Source: Blockworks; Translated by: Tao Zhu, Jinse Finance
K33 believes that unlike meme coins, Altcoins may not make a comeback... at least not in the way we are accustomed to.
David Zimmerman from K33 wrote in a report that the cycle of 2020/2021 may have reached its peak.
"If there is no new retail capital inflow, the profitability of speculative tokens without revenue, without products, and without a roadmap beyond sentiment will become more difficult," he said.
In addition to the overall mature cycle we have seen, a significant change is that meme coins have truly established themselves in the cryptocurrency field.
In other words: Since meme coins can be invested in, why invest in narrative-driven tokens?
As I wrote on Milk Road last week, meme coins accounted for about 25% of total cryptocurrency trading volume during their peak in the first quarter.
This means that the future path of Altcoins is more likely to be selective. As Zimmerman pointed out, the overall "Altcoin market faces $4.3 billion in token unlocks in May, $2.8 billion in June, and $3.2 billion in July. These unlocks are headwinds that require significant new liquidity to absorb."
"With no significant surge in demand or new retail inflows, the calculation is simple: more supply against static or shrinking demand equals downward pressure."
Besides the obvious need for liquidity, times have changed. In the past, Altcoins could get a boost just by being close to hot topics. Now, more attention needs to be paid to fundamentals (I swear I'm not trying to keep mentioning this, it's just happening).
Zimmerman stated that Bitcoin will still dominate, but there is an opportunity to allocate smaller positions to Altcoins. While some Altcoins may perform exceptionally, the "window of opportunity is limited and increasingly brief".
As cryptocurrencies mature, tokens may not continue to be big winners. Take stablecoins as an example.
"Currently, the most bullish crypto asset after Bitcoin is almost certainly stablecoins. They are advancing into payment infrastructure, continuously growing in market cap, and positioning themselves at the center of retail and institutional use cases," Zimmerman said.
Among the many choices, investors now must focus on metrics before investing in tokens (unless you insist on investing in meme coins). For K33, this means understanding product-market fit, user growth, or the token's earnings.
A more serious cryptocurrency era is about to arrive.
