenarios, such as Uniswap AMM market making, DEX derivatives such as ENS domain names or DYDX, or deposit and loan scenarios such as AAVE. In the impression of many people, these projects have a lot of market demand, so if people’s previous views on the projects are followed, that is, they will gradually disappear in the future, this may not be realistic.
Therefore, when the market gradually eases, people will naturally pay more attention to the layout of the next bull market. Whether some popular currencies in this bull market can escape the fate of previous competing currencies has also become the focus of most people. Some people may think that the hot projects in this bull market are different from the hot projects in previous bull markets, and the proportion of projects that have gone bankrupt or run away has decreased. Some people may also think that the current market wash-out is not over yet, and they expect there to be a "last drop" to clean up the junk copycat projects, thereby making room for new hot projects in the next bull market.
In response to these two ideas, there are naturally two different ways of investment. The first is to invest in these competing coins at a low point, hoping to seize the opportunity in the next bull market and obtain a much higher increase than Bitcoin or Ethereum. In the process of the transition from a bear market to a bull market, the increase of competing coins will naturally be higher. The second is to use Bitcoin and Ethereum as the main investment targets in the bear market, and clear out the competing coins in your hands, because once the competing coins in your hands do not work in the next bull market, they may not see a good increase, so holding Bitcoin and Ethereum is a very safe way.
How to choose the right investment method?
First of all, many competing coins actually exist in the public eye for a maximum of one bull and bear cycle, while another part will last for two bull and bear cycles. That is to say, they were born in the last bull market, ushered in the first round of ups and downs, and then the second bull market may usher in another wave of ups and downs, and very few projects will persist until the third bull market's ups and downs. At least in the third bull market, most of these projects will disappear from the public eye, and only a few people know of its existence. At this time, we think that the project is close to zero (it may not actually have returned to zero, but it’s just that the exchange has removed it and the market value is far less than that of mainstream projects, which makes it difficult for holders to make a profit).
For example, when POW was popular in the early days, many popular POW currencies appeared in the market, but now there are no more than 5 early POW currencies in the top 100. Among the popular currencies that appeared in 2017, there are now about 10 in the top 100. Most of the top 100 projects were born after 2019, and they reached the peak of speculation in 20-21. Some of them are projects after 20 years. It can be seen that in the encryption market, the updating of project rankings is very obvious.
If we follow this inference, then it is a wise choice for investors to abandon competing currency projects in a bear market, because many of the top 100 projects will fall outside the top 100 in the next bull market, while some new projects will soar from obscurity, and this wealth-creating effect will also attract more investors to participate.
But if we look at a certain competing coin project, we will find that its price will also increase from a bear market to a bull market. Let’s take AE as an example. This project was previously called “European Ethereum”. The token has fallen by more than 99% from its highest point to now (the highest is around 5U, currently 0.04U), but from 2019 to 2021, the increase from the lowest point to the highest point is close to 5 times. In other words, if the buying position is just right, even a declining competing coin will have a good increase in a bull market.
Of course, this situation is difficult for ordinary investors to grasp, because very few people will buy and build positions at the lowest point. Therefore, even if there are profits in the bull market, most people still get less than this increase. It also shows that the "competitiveness" advantage of competing coins is not very obvious.
Summarize
In project investment, most people may not have the advantage of news and technology, so they often lose money in traditional investment markets such as stocks, and the disadvantages of ordinary investors are undoubtedly exposed. In cryptocurrency investment, even if ordinary investors have no advantages, they can still gain benefits by relying on the bonus period of the crypto market, which is also the difference between the two.
Therefore, for institutional investors, they may prefer competing coin projects and use them to obtain returns that are higher than the market average. However, for ordinary investors, investing in competing coins in a bear market may not be a good strategy. On the contrary, holding mainstream BTC, ETH, and even stablecoins in a bear market is a better measure.