Original author: Riyue Xiaochu, crypto KOL
Recently, high-market-cap projects have been widely discussed. If this continues, not only will we, the leeks, fail to make money in the bull market, but we will also become ATMs for institutions and project parties, which is really annoying.
I hate this, too. The way many projects are playing this round has become that institutions invest in high valuations, attracting the "fake investors" to brush up the data, and then listing them on the exchange, harvesting them with high FDV and low circulation.
In my opinion, the reason for this is that people are too certain about this bull market, which has led to a large influx of funds and a serious bubble in the primary market.
I remember that in 2019, I attended several institutional investment meetings on behalf of the company at that time. At that time, the market value of project financing was several million US dollars. That's right, it was often one or two million US dollars. At that time, there was very little primary investment capital because everyone was full of doubts about the future of this industry. In 2019 and 2020, when BTC fell sharply, we often saw reports that the currency circle was going to return to zero.
But in this bear market, everyone in the cryptocurrency industry is convinced that the bull market will come again, and a lot of money has poured into the industry. Institutions like a16z have fund sizes calculated in billions of dollars. When there is excess capital, the valuation of projects is constantly pushed up. When I am doing project research, I can see projects with financing valuations of 100 million dollars everywhere, and many are pushed to 1 billion dollars or even higher. Looking at the market value of projects in this round of Binance launchpool, the contrast with the market value in the previous round is also very obvious.
This phenomenon is definitely irrational. But complaining is useless. Only when the institutions that invested in high valuations suffer heavy losses can the problem be solved. However, since the primary feedback cycle is relatively long, it takes several years from investment to final unlocking and realization, so it is difficult to see improvement in this round of bull market.
What we need to do is stay away from projects with high FDV. In this bull market, not all projects will make a lot of money. Taking 10 billion FDV as an example, institutions and teams often account for more than 40%. Even if they are unlocked in 3 years, at least 2 billion US dollars can be cashed out by the end of the 25-year bull market. Institutions often have 10 to 20 times the return, and retail investors generally want hundreds of times, but the big funds of institutions are completely satisfied with such returns. Therefore, institutions and teams are busy cashing out, who will come to pull the market? So don't take over. Only when those institutions lose money will they dare not make such a big move in the next round of the market.
If there is a project that you really like and really want to buy, at least consider a few factors.
1) In terms of time, buy at the bottom of a trend rather than at the top, such as now. 2) If there are favorable news for the entire sector recently, you can consider that the market may hype it up. 3) If there are large amounts of unlocking recently, you can pay attention to the market.
Based on historical experience, in order to sell at a good price, some projects will sometimes concentrate on favorable factors and pull up the price when they are close to being unlocked.
In any case, low-circulation, high-FDV projects are not suitable for long-term holdings. Even if you want to buy, the expected return is lower, and you must check the unlocking rules and time of the institution and team.
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