Guide to bargain hunting: Altcoins continue to fall, it's time to refocus on DeFi

Introduction

As one of the oldest tracks in the crypto field, the Defi track has not performed satisfactorily in this bull market. The overall increase of the Defi sector in the past year (41.3%) is not only far behind the average level (91%), even behind Ethereum (75.8%).

数据来源：artemis

And if you only look at the data in 2024, the performance of the Defi sector is also difficult to say well, with an overall decline of 11.2%.

数据来源：artemis

However, in the author’s opinion, under the strange market background of altcoins falling after BTC once hit a new high, the Defi sector, especially the leading projects among them, may have the best time since its birth. layout moment.

Through this article, the author hopes to clarify his views on the value of Defi at the current moment by discussing the following issues:

• The reasons why altcoins have significantly underperformed BTC and Ethereum in this round
• Why is it the most important time to pay attention to Defi now? Best time
• Some Defi projects worthy of focus, as well as their value sources and risks

This article is far from covering Defi with investment value in the market. The Defi projects mentioned in the article are only examples and analysis, not investment advice.

This article is the author’s staged thinking as of the time of publication. It may change in the future, and the views are highly subjective. There may also be errors in facts, data, and reasoning logic. Comments and further discussions from peers and readers are welcome.

The following is the main text.

The mystery of the sharp decline in altcoin prices

In the author’s opinion, the price performance of altcoin prices in this round is not as good as expected. There are three main internal reasons for the encryption industry:

• Insufficient growth on the demand side: lack of attractive new business models, The PMF (product market fit) of most tracks is far away
• Excessive growth on the supply side: the industry infrastructure is further improved, the threshold for entrepreneurship is further lowered, and new projects are over-issued
• The wave of lifting of bans continues: the generation of low circulation and high FDV projects The currency continues to unlock, bringing heavy selling pressure

Let us look at the background of these three reasons respectively.

Insufficient demand-side growth: The first round of bull market lacks innovative narratives

The author mentioned in the article "Preparing for the Bull Market Main Rising Wave, My Phased Thoughts on This Cycle" written in early March that this round of bull market lacks and 21 Defi in 2017 and ICO in 2017 have business innovations and narratives of the same magnitude. Therefore, the strategy should be to overweight BTC and ETH (benefiting from the incremental funds brought by ETFs) and control the allocation ratio of copycats.

As of now, this view is very correct.

There are no new business stories, resulting in a significant decrease in the inflow of entrepreneurs, industrial investment, users and funds. More importantly, this situation has suppressed investors' overall expectations for the development of the industry. When the market has not seen stories such as "Defi will engulf traditional finance", "ICO is a new innovation and financing paradigm" and "NFT subverts the content industry ecology" for a long time, investors will naturally vote with their feet towards new stories. places, such as AI.

Of course, the author does not support overly pessimistic views. Although this round has not yet seen attractive innovations, the infrastructure is constantly improving:

• Block space fees have dropped significantly, and this is true for L1 to L2
• The cross-chain communication solution is gradually becoming more complete, with a wealth of options List
• User-friendly wallet experience upgrades, such as Coinbase’s smart wallet that supports quick creation and recovery without private keys, direct call to cex balance, no need to recharge gas, etc., allowing users to get close to web2 product experience
• Actions and Blinks functions launched by Solana , the on-chain interaction with Solana can be published to any common Internet environment, further shortening the user's usage path

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