Fundamental investment, basically not profitable. “Pumpmental > Fundamental” has become the consensus for most people. For retail investors who invest real money, pumping is the best fundamental.
(Background:
Inventory of the most active meme coins in 2024: Dog-themed coins still dominate, $PEPE becomes the new focus..
)
(Background:
34 charges against Trump all upheld! Meme coin TRUMP plummeted and then “V-shaped rebound” surged to a new high of $17.
)
Table of Contents
Fundamental Investment, Basically Not Profitable
Attention is the Fundamental
Retail Investors Love “Interesting”, Institutions Want “Useful”
Viewpoint
There is always a legend circulating in the market that certain diamond hands have obtained substantial returns, as if achieving financial freedom only requires two simple steps: buy and wait. However, when it comes to personal practice, being a diamond hand requires a significant level of determination. People always say that “the rewards of waiting are abundant,” but in reality, most of the time it’s waiting and waiting, only to find out that others have reaped abundant rewards, and in the end, all that’s left is a handful of disappearing dust.
Compared to BTC, which has less volatility, more people choose to hold a variety of “value coins,” hoping that their hodled altcoins will be discovered for their value and achieve returns far exceeding the overall market.
But recently, well-known Defi OG Ignas (@DefiIgnas) expressed through a tweet that choosing to hold altcoins based on fundamental analysis alone is unreliable.
The crypto market does not believe in fundamental investment, just like how people in Beijing, Shanghai, and Guangzhou do not believe in tears.
Ignas gave examples from the previous cycle of projects with solid fundamentals, such as the Brave browser and its $BAT token:
Currently, Brave has about 73 million active users and had a high financing of $40 million as early as 2016 and 2017. The product is reasonable and the technology is solid. From the perspective of a reliable crypto project, Brave is undoubtedly successful.
However, the price of $BAT has not significantly increased. To this day, the price of $BAT is similar to its initial issuance in 2017, while $ETH, during the same period, has risen from $250 to $3900.
Ignas frankly said that he was very optimistic about the vision of $BAT and it used to be his largest holding of altcoins. Although he sold all of it near the peak, the price trend of $BAT still provides some insights: the success of a product does not necessarily translate into excellent long-term performance of the token.
The truth of “high performance supports high stock price” in traditional financial markets is not worth mentioning here. At the same time, buying into high performance and good data could lead to a disastrous outcome.
Ignas also considered whether the suppressed price of $BAT was due to token unlocking, but unfortunately, $BAT is now fully circulating with no additional issuance.
In the end, Ignas’s advice is not to easily believe in any project’s long-term holding commitment, especially for altcoins. It is important to adjust the portfolio in a timely manner and choose investment targets carefully.
After Ignas’s tweet, there were some interesting discussions in the comment section:
Some people suggested that the dismal price performance of $BAT may be because the team focused on project development and lacked marketing. At the same time, there is not much mention of the token in the official tweets. Ignas also pointed out in the comment section that attention is everything in the crypto world, and the team should consider inviting some KOLs to promote $BAT and build a stronger community to enhance the market awareness of $BAT.
Yes, $BAT is the classic representative of “value coins”: excellent project fundamentals, fully circulating token supply. This seemingly undervalued golden egg only lacks market recognition to unleash a frenzy of buying and price increase.
But the cold reality is: if a diamond hand holds $BAT for 7 years, their personal gains have long been left behind by the overall market.
Unlike traditional Web2 projects that focus on technical composition, user data, and financing background, the “fundamentals” in the crypto market can be influenced by pump and dumps, celebrity endorsements, and even project criticism. These can all attract retail investors’ attention as the “fundamentals”.
Persistently adhering to the old-fashioned “fundamental investment” and waiting for value discovery may be somewhat outdated.
MEMECOIN can be said to be the most direct destroyer of fundamental investment in the crypto market. The reason why everyone loves MEMECOIN is straightforward: it is easy to understand and can be pumped with excitement.
