Friends who pay attention to the market know that the market in the cryptocurrency circle has been relatively quiet in the past two months. Compared with the first half of the year, when everyone was still paying attention to various cryptocurrency investment topics, the pullback of Bitcoin and Ethereum in the second half of the year led to a downward trend in the market. Some people are always restless and have recently set their sights on the primary market, constantly looking for projects, hoping to get an advantageous token quota before the bull market. So should we pay attention to the primary market? Here we need a comprehensive analysis.
How did the primary market perform in the last bull market?
In fact, the primary market is quite complicated. 2018 to 2020 is the initial stage of the primary market. I started to get involved in the primary market in 2020, and also got the primary quota of some projects with some communities. Let us talk about the results here. Overall, there are gains and losses. The combined return on investment is less than 1 times. It is better to buy mainstream coins from the exchange. Judging from the results, the profitability of primary market projects is not high.
Why does this phenomenon occur? Since the primary market does not make a lot of money, why do so many people still participate?
My overall feeling is that many projects that appeared in the early stage of the bull market actually have a higher probability of being cut into leeks, and the primary market is no exception. Generally, there are the following situations:
1. After the team gets the funds, they will either postpone the issuance of coins until the end of the bear market or the bull market, so that the losses can be attributed to the bad overall environment.
2. Some teams will create hacker theft incidents to collect money and run away. This is also the main source of losses and is actually embezzlement.
3. Another part of the projects received their quotas in a relatively late round, so their rate of return was not high, and some even fell below the issue price. When they received their quotas, the middlemen also made a profit from the price difference, so their costs were higher than those of those who had received financing before.
4. Although some first-level projects are profitable, they also have unlocking restrictions, so the overall rate of return is not as high as expected.
It is difficult to make a profit on first-level projects
The bull market carnival is actually the process of project teams and institutions distributing chips. We see that there are relatively few teams that actually work in the bull market. Most of them will temporarily set up a team in the bull market, then make the front-end of the web page, buy a set of mature codes, modify them, and then put them on the shelves immediately. The functional deficiencies can be packaged through white papers, and some high-sounding terms have also emerged. But for those who really understand the underlying layer, it is actually just a refurbished hype of things from a few years ago.
Although we all know that this is not right, the market is still willing to pay for it. For this reason, many newly established projects in the bull market rarely do things seriously, and most of them quietly lose attention in the bear market until they become an empty shell. Then the same team will start a new project and continue to tell the story in the market.
The project has institutional investment, so don’t the institutions worry? In fact, institutional investment here does not mean that the institutions will directly transfer the money to the project team’s account, but rather sign various agreements to realize the agreement on profit distribution. Some institutions even provide personnel, build teams, and help with marketing for the project founders. All of this is to make it easier for them to cash out. Therefore, the bull market in the currency circle actually refers to the bull market of project teams and investment institutions. For ordinary investors, it is a bull market where a few individuals can see the essence. Those who cannot see the essence may gain profits, but they will not be able to hold on to them in the end.
In addition, some projects are fake financing, using exaggerated methods to fabricate the amount of financing in order to attract the attention of more ordinary users.
Comparing the performance of the last bear market and bull market, there are now a large number of project teams in the market, and many of them have received generous financing from institutions. So what will happen to the primary market in the next bull market?
First of all, for project teams, many want to wait until the early stage of the bull market to issue coins. The main problem with such projects is that there are too many of them. If they are all listed on secondary exchanges, it will easily cause a blood-sucking effect on mainstream coins. Therefore, some project teams that cannot persist or the leading institutions behind them cannot persist and want to cash out, so they chose to issue tokens this year in order to survive the difficult period of the bear market.
In addition, many project teams also expect that the bull market will allow them to sell their chips at a better price, so they will not choose to issue coins this year. The project parties need good conditions to reap the benefits.
Un-issued projects are waiting for the bull market
Many first-level projects in 2020-2021 were basically established within a few months. In the last bull market, the first-level projects I participated in basically made money in 2020, and most of the ones invested in 2021 lost money. In fact, this also shows that the sickle was anxious to harvest at that time. However, many first-level projects in the current market were established in 2022 or even this year. Therefore, if the next bull market comes next year, we must not judge the quality of this first-level project only by the time of its establishment.
As the number of market projects increases, the corresponding rate of return will also be lower. In this way, it can be predicted that the investment return rate of primary projects will be lower in the next bull market. Investors need to increase the rate of return and reduce risks. Therefore, once the rate of return is reduced, the money-making effect of the primary market will further decline.
In addition, when the quota for primary projects begins to be available to individual investors, it actually means that it has become more difficult for institutions to get projects or that the institutions have no money to accept them. Therefore, as mentioned earlier, the return rate of the primary projects that the author participated in in 20-21 was low, and this has its own reasons.
Summarize
The first-level projects themselves are not suitable for individual investors. There are often many good and bad projects, and individual investors do not have sufficient information to understand the internal progress of the team. Therefore, this is a very obvious disadvantage. In addition, as more and more people are waiting for the next bull market to issue coins, it can be speculated that even if those projects will have a high increase, they may not be able to maintain the high point for a long time, and players may not have time to ship out before the price falls. Therefore, investing in first-level projects may not be a good choice.
