Fundamental investing basically makes no money.

  • Written by: TechFlow

There are always legends circulating in the market about certain diamond players getting huge returns. It seems that achieving financial freedom only requires two simple steps: buy and wait.

But when it comes to personal practice, being a diamond player requires quite high personal will. People always say "the rewards of waiting are rich", but the reality is mostly: waiting and waiting to find that the rewards of others are rich, and when you finally open your hands, you find that there is only a handful of dust that disappears in the wind.

Compared with BTC, which is less volatile, more people choose to hold a variety of "value coins" for the long term, hoping that the value of the altcoins they hold will be discovered one day and obtain returns that far exceed the market.

But recently the well-known Defi OG Ignas (@DefiIgnas) said in a tweet: It is not reliable to choose to hold altcoins for a long time just because of the fundamentals.

The currency circle does not believe in fundamental investment, just as Beijing, Shanghai and Guangzhou do not believe in tears.

Fundamental investing makes no money at all

Ignas gave the example of the Brave browser and its $BAT token, a project with solid fundamentals in the last cycle:

Brave currently has about 73 million active users, and has raised US$40 million in high-level financing as early as 2016 or 2017. The products are reasonable and the technology is solid. From the perspective of a reliable encryption project, Brave is undoubtedly successful.

However, the price of $BAT has not increased significantly. Today, the price of $BAT is similar to when it was first issued in 2017. During the same period, $ETH has already risen from $250 to $3,900.

Ignas bluntly stated that he was very optimistic about the vision of $BAT, and said that this was the altcoin with his largest position. Although he sold all of them near the high point, the price trend of $BAT still brought some enlightenment: the success of the product did not This does not necessarily translate into superior price performance of the token over the long term.

The truth that "high performance supports high stock prices" in the traditional financial market is not worth mentioning here; at the same time, paying for high performance and good data may end badly.

Ignas also considered whether the price of the currency was suppressed due to the unlocking of the token, but unfortunately, $BAT is now in full circulation and there is no additional issuance.

The final advice given by Ignas is not to easily believe in the long-term holding commitment of any project, especially for altcoins. It is very important to adjust positions in a timely manner and carefully select investment targets.

Attention is the fundamental

After Ignas’s tweet, there were some interesting discussions in the comments section:

Some people have suggested that the dismal currency price performance of $BAT may be because the team focuses its funds on project research and development and lacks project marketing. At the same time, there are not many official tweets that mention the token. Ignas also bluntly stated in the comment area that attention is everything in the encryption world. The team should perhaps invite some KOLs to promote $BAT and build a stronger community to enhance $BAT’s market awareness.

Yes, $BAT is the classic representative of "value coins": excellent project fundamentals and full circulation supply of tokens. Such an ultra-low valuation golden egg seems to have only missed being discovered by the market value, and finally ushered in a wave of excitement. Buying and rising like crazy.

But the cold reality is: if a diamond investor holds $BAT for 7 years, his personal income will have been far behind the market.

Different from traditional Web2 projects that focus on the technical composition, user data and financing background of the project, sector effects, celebrity shout-outs and even project hacks can become the "fundamentals" for crypto projects to attract the attention of retail investors.

Blindly adhering to the old-school "fundamental investing" and waiting for value discovery would be a bit conservative.

Retail investors love “interesting”, while institutions want “useful”

MEMECOIN can be said to be the most direct fundamental destroyer of the crypto market. The reason why everyone loves MEMECOIN is very straightforward: it can be understood at a glance, and it will pull the market as soon as you say it.

Due to its early fair chip distribution mechanism and various unique cultures, MEMECOIN has always had a fair and interesting image in people's minds.

However, judging from the various MEMECOIN price manipulation incidents that continue to break out, it is obvious that large capital is not willing to let go of MEME, an emerging money hotspot. There are also traces of manipulation by large institutions behind many MEMECOIN. See our other report for details: Collective evil? Insiders Exposed Polygon Executives Maliciously Manipulating Meme Coin Prices

There is a chart that provides a simple analysis of current crypto assets:

This picture shows the different nature of the two ends of crypto assets: one end is entertainment-to-death and crazy speculation represented by MEMECOIN, and the other end is boring practical assets represented by RWA assets.