Due to the early fair chip distribution mechanism and various unique cultures, MEMECOIN has always had a fair and fun image in people’s minds.
But from the various price manipulation incidents that have been exposed, it is evident that large capital institutions are also unwilling to miss out on this emerging money-making territory of MEME, and many MEMECOINs have traces of manipulation by large institutions. See our other report for details:
Collective Misdeeds? Internal personnel expose 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 entertainment-driven and speculative MEMECOIN, and on the other end, there are boring and practical RWA assets.
Interesting versus useful, it seems to be the different choices between retail investors and institutions.
C-end retail investors prefer a retail-driven market fueled by high speculation and entertainment, represented by the MEMECOIN frenzy and the AI bubble in the fourth quarter of 2023. On the other hand, B-end institutions tend to focus on practical markets that comply with regulations, such as BTC/ETH ETF + RWA assets, which have a stable narrative.
But although they seem to be going in different directions, they are actually converging.
Phantom has topped the downloads in the Google market in multiple countries, and the MEME craze driven by retail investors has spread worldwide. The freedom, randomness, and chaos associated with MEME culture make retail investors willing to pay for this added value. People from various fields also want to get a share of the pie, whether it’s political MEMEs, celebrity MEMEs, or Pump.Fun live streams… Everything can be turned into a MEMECOIN, and all kinds of indicators measuring people and things are transformed into the rise and fall of MEME coin prices, creating a paradise of influence and traffic explosion.
Even the attitudes of traditional institutional players reveal that from dismissing and questioning crypto assets to scrambling to launch BTC/ETH ETFs, “regulation” has transformed from the sword of Damocles hanging over the crypto market to a catalyst for the bull market. In the current US election, the crypto market has even become a chip for candidates’ campaign.
From “considered useless” to “can’t do without,” attention has always been embedded in the entire journey of crypto currencies from the fringes to the mainstream.
In the crypto industry, investment logic differs greatly from traditional financial markets, and the definition and significance of “fundamentals” are completely different when there is or isn’t tangible performance support.
Retail investors have been deceived by the stories of fundamentals for too long, so naturally they choose the direct and crude MEMECOIN. It is not necessarily true that institutions favor utility coins because of the projects’ fundamentals.
Institutions can certainly see the value of MEMECOIN, but when it comes to investing in MEMECOIN, institutions themselves cannot justify it to investors. They can’t just say that they invested in an emoji or a cat.
Investors may also prefer institutions to invest in more “serious” assets, so the concept of fundamentals has become a packaging for serious investments.
Therefore, perhaps no one is really doing pure fundamental investing, it’s just that retail investors are more direct while institutions are more indirect.
Therefore, it may not conflict with pumping MEME coins and building infrastructure. The smart approach is to embrace both.
For example, Jupiter, which started as a MEME theme park, is now venturing into the mainstream market, establishing the GUM alliance with multiple projects and institutions. Whether it’s MEMECOIN, RWA, stocks, or foreign exchange, everything is welcomed. Jupiter’s compatibility with various assets demonstrates a business logic that goes beyond just relying on fundamentals.
In this bull market, the market is no longer a simple mode. All participants have evolved, and fundamental investment with a simple structure is becoming less effective.
From the lessons learned from history, some fundamental investments have not even outperformed inflation in terms of returns, let alone some projects with strong fundamentals that head straight to zero. The logic of market investment is gradually changing, and fundamental investment is no longer as politically correct as before.
Of course, if the time cost is extended indefinitely, value discovery investment may have a different conclusion.
But retail investors can’t afford it.
In the rapidly iterating crypto market, new hotspots are never in short supply, and attention is the most valuable asset. The driving force in the market has changed, and projects are running out of time to be discovered for their value while the attention economy continues to grow in importance.
It is already the consensus for most people that “Pumpmental > Fundamental”. For retail investors who invest real money, pumping is the best fundamental.