Fundamental Investing, Basically Not Profitable. “Pumpmental > Fundamental” has become the consensus for most people. For retail investors who put in real money, pumping is the best fundamental.
Summary:
Review of the most active meme coins in 2024: Dog-themed coins still dominate, $PEPE becomes the new focus.
Background:
All 34 charges against Trump approved! Meme coin TRUMP plummeted and then experienced a “V-shaped rebound,” surging to a new high of $17.
Table of Contents:
Fundamental Investing, Basically Not Profitable
Attention is the Real Fundamental
Retail Investors Love “Interesting,” Institutions Want “Useful”
Viewpoint:
There is always a legend circulating in the market about someone getting rich from investing and achieving financial freedom with just two simple steps: buying and waiting. But when it comes to personal practice, being a successful investor requires a great deal of determination. People often say, “The rewards are generous for those who wait,” but in reality, most of the time, while waiting, they see others reaping generous rewards, only to find that they are left with nothing but a handful of fleeting dust.
Compared to less volatile BTC, more people choose to hold a variety of “value coins” with the hope that their altcoins will be discovered for their value one day and bring in returns that far exceed the market.
However, recently, well-known Defi OG Ignas (@DefiIgnas) made a tweet stating that it is not reliable to choose to hold altcoins based solely on fundamental analysis. The crypto community does not believe in fundamental investing, just as people in Beijing, Shanghai, and Guangzhou do not believe in tears.
Ignas used the well-founded project Brave Browser and its $BAT token as an example to illustrate his point. Brave currently has about 73 million active users and raised $40 million in funding back in 2016 and 2017. The product is reasonable and the technology is solid. From the perspective of a reliable crypto project, Brave is undoubtedly a success.
However, the price of $BAT has not significantly increased. To this day, the price of $BAT is similar to its initial price in 2017, while $ETH, during the same period, has risen from $250 to $3,900.
Ignas admitted that he used to have high hopes for $BAT and even said that it was his largest holding of altcoins at one point. Despite selling all his $BAT near the peak, the price movement of $BAT still provided some insight: success in terms of product does not necessarily translate into excellent token price performance in the long run.
The truth that “high performance supports high stock prices” in traditional financial markets is not worth mentioning here. At the same time, buying into high performance and good data may have dire consequences.
Ignas also considered whether the token unlocking caused the price of $BAT to be suppressed, but unfortunately, $BAT is already fully circulating and there is no additional issuance.
In conclusion, Ignas advised not to easily believe in any project’s long-term holding promise, especially when it comes to altcoins. It is important to timely adjust portfolios and choose investment targets carefully.
After Ignas’s tweet, there were some interesting discussions in the comment section. Some people suggested that the poor price performance of $BAT could be due to the team focusing more on project development and lacking in marketing efforts. They also noticed the lack of official tweets mentioning the token. Ignas also commented in the discussion that in the crypto world, attention is everything, and the team may consider hiring some KOLs to promote $BAT and build a stronger community to enhance $BAT’s market awareness.
Indeed, $BAT is a classic representation of a “value coin”: a project with solid fundamentals and fully circulating supply. This seemingly undervalued golden egg seems to only need to be discovered by the market to trigger a frenzy of buying and price increase.
But the cold reality is that if a diamond hand holds $BAT for 7 years, their personal gains would have long been left far behind by the overall market.
Unlike traditional Web2 projects that value technical composition, user data, and funding background, the crypto market is driven by FOMO, celebrity endorsements, and even projects being “blacklisted.” These factors can become the “fundamentals” that attract retail investors’ attention.
Persistently adhering to the old-fashioned “fundamental investing” and waiting for value discovery may be limiting and conservative.
MEMECOIN can be considered the most direct destroyer of fundamental investing in the crypto market. The reason people love MEMECOIN is straightforward: it is easily understandable, and it pumps when people pump.
Due to the fair distribution mechanism of early chips and various unique cultures, MEMECOIN has always had a fair and fun image in people’s minds.
