Author: ZTZZ
The market is not averse to projects led by institutions, but this round of institutional-led projects does not have a wealth-creating effect.
The essence of this round of lack of momentum is that the sudden arrival of BTC ETF has caused the market to rise rapidly without sufficient bottom washing, which has ignited the enthusiasm for financing in Europe and the United States. You can clearly feel the explosion of European and American narratives such as DEPIN and AI, but Europeans and Americans are not good at building communities and buying. The high FDV projects that are rapidly financed are almost all pursuing the launch as soon as possible, leaving them no time to stabilize the project and buy. Simply put, this bubble came too fast. If you blow too much force when blowing bubbles, it is easy to explode. If you want to blow a big bubble, you have to use force slowly and evenly.
After 21 years of substantial expansion, the market needs new narratives and new myths of getting rich quickly to expand the market itself. It needs traffic and funds from outside the circle to enter. In fact, if you pay attention, you will find that after BTC reached 70,000 points, there has been no news outside the circle for a long time. It is completely inferior to the market madness before 519. So this is just a chain reaction. The sudden rise of BTC has made North America crazy and made primary financing too easy, so high FDV projects have emerged.
To put it bluntly, North America had no idea how to exit when they invested!
That’s why high FDV projects came into being. They chose to raise FDV, use VC money to do airdrops, accumulate data, and use data to force exchanges. As the final exit channel for funds, large exchanges did fall into their calculations, but large exchanges led by Binance have recovered, so He Yi said that we are unwilling to participate in similar projects again. The structure of this kind of project is to be taken over by retail investors. If the community itself is not good, it will hurt the retail investors of the exchange. You can see many people on Twitter recently scolding Binance, which is actually the sequelae of high FDV projects.
The game of interests between institutions and retail investors will not lead to a reshuffle of the market structure. Even if a bear market is entered, most retail investors will be washed away first, and then VCs that cannot adapt to the market will be washed away. The extreme case is that in 2018, the project party harvested VCs indiscriminately and finally fell into a liquidity crisis, but the current market is no longer the immature market at that time, and this situation will not occur.
Do projects with high FDV and low circulation have long-term value? I think there are loopholes in the fundamentals of such projects. Their financing structure makes it difficult for retail investors to make money, but they cannot be rejected outright. Retail investors can pay attention to the leaders of the sector and treat them as complete secondary transactions. For such high FDV leading projects, secondary transactions are relatively simple.
