Cryptocurrency Bull Market Pauses, Selecting Outstanding Performing Altcoins Requires More Caution
This article shares four key considerations for selecting potential projects: narrative heat, growth indicators, sound token economics, and community-first characteristics. This article is derived from a piece by The DeFi Investor, organized, translated, and written by Tim, PANews.
(Background: Can Solana’s successful trajectory be replicated? The market focuses on four potential altcoins)
(Background Supplement: ChatGPT In-Depth Analysis: Who are the next potential coins before the altcoin bull market arrives in August?)
The cryptocurrency bull market is back, at least for now.
The question is: which altcoins will deliver performances that exceed the market?
During the bull market of 2021, nearly all altcoins experienced surges. However, the situation has changed since then, with millions of new altcoins available, making it essential to carefully sift through them to achieve outstanding performance. In this article, I would like to share my list of crypto projects and the main factors to consider during selection.
Let’s get started:
1. Narrative Heat and User Mindshare
Think about the best-performing tokens over the past 12 months.
The first that comes to mind are HYPE, VIRTUAL, and meme coins.
Do they all have strong fundamentals? Platforms like HYPE do, but most of the top performers listed below certainly do not.
Source: Coingecko’s 2024 Top Cryptocurrency Surge Rankings Article
They all share a common trait: a high user mindshare on social media, along with a group of loyal fans tirelessly promoting them on the X platform.
Moreover, the success of most top performers is also related to strong narratives.
With the popularization of AI concepts, Virtual continues to soar.
Due to the popularity of internet memes, meme coins experienced value surges from Q4 2024 to early Q1 2025.
My suggestion is to identify the current trending narratives, search for them, and then select tokens that have highly active communities on Twitter.
2. Growth Indicators
In a bull market, market speculation (unfortunately) is far more important than fundamentals. The good news is that some projects have achieved both high attention and strong product-market fit.
If a project possesses both qualities, it may be a great investment, especially if its key indicators have recently experienced explosive growth.
For example: The total locked value (TVL) of the stablecoin protocol Ethena surged by 50% in the past 30 days. Meanwhile, many users and analysts on Twitter have been focused on and analyzing this project.
What was the result? Ethena’s token ENA rose by 154% over the past month.
By betting on early projects that consistently show growth indicators (such as TVL, revenue, and fees) and have significant community interest, you can make substantial profits.
I often use DeFiLlama to identify the fastest-growing projects.
3. Sound Token Economics
If you only plan to hold tokens for a few days, token economics may not have much impact; however, if you are investing for the medium to long term, the situation is completely different.
For instance, the TIA token has plummeted over 90% in the past 17 months due to early investors selling off significantly after each token unlock.
This is why it is crucial to understand token economics before purchasing tokens.
Key points I focus on when researching tokens include:
Token Unlock Schedule
Tokenomist can track the token economics and unlock history of many popular tokens.
In general, I look for tokens with at least 30% circulating supply, and annual token release (i.e., inflation) capped at 20%-35%.
Additionally, if there has been a significant recent token unlock (for example, unlocking more than 20% of the current circulating supply), I prefer not to buy that token.
Token Utility
I always ask myself two questions:
Will the token I consider purchasing benefit from the success of the protocol? Why would someone be willing to pay a higher price than I would?
Dividend mechanisms or token buyback programs are the best options I can think of.
While strong token utility is a significant advantage, it is not a necessity. I have seen many tokens with almost no utility perform exceptionally well.
4. Community-First
A community-first project is more important now than ever.
More and more people are unwilling to invest in vague and dull projects, preferring to support community-centered teams.
This is one reason I believe tokens like HYPE and PENGU have performed so well recently.
Some characteristics of community-first crypto projects include:
Large-scale Airdrops
The team consistently under-promises and over-delivers.
Team-driven marketing: The team is very active on the X platform and continuously interacts with the community.
The majority of token supply is allocated to the community.
These are the main factors I consider when selecting tokens.
Another important factor that could drive token prices higher is an upcoming significant positive development that has not yet been reflected in the current price.
Possible positive catalysts include upcoming protocol upgrades, improvements to the token economic model, or the release of new products that can significantly increase project returns.
Even the best assets are poor investments if they are overpriced.
Be patient and wait for the right opportunities while taking appropriate action, avoiding fear of missing out (FOMO) and chasing highs.
