Even in the “Altcoin Bear Market,” projects with outstanding fundamentals can achieve Alpha returns that surpass BTC and ETH. This article is derived from a piece written by Alex Xu and Lawrence Lee, organized, compiled, and authored by Deep Tide TechFlow.
(Background: Zhao Changpeng: Insisting on fundamental investment “will not do technical analysis,” I bought Bitcoin at $600 in 2014)
(Additional Context: Cryptocurrency, Inflation, Bonds: An Investment Guide for 2025 with Risk Control)
Undoubtedly, this bull market cycle has been the worst for altcoins.
Unlike previous bull markets where various altcoin prices surged after the onset of the bull run, leading to a rapid decline in BTC’s market share, this bull market has seen BTC’s market share rise steadily from around 38% since the market bottomed in November 2022, currently stabilizing above 61%. This is notable even amidst the rapid expansion of altcoin numbers during this cycle, indicating the weakness in altcoin prices.
BTC Market Share Trend, Source: Tradingview
As the market has progressed to this point, it has essentially validated Mint Ventures’ projections in the March 2024 article “Preparing for the Main Surge of the Bull Market,” where the author posited:
Out of the four driving factors of this bull market, three are fulfilled and one is lacking:
– BTC Halving (expectation of supply-demand adjustment), √
– Easing or expected easing of monetary policy, √
– Easing of regulatory policies, √
– Innovation in new asset models and business models, ×
Thus, it is advisable to lower price expectations for the previous cycle’s altcoins—including smart contract platforms (L1L2), gaming, Depin, NFTs, and DeFi. Consequently, the recommended strategy for this bull market was:
– Allocate a higher ratio to BTC and ETH (with a stronger preference for BTC, considering BTC as the long-term focus)
– Control the allocation ratio to altcoins such as DeFi, Gamefi, Depin, NFTs
– Select new tracks and new projects to seek Alpha, including: Meme, AI, and the BTC ecosystem
As of the publication of this article, the correctness of the above strategies has been largely validated (except for the underwhelming performance of the BTC ecosystem).
However, it is noteworthy that despite the lackluster price performance of most altcoin projects this cycle, a few have significantly outperformed BTC and ETH over the past year. The most typical examples are Aave and Raydium, highlighted in Mint Ventures’ report “Altcoins are in a Downward Spiral, It’s Time to Refocus on DeFi,” published in early July 2024 during the lowest point for altcoins.
Since early July last year, Aave has seen a maximum increase of over 215% relative to BTC, and 354% relative to ETH. Even after a significant price drop currently, Aave still shows a 77% increase relative to BTC and 251% relative to ETH.
Aave/BTC Exchange Rate Trend, Source: Tradingview
Since early July last year, Ray has seen a maximum increase of over 200% relative to BTC and 324% relative to ETH. Despite the overall decline of the Solana ecosystem and the significant negative impact of the Pump.fun self-developed Dex, Ray still maintains a positive increase relative to BTC, substantially outperforming ETH.
Ray/BTC Exchange Rate Trend, Source: Tradingview
Considering that BTC and ETH (especially BTC) have significantly outperformed most altcoin projects in this cycle, the price performance of Aave and Ray stands out among altcoins.
The reason for this is that, compared to most altcoin projects, Aave and Raydium possess superior fundamentals, reflected in their core business metrics reaching historic highs during this cycle, as well as having unique competitive moats with stable or rapidly expanding market shares.
Even in the “Altcoin Bear Market,” betting on projects with outstanding fundamentals can yield Alpha returns that surpass BTC and ETH, which is also the primary purpose of our research and investment work.
In this report, Mint Ventures will identify quality projects with solid fundamentals from thousands of listed cryptocurrency projects, track their recent business performance and market share, analyze their competitive advantages, assess their challenges and potential risks, and provide a reference for their valuations.
It is important to emphasize:
The projects mentioned in this article have advantages and attractions in certain aspects, but they also face various problems and challenges; different readers may have completely different judgments on the same project after reading this article.
Similarly, the projects not discussed in this article do not imply that they “have poor fundamentals,” nor does it mean “we do not have confidence”; we welcome recommendations for projects you are optimistic about along with your reasons.
This article reflects the authors’ thoughts as of the time of publication and may change in the future; the views expressed are highly subjective and may contain errors in facts, data, or reasoning logic. All opinions in this article are not investment advice; we welcome criticism and further discussion from peers and readers.
We will analyze the projects from several dimensions, including business status, competitive landscape, major challenges and risks, and current valuation. The following is the main text.
1. Lending Sector: Aave, Morpho, Kamino, MakerDao
DeFi remains the best-performing major sector for achieving Product-Market Fit (PMF) in the cryptocurrency business world, and lending is one of the most important sub-sectors within it, with mature user demand and stable business income. This sector gathers numerous quality new and old projects, each with its own strengths and weaknesses.
For lending projects, the key indicators are the scale of loans (Active loans) and protocol revenue, along with an assessment of the protocol’s expenditure indicators—token incentives.
1.1 Aave: The King of Lending
Aave is one of the few projects that have successfully navigated through three cycles of cryptocurrency markets while maintaining stable business development. It completed its funding through an ICO in 2017 (when the project was still called Lend, operating as a peer-to-peer lending model) and surpassed the then-leading lending platform, Compound, during the last cycle, remaining at the top in lending volume. Aave currently provides services across most mainstream EVM L1 and L2 networks.