A detailed article to clarify the crypto market will no longer reward diamond players

Once upon a time, Zhao Changpeng's famous saying "If you can't HODL, you won't become rich" has been widely circulated in the cryptocurrency circle and has become the investment standard. Buy, hold, and wait patiently for high returns, the HODL strategy was once popular. Some institutional investors have achieved hundreds or even thousands of times profits on projects such as MATIC and AAVE through in-depth research and precise betting. These legendary stories have further strengthened retail investors' belief in "diamond hands". However, this strategy may have worked in the last cycle but no longer applies in this cycle, especially for investors holding a large number of altcoins.

A cycle of four years, the market structure has changed significantly. If you cannot adjust your investment strategy in time, you can easily face the risk of being trapped at a high level. Is the market really no longer favoring "diamond players"?

1. Meme coins and AI concepts dominate the market, and the era of general rise is no longer

In the past crypto market cycle, Bitcoin usually ushered in a general rise in the second half of the year after the halving. Funds first pour into Bitcoin, then gradually flow to Ethereum, mainstream altcoins, and finally a carnival of small-cap altcoins and meme coins, and a typical bull market cycle ends.

This cycle started its first wave of rise in advance due to the positive news of Bitcoin spot ETFs. After Bitcoin briefly shined, the market was sluggish for a long time. The rise in the fourth quarter of 2024 was also very short-lived.

If you bet on popular assets such as Bitcoin, SOL, Dogecoin in the early stage and insist on holding them, then your returns will be very considerable. But if the altcoins you choose are not popular in the market, such as re-staking, inscriptions, games, NFT and other track projects, you are likely to face miserable returns.

Recently, the new coins launched by Binance often "are at their peak when they go online, and then fall all the way." Currencies with good project quality and certain popularity may be able to rise briefly, while projects that lack popularity and practical value and continue to unlock will be weak in buying and setting new lows. If the "diamond player" unfortunately chooses unpopular tracks and unpopular currencies and keeps holding on and not selling them, he will suffer huge losses.

In addition, compared with DeFi and NFTs that were popular in the previous cycle, this cycle lacks innovative projects that have really emerged, and market funds have been concentrated on Bitcoin, meme coins and AI concept coins for a long time.

The following figure shows that the proportion of Bitcoin's market value decreased significantly in 2017 and 2021, because altcoins generally rose. In 2023, the proportion of Bitcoin's market value continued to rise, once exceeding 60%. At the same time, Ethereum has been affected by a variety of factors, and its market value share has continued to decline since the beginning of 2023.

Historically, it is difficult to see a general rise in altcoins during the period of continuous increase in Bitcoin's market value.

At present, the market seems to reward only "diamond hands" investors who hold a few currencies such as Bitcoin.

2. Mainstream altcoins performed worse than expected

The difficulty of this round of altcoin market is far greater than that of the previous round. Take the L1 project in the previous cycle as an example. From the lowest point after Binance was launched, the highest return of DOT is more than 20 times, NEAR is nearly 40 times, AVAX is more than 40 times, SOL is more than 250 times, and UNI in the DeFi field is also more than 20 times. The wealth effect in the industry is very significant.

It is worth noting that after the above-mentioned tokens with rich returns hit a record high, they all fell into the bottom range after half a year or even a year.

In this cycle, in the infrastructure L1 project, except for the SOL/SUI performance, the rest are mediocre. In the L2 project, OP recorded a maximum return of 10 times and ARB received a maximum return of 3 times. Both fell into the bottom range within 5 months after hitting new highs, with ARB even falling from an all-time high of $2.42 to an all-time low of $0.34. Stable coins such as USUAL/ENA have received considerable returns, but from the bottom, they are all less than 10 times.

Some projects favored by venture capital are sluggish, with EIGEN receiving the highest 2x returns, and now hitting a record low. After re-polizing ETHFI and RENZO, they even fell all the way after they were launched on Binance. The highest 2 times return in IO has also hit a record low.

More and more investors are reluctant to take over the highly valued "VC coins", and market participation has declined regardless of new and old projects.

In addition, data from CoinMarketCap and CoinGecko show that currently there are more than 20,000 altcoins (excluding low-market meme coins) that are 2-3 times that of 2021. The wide variety of tokens and the rise of meme coins will inevitably impact the attention of mainstream altcoins and the returns will also be reduced accordingly.

3. The meme currency market is fast-paced and intensified.

The highly-watched "VC coins" in previous cycles are no longer popular. After market investors could not find the wealth effect on centralized exchanges, they turned to the chain to look for opportunities.

WIF rose to around $4.8 after launching Binance, and has now fallen to $0.8. BOME has a maximum price of $0.029 after launching Binance, and now the price is $0.002. Although TRUMP has brought wealth effects to some on-chain investors, if you do not take profits and leave the market near the highest point of $70, then in just about a week, TRUMP will fall to a minimum of $16.

Meme coins seem fair, but they are not small. The pace of market targets is getting faster and faster, and participants will be seriously trapped if they are not careful.

Taking the AI ​​meme coin GOAT as an example, on October 23, 2024, trader Nachi tweeted that "has obtained 4% of the total GOAT supply. This will be the best deal in this cycle." At that time, the price of GOAT coin was around US$0.5. On December 12, Nachi still stated that he held GOAT, and the GOAT coin price was US$0.84. After that, the situation took a sharp turn. First, it was stolen by ACT, and then it was stolen by AI agents such as VIRTUAL. The price of the currency fell below $0.1 for a time, while the historical highest price of GOAT was once at $1.37 for a time.

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