However, based on various price manipulation events that have been exposed, it is evident that large capital institutions are also unwilling to miss out on the emerging money-making field of MEME, and there are signs of manipulation by these institutions behind many MEMECOINs. See our other report for more details: “Collective Misconduct? Insider Reveals Polygon Executives’ Malicious Manipulation of Meme Coin Prices.”
A chart provides a simple analysis of current crypto assets:
This chart shows the different characteristics of crypto assets: on one end, there is the entertainment-driven, speculative frenzy represented by MEMECOINs, and on the other end, there are the mundane, practical assets represented by RWA assets.
Interesting and useful seem to be the different choices for retail investors and institutions. Retail investors prefer a retail-driven market fueled by high speculation and entertainment, as seen in the MEMECOIN craze and the AI bubble in the fourth quarter of 2023. On the other hand, institutions tend to focus on practical markets that comply with regulations, such as BTC/ETH ETFs + RWA assets, which have a more stable narrative.
But despite seeming to go in different directions, they are actually converging.
Phantom has been among the top downloads in the Google market in many countries. The MEME frenzy, driven by retail investors, has spread worldwide. The entertainment attributes of MEME culture, such as freedom, randomness, and chaos, make retail investors willing to pay for this added value. People from various fields also want to get a piece of the pie, whether it’s political MEMEs, celebrity MEMEs, or Pump.Fun live streams. Everything and anything can become a MEMECOIN, and various indicators of people and things are reflected in the price fluctuations of MEME coins, turning into a paradise of realized influence and traffic.
The attitude of traditional institutional players also speaks volumes. From criticizing and questioning crypto assets to rushing to launch BTC/ETH ETFs, “regulation” has transformed from a proverbial sword hanging over the crypto market to a catalyst for a bull market. Even in the current U.S. election, the crypto market has become a chip for candidates to campaign with.
From “considered useless” to “forced to use,” attention has always been the driving force behind the crypto market’s transition from the fringes to the mainstream.
In the crypto industry, investment logic differs greatly from traditional financial markets. The so-called fundamentals have completely different meanings when there is or isn’t tangible performance to support them.
Retail investors have been deceived by the stories of fundamentals, so it is natural for them to choose the straightforward approach of MEMECOINs. Are institutions really favoring utility coins because of the projects’ fundamentals? Not necessarily.
Institutions can indeed see the value of MEMECOINs, but when it comes to investing in MEMECOINs, they cannot explain it well to investors. They can’t simply say they invested in an emoji or a cat.
Investors may also prefer institutions to invest in more “serious” assets, so fundamentals have become the packaging of serious investments.
Therefore, it is possible that no one is really doing pure fundamental investing. It’s just that retail investors are more direct, while institutions are more indirect.
So, the smart approach is to embrace both MEME trading and infrastructure development.
For example, Jupiter, which started as a MEME amusement park, is now expanding into the unified market and has established the GUM Alliance in collaboration with multiple projects and institutions. Whether it’s MEMECOINs, RWA assets, stocks, or foreign exchange, Jupiter is open to everything, promoting a diverse market.
In this bull market, the market is no longer operating in a simple mode, and all participants have evolved. The simple structure of fundamental investing is becoming less effective.
Based on historical lessons, some fundamental investments do not even outperform inflation, let alone the fact that some projects with strong fundamentals end up going to zero. The logic of market investment is gradually changing, and fundamental investing is no longer as politically correct as before.
Of course, if the time cost is infinite, value discovery investing may lead to a different conclusion.
But retail investors cannot afford to wait that long.
In the fast-paced crypto market with rapidly changing information, what is most abundant is new hotspots, and what is most valuable is attention. The driving force of the market has changed, and projects no longer have much time left for value discovery.
In a recent article, well-known blogger @redphonecrypto also pointed out that the ability of a token to attract attention is more important than other indicators. The stronger the ability to attract attention, the greater the potential for price increases.
“Pumpmental > Fundamental” has become the consensus for most people. For retail investors who put in real money, pumping is the best fundamental.