Interesting and useful seem to be different choices for retail investors and institutions.

Retail investors on the C-side prefer retail-driven markets driven by high speculation and fun, represented by the MEMECOIN craze and the artificial intelligence bubble in the fourth quarter of 2023, while the B-side represented by institutions prefer to focus on regulatory compliance. Practical markets that require robust narratives such as BTC/ETH ETF + RWA assets.

But they seem to be going their separate ways, but in fact they reach the same goal.

Phantom ranks among the top downloads in the Google market in many countries and regions. The MEME craze driven by retail investors has spread to the world. The entertainment attributes such as freedom, gratuitousness, and chaos contained in MEME culture also make retail investors happy to pay for this added value.

Even people from all fields want to get a piece of the pie, political MEME, celebrity MEME, Pump.Fun live broadcast... everything can be MEME, as fancy as you like, various indicators for measuring people and things are transformed into MEME currency prices here. , a paradise for influence and traffic carnival realization.

This is even more evident from the attitude of old money institutions, from slandering and questioning crypto assets to scrambling to grab the BTC/ETH ETF, and "regulation" has also transformed from the Sword of Damocles hanging over the crypto market. Became the catalyst for the bull market. In the current U.S. election, the encryption market has become a weight for candidates to canvass votes.

From "thinking it is useless" to "having to use it", attention runs through the entire process of cryptocurrency from wild road to regular army.

In the crypto industry, the investment logic is very different from the traditional financial market; and the so-called fundamentals have completely different meanings when they are supported by physical performance and when they are not.

Retail investors have been deceived too much by stories about fundamentals, so they will naturally choose the simple and crude MEMECOIN; is the preference of institutions for utility coins really because of the fundamentals of the project? Not necessarily.

Institutions can naturally see the value of MEMECOIN, but when it comes to investing in MEMECOIN, the institution itself cannot explain it well to investors. You can’t say that I invested in an emoticon/cat, right?

Investors may also prefer institutions to invest in more "serious" assets, so fundamentals become a package for serious investment.

Therefore, maybe no one is really doing pure fundamental investment, but retail investors are more direct and institutions are more roundabout.

Therefore, there is no conflict or opposition between MEME speculation and infrastructure construction. The smart way to play it is to accept everything as ordered.

For example, Jupiter, which started out as a MEME amusement park, began to unify the market and unite multiple projects and institutions to establish the GUM Alliance. Whether it is MEMECOIN, RWA, stocks or foreign exchange, all meat and vegetarian products are not taboo, and the main focus is omnivorous.

There are both MEME and "fundamental" assets. Jupiter's compatibility with all types of assets also reflects the business logic of not focusing solely on fundamentals.

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By the current bull market, the market is no longer a simple model. All participants have evolved, and fundamental investments with simple structures are increasingly difficult to work.

Judging from the lessons learned from history, the returns from some fundamental investments have not even outperformed inflation, let alone some projects with strong fundamentals that have gone straight to zero. The logic of market investment is gradually changing. Fundamental investments It is no longer as politically correct as it once was.

Of course, if the time cost is extended indefinitely, the conclusion about value discovery investment may be different.

But retail investors can’t afford it.

In the currency circle where information hotspots are rapidly iterating, the most indispensable thing is new hot spots, and the most valuable thing is attention. When market driving forces change, a project's ability to capture market attention can often have a strong impact on the price of tokens. The importance of attention economics has gradually come to the fore, and the market is running out of time for projects to slowly discover their value.

Well-known blogger @redphonecrypto also pointed out in his latest article: The ability of a token to attract attention is more important than other indicators. The stronger the ability to attract attention, the greater its potential upside.

"Pumpmental > Fundamental" is already the consensus of most people. For retail investors who pay real money, pulling the market is the best fundamental.

This article is reprinted from Shenzhen Chao TechFlow with permission

This article The currency circle does not believe in fundamental investment, attention is everything first appeared in Zombit.