Author: 1912212.eth, Foresight News
At one point, CZ's statement "If you can't hodl, you won't get rich" was hailed as the golden rule of crypto investment and widely circulated. Buying, holding, and firmly holding, and then selling at a huge profit when the gains are abundant, the HODL concept was once very popular in the circle.
Some investment institutions, through in-depth research and betting, have obtained very generous returns, such as the previous cycle's huge gains on MATIC and AAVE. The legendary wealth stories have led retail investors to generally believe in the powerful strength of diamond hands. However, if this investment concept was still relatively useful in the previous cycle, in this cycle it is no longer believed by the market, especially for players with a lot of Altcoins.
Under the four-year cycle, the market structure has undergone significant changes, and if you cannot adjust your style in time, you often face the risk of being stranded at the top of the market. Has the market really stopped rewarding diamond hands?
I. Memes and AI are the main tunes, and the bull market is no longer widespread
In the past cycles of the crypto market, there was often a bull market climax after the Bitcoin halving. Market funds gathered from Bitcoin, then spread to Ethereum, and then flowed into mainstream Altcoins, and finally the small-cap Altcoins and meme coins went crazy, marking the end of a typical bull market cycle.
However, in this cycle, the first wave of the rally was brought forward due to the positive news of the Bitcoin spot ETF. BTC had its moment of glory, and the crypto market then remained dormant for a long time. It wasn't until Q4 2024 that the market saw an upturn, but it was quite short-lived.
If you had embraced popular assets like BTC, SOL, and Dogecoin relatively early in this cycle, the diamond hand gains would be very impressive. But if the Altcoins you chose were not favored by the market, such as those in the DeFi, Metaverse, gaming, and NFT tracks, the returns on your books could be "appalling".
Recently, new coins listed on Binance, which are often criticized by the market, tend to peak immediately after listing and then slide downward. Projects with slightly better quality and hype may see a period of upward movement, but those without hype and use cases that keep unlocking new tokens will see weak buying power and continuously hit new lows. If diamond hands unfortunately choose obscure tracks and obscure coins and hold on without selling, they will suffer huge losses.
In addition, compared to the relatively hot DeFi and NFT in the previous cycle, this cycle has not seen any truly innovative projects that can compete with them, and market funds have been stagnant on BTC, memes, and AI-concept coins for a long time.
The chart below clearly shows that the market cap dominance of BTC has seen a significant decline in 2017 and 2021, which was due to the widespread rise of Altcoins. By 2023, BTC's market cap dominance has started to rise all the way, from 38% to even over 60% at one point. In contrast, Ethereum has been plagued by multiple factors, and its market cap dominance has been declining since the beginning of 2023.
Historically, periods of rising BTC market cap dominance are difficult to see the so-called widespread Altcoin season.
Now, the market seems to only reward diamond hand players holding BTC and a few other coins.
II. Mainstream Altcoins underperform expectations
The difficulty of the Altcoin market in this cycle is incomparable to the previous cycle. Taking the L1 projects of the previous cycle as an example, calculated from the lowest point after listing on Binance, DOT had a maximum return of over 20x, NEAR nearly 40x, AVAX over 40x, and SOL over 250x. UNI in the DeFi field also had a return of over 20x. The wealth effect of the industry was very significant.
It is worth mentioning that the tokens with generous returns mentioned above all fell back to the bottom range within half a year or even a year after hitting new highs.
Among the L1 infrastructure projects in this cycle, except for SOL/SUI, the performance of the rest is rather poor. In the L2 sector, OP recorded a maximum of 10x return, and ARB a maximum of 3x. Both fell back to the bottom range within 5 months after hitting new highs, and ARB even fell from its all-time high of $2.42 to a new low of $0.34. Stablecoins like USUAL/ENA have also recorded decent returns, but from the bottom, they are still less than 10x.
Some projects that were heavily pursued by VC capital have performed poorly, with EIGEN reaching a maximum of 2x and already hitting a new low. The re-pledging ETHFI and RENZO even started a new low mode immediately after listing on Binance. IO reached a maximum of 2x and has also hit a new low.
More and more players are no longer willing to take over high-valued VC coins, and the market participation, regardless of new or old projects, has reached a discount.
In addition, data from CoinMarketCap and CoinGecko shows that there are currently over 20,000 Altcoins (excluding low-cap memes), which is 2-3 times more than in 2021. The large number of tokens and the prosperity of memes must have had an impact on the attention and returns of mainstream Altcoins.
III. The MEME market is fast-paced and intense
The VC coins that were once the focus in previous cycles are no longer the darlings. After failing to find the wealth effect they were looking for on CEXs, market players have turned to on-chain mining.
The craze for on-chain memes on Solana has swept the industry. Undeniably, the wealth effect of memes like WIF/BOME/TRUMP has attracted great market attention, but if you chose to hold as a diamond hand until now without cashing out, the profits you've given back will be many times more.
WIF has fallen from a high of around $4.8 after listing on Binance to $0.8 now. BOME has fallen from a high of $0.029 after listing on Binance to $0.002 now. Although TRUMP brought wealth effects to some on-chain players, if you didn't choose to take profits at the market high of $70, TRUMP plummeted to a low of $16 in just about a week.
MEME seems fair, but the difficulty is not small either. The growth and decline of market targets is getting faster and faster, and participants who don't keep up can easily get severely trapped.
Take the AI-themed meme GOAT as an example. On October 23, 2024, trader Nachi tweeted that he had acquired 4% of GOAT's total supply, saying "This will be the best trade of the cycle." At that time, GOAT was around $0.5. On December 12, Nachi still said he held GOAT, which was then $0.84. After that, the price plummeted, first being overshadowed by ACT, and then losing heat to projects like VIRTUAL, with the price even falling below $0.1, while GOAT's all-time high was once $1.37.
Taking the meme coins famous on Moonshot as an example, Foresight News selected the tokens listed on the Moonshot platform from November 2024 to January 2025 as the research sample. Of the 116 tokens listed, only 17 are currently trading above their listing price, accounting for less than 15%, and the vast majority of projects are in a downward trend, with over 85% of the projects having fallen.
The cold, hard data behind this tells market players that it is not easy to pick good targets and cash out at high returns with low costs. It is normal for MEME to drop more than 80% or even go to zero.
The fast pace and high intensity of MEME have also spread to some Altcoin markets with already fragile liquidity. Those with low narrative ceilings, no hype, and high valuations are all facing a "dark moment".
IV. What to do?
From a long-term perspective, the market's requirements for diamond hands are becoming higher and higher. First, it is necessary to judge the market sentiment and the range of top-up profit-taking. If you hold on to the wrong position and refuse to sell, all the profits may eventually be in vain. Secondly, it is necessary to carefully select the targets, which targets are worth the diamond hands need to be very cautious. Once the wrong track is selected, even if the bull market comes again, it may have nothing to do with you.
It is generally not advisable to be a diamond hand in the Altcoin track.
Timely cash-out and withdrawal to improve life is also a relatively good way. Reducing positions can help reduce the pressure of subsequent holdings. Once there is a significant retracement, the realized profits can ensure that there are still opportunities to capture in the future.
