The cryptocurrency circle does not believe in fundamental investment; attention is everything

Author: Deep Tide TechFlow

There are always legends in the market about certain diamond hands reaping substantial rewards, as if achieving financial freedom only requires two simple steps: buy and then wait.

However, when it comes to personal practice, being a diamond hand demands a high level of personal willpower. People often say, "The rewards for waiting are plentiful," but the reality is mostly: while waiting, one discovers that others' rewards are plentiful, and by the end, one opens their hands to find only a handful of dust that has blown away.

Compared to the relatively stable BTC, more people choose to hold a variety of "value coins" for the long term, hoping that the altcoins they hold will one day be recognized for their value and yield returns far exceeding the market.

Recently, well-known DeFi OG Ignas (@DefiIgnas) stated in a tweet: Just being optimistic about the fundamentals and choosing to hold altcoins long-term is not reliable.

The crypto world does not believe in fundamental investing, just as the big cities do not believe in tears.

Fundamental Investing Rarely Makes Money

Ignas used the example of the Brave browser and its $BAT token, which had solid fundamentals in the last cycle:

Currently, Brave has about 73 million active users and had raised $40 million in high-profile funding 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 seen significant growth, and to this day, the price of $BAT is close to what it was at its initial issuance in 2017, while $ETH during the same period has already risen from $250 to $3900.

Ignas candidly expressed that he was very optimistic about the vision for $BAT and that it was once his largest altcoin position. Although he sold everything near the peak, the price trend of $BAT still offers some insights: success in the product does not necessarily translate into long-term excellent price performance for the token.

The truth of "high performance supports high stock prices" in traditional financial markets seems trivial here; at the same time, paying for high performance and good data may lead to a disastrous outcome.

Ignas also considered whether the price suppression of the token was due to token unlocks, but unfortunately, $BAT is now in a fully circulating state with no additional issuance.

In the end, Ignas's advice is not to easily believe in any project's long-term holding promises, especially for altcoins. Timely rebalancing and cautious selection of investment targets are very important.

Attention is the Fundamental

After Ignas's tweet, there were some interesting discussions in the comments:

Some suggested that the dismal price performance of $BAT might be because the team focused its funding on project development, lacking in marketing, and that there were not many mentions of the token in the official tweets. Ignas also stated in the comments that in the crypto world, attention is everything; the team should perhaps hire some KOLs to promote $BAT and build a stronger community to enhance $BAT's market recognition.

Indeed, $BAT is a classic representative of "value coins": excellent project fundamentals and fully circulating token supply. Such an undervalued golden egg seems to be just waiting for market value discovery, eventually leading to a wave of enthusiastic buying and price increases.

But the cold reality is: if a certain diamond hand held $BAT for 7 years, their personal returns would have long been left far behind by the market.

Unlike traditional Web2 projects that focus on the technical composition, user data, and financing background, sector effects, celebrity endorsements, and even project controversies can all become the "fundamentals" that attract retail attention in crypto projects.

Stubbornly adhering to the old-fashioned "fundamental investing" while waiting for value discovery may be somewhat clinging to the past.

Retail Investors Love "Fun," Institutions Want "Usefulness"

MEMECOINS can be said to be the most direct destroyers of fundamentals in the crypto market. The reason people love MEMECOINS is straightforward: they are easy to understand and can be pumped at any time.

Due to the early fair distribution mechanism and various unique cultures, MEMECOINS have always had an image of fairness and fun in people's minds.

However, from the various price manipulation incidents that have emerged, it is clear that large capital is also unwilling to miss out on this emerging money-making territory, and many MEMECOINS show signs of being manipulated by large institutions. See our other report: Collective Malfeasance? Insiders Expose Polygon Executives' Malicious Manipulation of Meme Coin Prices

A chart provides a simple analysis of current crypto assets:

This chart shows the different natures of crypto assets at both ends: one end is represented by MEMECOINS, characterized by entertainment and wild speculation, while the other end is represented by RWA assets, which are dull and practical.

Fun and usefulness seem to be different choices for retail and institutional investors.

Retail investors prefer a retail-driven market propelled by high speculation and fun, represented by the MEMECOIN craze and the AI bubble in the fourth quarter of 2023, while institutions tend to focus on practical markets that comply with regulatory requirements, such as BTC/ETH ETFs and RWA assets, which tell a more stable narrative.

However, while they may seem to be diverging, they are actually converging in different ways.

Phantom ranks high in Google Play downloads across multiple countries, and the MEME craze driven by retail has spread worldwide. The entertainment attributes of freedom, randomness, and chaos inherent in MEME culture also make retail investors willing to pay for this added value.

Even people from various fields want to get a piece of the pie: political MEMEs, celebrity MEMEs, Pump.Fun live streams… everything can be MEME'd, and the more flashy, the better. Various metrics for measuring people and things are transformed into the rise and fall of MEME coin prices, creating a paradise for monetizing influence and traffic.

The attitudes of traditional institutions are also telling; they have shifted from disparaging and questioning crypto assets to scrambling for BTC/ETH ETFs, while "regulation" has transformed from a sword of Damocles hanging over the crypto market to a catalyst for a bull market. Now, in the context of the U.S. elections, the crypto market has even become a bargaining chip for candidates.

From "considered useless" to "must be used," attention runs through the entire journey of cryptocurrencies from wild paths to formal armies.

In the crypto industry, investment logic differs significantly from traditional financial markets; the so-called fundamentals have entirely different meanings depending on whether there are tangible performance supports or not.

Retail investors, having been deceived by fundamental stories too many times, naturally choose the simple and crude MEMECOINS; do institutions' preferences for utility tokens really stem from the projects' fundamentals? Not necessarily.

Institutions can certainly see the value of MEMECOINS, but when it comes to investing in MEMECOINS, they cannot explain it well to their investors. They can't just say they invested in an emoji or a cat, right?

Investors may also prefer institutions to invest in more "serious" assets, so fundamentals become the packaging for serious investments.

Thus, perhaps no one is truly engaged in pure fundamental investing; retail investors are just more direct, while institutions are more indirect.

Therefore, trading MEMECOINS and building infrastructure are not necessarily in conflict; the smart approach should be to embrace both.

For example, Jupiter, which started as a MEME playground, is now working towards a unified market, forming the GUM Alliance with multiple projects and institutions, embracing everything from MEMECOINS, RWA, stocks, to foreign exchange, promoting an omnivorous approach.

With both MEME and "fundamental" assets, Jupiter's compatibility with various assets reflects a business logic that is not solely dependent on fundamentals.

Opinion

In this bull market, the market is no longer a simple model; all participants have evolved, and simple fundamental investing is becoming increasingly ineffective.

From the lessons learned in history, some fundamental investment returns have even failed to outpace inflation, let alone some strong fundamental projects heading towards zero. The logic of market investment is gradually changing, and fundamental investing is no longer as politically correct as it once was.

Of course, if the time cost is extended indefinitely, there may be a different conclusion for value discovery investments.

However, retail investors cannot afford to wait.

In the rapidly evolving information hotspots of the crypto world, there is no shortage of new trends, and the most valuable asset is attention. As market driving forces change, a project's grasp of market attention can often strongly influence token prices. The importance of attention economics is becoming increasingly prominent, and the market has little time left for projects to slowly be discovered for their value.

Well-known blogger @redphonecrypto pointed out in a recent article: 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 appreciation.

"Pumpmental > Fundamental" has become the consensus for most people; for retail investors who put in real money, pumping is the best fundamental.