Currently, crypto investors are focusing their attention and capital on two extremes of the market: Bitcoin and meme coins. One represents a reliable store of value, while the other embodies “high risk, high return.”
This is characteristic of the dumbbell strategy. Industry experts cite two main reasons for this trend: first, short-termism and second, the influence of social media.
Short-termism distorts the crypto market
In a recent analysis, Ryan Watkins, co-founder of Syncracy Capital, illustrated the performance of meme coin investments using data from the Pump.fun platform.
Data reveals that only 2 tokens out of 2.44 million created on this platform reached a market capitalization of $500 million. Only 3.1% of portfolios made a profit of $1,000, with even lower rates for higher profit thresholds. Despite these statistics, the platform continues to launch over 248,000 tokens per month, generating over $16.3 million in monthly revenue.
Read more: 7 Hot Meme Coins and Altcoins Trending in 2024
Watkins describes investor focus on meme coins as a “speed trap,” with short-termism dominating the market.
“This phenomenon is not surprising as it reflects a broader shift in the global economy towards on-demand goods and services. Just as consumers expect fast delivery of food to their doorstep, retail investors now expect immediate returns on their mobile trading apps…few market participants can see beyond two weeks, let alone two months or two years. For many, trading has subtly become a mere front for gambling. » – commented Ryan Watkins.
He also notes that the current market reflects the internet boom of the late 1990s. Bitcoin appears to have moved past its unstable phase and is on the path to global acceptance as digital gold. However, the rest of the market is once again experiencing a speculative surge similar to that of the late 1990s.
Ryan also mentioned that token valuation is now driven entirely by mass attention. Ki Young Ju, CEO of CryptoQuant, attributes the current coin boom to social media’s shift from a focus on family and friends to interests. He predicts that an altcoin season will follow as social media shifts towards economic interests.
“Social media has evolved from focusing on relationships with friends and family to focusing on shared interests. The next step is social media driven by economic interests, which was the vision of Web3. Memecoins are only a temporary alignment of economic and shared interests in this transitional phase of social media. Soon we will see an era where economic interests align with social value creation on the internet, and that is when the real altcoin season will begin. – commented Ki Young Ju.
Read more: 11 cryptos to add to your portfolio ahead of Altcoin season
Community discussions still focus primarily on Bitcoin and meme coins. Topics regarding Bitcoin and meme coins always feature prominently in community discussions.
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