If u'd bought $WIF for $1k in December, it'd now be worth $3M+
If u'd bought $POPCAT for $1k in December, it'd now be worth $1.5M.
🧵: Why memecoins pump so hard, and why they'll continue to pump this bull run !
I think many noticed that the only alts that have pumped hard this cycle are memecoins.
And I think many are interested in 2 questions:
• Why are memes pumping while utility coins are not?
• When will this end, and will it end at all?
If u follow me, you know I've made many successful meme coin calls:
$POPCAT before 400x, $WIF before 82x, $ANALOS before 1000x, $PONKE before 15x, and many others
2/➮ Many believe that the market could replicate the 2021 bull run when altcoins pumped all together
✧ However, this cycle has revealed several issues that make this unlikely:
• VCs dumping
• Too many coins
• Too high initial FDV
• Too low initial MC = big sell pressure
3/➮ Back in 2021, retail traders made money on alts cause they raised rounds during the bear market at low valuations and launched at low valuations, leaving huge upside.
✧ But everything changed in 2022 when many projects raised rounds with huge valuations began postponing their launches because the market was dead
✧ Launching a project in such a market is a death sentence
4/➮ Most projects kept getting postponed, and by the end of 2023, as the market began to turn, they started launching
✧ Add to that a bunch of new projects from new players who saw the bullish conditions as an opportunity to launch quickly
✧ Result = peak in token launches
And I do believe they will continue to be the hottest narrative for this cycle.
Here's my thesis:
1/➮ "Utility" alts are completely underperforming this bull run, even though $BTC has reached a new ATH
✧ But many are still waiting for the altcoin season to start where all alts will grow
Let's figure out why this is happening and what to expect👇
4/➮ Most projects kept getting postponed, and by the end of 2023, as the market began to turn, they started launching
✧ Add to that a bunch of new projects from new players who saw the bullish conditions as an opportunity to launch quickly
✧ Result = peak in token launches
6/➮ Currently, there is over $200M of new supply pressure per day
✧ And all of this is dumping the market daily
✧ Plus, new projects that are launching with low FDV/high float mechanics, and are just going down
7/➮ On top of this, there's the trend of raising rounds at high valuations because everyone was counting on a utility alt season in this bull market.
This led to retail not making money since early investors are dumping to recoup their investments.
But even they aren't making much because the initial valuation is high, and liquidity has decreased significantly due to an increase in projects.
In short, funds wanted to make money this cycle, but retail wasn't as dumb as expected, refusing to buy useless fake utility coins at inflated valuations...
As a result, only the developers made money, raising rounds at high valuations
8/➮ All of this has led to the huge growth in meme coins
✧ Retail traders no longer see opportunities to make 5x, 10x, or more on altcoins
✧ And if they don't even see these opportunities, they don't act (buy)
That's why memecoins become so popular
9/➮ Meme coins are currently the only alts where you can actually make a lot of money for a few reasons:
- They are fully unlocked (no sell pressure by private investors)
- They are launching at low MC
- Anyone can buy them directly from the market (no private sales for KOLs/VCs only)
- Their upside is almost limitless because it's based solely on the community, not on technology.
10/➮ It turns out that as long as we remain in the position of "not enough new liquidity entering the market" with an insane amount of sell pressure from unlocks, nothing will change, and meme coins will keep rising
✧ So how could things turn around
Here are a few things that could change everything:
- Exchanges might implement stricter token distribution policies
- Teams could focus on allocating more tokens to the community
- A higher % could be unlocked at launch, with potential measures to discourage dumping
BUT even if they manage to do it, it won't be soon, and solving this problem quickly is IMPOSSIBLE.
Everyone realized that utility in most alts is just a facade, there are too many of them, and the initial valuation is too high
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