The cryptocurrency market has undergone significant transformations over the years, each phase characterized by distinct investment opportunities and associated risks.

2017: The ICO Era


In 2017, the rise of Initial Coin Offerings (ICOs) revolutionized fundraising in the crypto space. Public fundraising directly replaced traditional venture capital (VC) and private equity (PE) investments. This period marked a bull market driven by the "OG" platforms and proxy investments, where participating early in ICOs often guaranteed substantial returns.

2021: The DeFi Boom


By 2021, Decentralized Finance (DeFi) had gained momentum, diversifying and fragmenting the market. Investors who moved quickly could capitalize on new opportunities. Initial Exchange Offerings (IEOs) also gained popularity, allowing projects to release shares to users at generally low prices. This trend of "buying new instead of old" became typical, providing lucrative opportunities for early investors.

However, the legal landscape evolved, and by 2024, IEOs faced regulatory challenges in many countries, shifting to airdrops and market pricing. Projects with large circulation and low opening prices, such as BB and Lista, performed steadily but lacked the thorough vetting process seen in earlier years.

2024: The BTC ETF Wave


The latest surge in 2024 was driven by the introduction of Bitcoin Exchange-Traded Funds (ETFs). Key projects and influential entities like Lumao Studio capitalized on this wave, creating impressive market data. These projects could attract substantial VC funding, often exceeding billions of dollars, which elevated the pricing of promising ventures. Confidence soared as projects amassed millions of users, offering diverse trading platforms, including Centralized Exchanges (CEXs) and Decentralized Exchanges (DEXs).

Despite these advancements, trading platforms now lack pricing power. For high-valuation projects, investors must consider fundamentals beyond market value, such as circulation metrics.

Current Market Dynamics


Today’s market presents a new landscape, with competition between Lumao Studio and Layer 2 (L2) projects becoming intense. The era of Lumao may be waning, giving way to more professional players equipped with sophisticated risk-hedging tools. While these tools have expanded the market, they also present new challenges for ordinary investors.

Strategies that were effective in the ICO boom of 2017, the IEO phase of 2021, and the 2023 market may no longer be applicable. The market's health is debatable, with fewer VC investments and project parties. Throughout each cycle, some projects successfully navigate bull and bear markets, while many potential "king-level" projects fail.

Investment Advice


The cryptocurrency market is inherently risky. Prospective investors should exercise caution and thoroughly understand the evolving market dynamics before entering. Past strategies may not be suitable for the current market, and success stories are rare both in web2 and web3 environments. Investors must remain vigilant and informed, recognizing that the landscape can shift rapidly and dramatically.

Appreciation

A big thanks and shout-out to @Yi He for giving us the glimpse into the evolution of cryptocurrency markets that led to this article.