Written by: dt
Editor: Lisa
BTC once returned to the 60,000 mark last week, causing mainstream coins such as ETH/SOL to fluctuate, while altcoins continued to slump, and meme coins were the sector with the strongest rebound. If we compare the beginning of 2024 to the present, altcoin and meme coin players can be said to be the representatives of the biggest losers and winners.
This week's CryptoSnap Dr.DODO will discuss with you the topic of altcoins vs meme coins.
Mature Market
The author believes that 2024 is a milestone year for the crypto industry to move towards maturity and compliance. The launch of spot ETFs for BTC and ETH in the US stock market means that the crypto industry has entered the world's mainstream market, bringing in a new group of holders. Large funds in various traditional financial industries will gradually become the dealers of the crypto market.
At the same time, due to compliance factors, the industry has also had more and more restrictions as it entered a mature stage, including concerns about whether many POS public chain tokens are unregistered securities, and controversies such as giant exchanges being involved in illegal money laundering. Project parties have had several more layers of shackles on their freedom to start projects.
On the other hand, the crypto market has also entered two increasingly extreme sides. The first side is the gradual and stable rise of mainstream coins. BTC is being chased by capital outside the circle, and its share of overall cryptocurrency has been rising. Although ETH has been criticized for its continuous decline after the launch of the ETF, it is still one of the most recognized assets in the circle. SOL is the super star of this round. After the collapse of FTX, a large number of chips were exchanged, so it has also become the mainstream coin with the brightest increase.
Source: https://www.tradingview.com/symbols/BTC.D/
The best performing altcoins in the last round of the 2021 bull market are in a terrible state, including various L1 ETH Killers and Defi tokens. Compared with the beginning of 2024, most of them are in a state of decline. In addition to the altcoins in the last round, the altcoins in this round are also sluggish. Judging from the performance of the new tokens on Binance 2024, there are countless coins that have been cut by -50% since the beginning of the year. In the past, Binance's new coins were the focus of retail players to gain excess returns, but now they have become the hardest hit area for players.
Source: https://x.com/ceterispar1bus/status/1820842327901954453
Source: https://x.com/Coin98Analytics/status/1820763411422032194
On the other side of the spectrum, retail investors have shifted their focus from altcoins that boast about their functional technology to meme coins with cute cat and dog avatars. They do not need to study project technology, token models, investment background, or token unlocking, etc. Instead, they need to learn how to join communities, observe sentiment, and study on-chain data.
The investment thinking of new players focuses more on the attention economy, just like the Internet paradigm shift that Web 2 is undergoing, from hardcore long articles to various eye-catching short videos. The corresponding Web 3 is the relationship between altcoins and meme coins.
Valuation and chip distribution
The author believes that another major reason for the poor performance of altcoins is the incorrect valuation and inflated financing amount. Many so-called "king-level" projects have received sky-high valuations of billions of dollars during the financing stage. Despite the real innovative technology, the value discovery was completed as early as the primary market financing stage. After listing on the exchange, it became a "death-level" project, and the token price continued to fall. The inflated financing amount is a common point of many junk altcoins. Institutions and project parties are in collusion, revealing exaggerated financing amounts through press releases, but in fact there is no real capital investment, just to attract retail investors' attention through news.
The old round of altcoins are facing a constant selling pressure brought about by the arrival of the unlocking cycle. Many tokens that performed well in the previous round were pulled up by means of high FDV and low MC, but now as the unlocking date approaches, a sliding trend is their only destiny.
In contrast, meme coins usually do not have venture capital, so there is no need to worry about subsequent unlocking and selling pressure. In addition, meme coins have a low starting point and there is no misvaluation. However, in terms of chip distribution, the author believes that meme coins are no different from altcoins. Both have many traces of manipulation. The only difference is that the manipulation is led by venture capital institutions or KOLs. But in terms of difficulty, meme coin retail investors are more likely to obtain chips at a low price.
Author's opinion
The author believes that another main reason for the decline of altcoins in this round is the inability to launch new concepts that can attract new user traffic. The last round of bull market, from Defi → NFT → GameFi, all brought a refreshing new way of thinking, simple but full of new ideas, retail investors can not only understand, play well, but also use them. The concepts that have emerged in this round, from RWA → Depin → AI, are full of various high-end technical concepts, but basically retail players can't use them at all, so it is difficult to cultivate community consensus.
In summary, my personal investment thinking has gradually shifted from being a supporter of altcoins to focusing only on mainstream coins BTC/ETH/SOL and meme coins. Lack of users is the biggest pain point of various altcoins. New public chains are emerging one after another, and modular infrastructure projects are increasing. But what use are these projects without users?
