Recently, the market has been quite volatile, with most altcoins facing a significant downturn. Many have almost returned to bearish territory. (Psst, it might be a good time to get involved.)
A large number of new listings have emerged, with the old pump-and-dump schemes fading away. Apart from assets like Ondo and early-stage projects with low circulation and no chip unlocks within a year continuing the tradition of pumping, these projects with FDVs in the tens to hundreds of billions have seen immediate distributions upon listing, leading to significant drops.
Why is this happening? What happened to the idea of “trading new, not old”?
1. The industry is gradually maturing, with strong funds constantly exploring new profit harvesting strategies. Market-making is a tough and exhausting job that requires careful calculation and involves a considerable risk of losing. By colluding directly with speculators, manipulating data, creating a buzz to deceive people, and relying on the endorsement of VCs and major exchanges, these projects set high valuations and sell essentially worthless coins.
2. It’s important to note that stocks are typically backed by actual companies with profits or even buyback support. Therefore, the market value of most stocks on traditional exchanges tends to be stable and not prone to sudden collapses.
However, the majority of blockchain projects are merely empty shells, used sporadically by the crypto community, with only pump-and-dump schemes creating false prosperity.
99% of crypto projects lack profitability and are essentially just stories, functioning as fraudulent financial schemes.
Exchanges essentially operate as casinos and have been one of the most visible profit models discovered so far. The blood-making capacity of current crypto projects mainly revolves around selling shovels, with services catering to gamblers being the most lucrative.
For instance, crypto media, mining, and mining hardware, among others.
In terms of societal impact, the widespread adoption of cryptocurrencies remains dismal.
Many brainless projects attain market valuations in the tens of billions immediately after launching their coins, whereas hardcore tech companies like NVIDIA took a considerable period to reach a valuation of just a hundred billion.
During the previous bull market, projects with significant price increases often briefly touched high FDVs when circulation was low and market FOMO was at its peak. However, in this cycle, a group of animalistic projects are hitting tens to hundreds of billions in market value right from the start.
Demanding hundreds of billions of RMB for open-source code copied and slightly modified by a few dozen or even a few people is simply outrageous.
Therefore, in this current cycle, new projects are bound to collapse rapidly once listed, as the unlocking of tokens continues before the flood arrives.
With retail investors drained, even the liquidity from a bullish market background cannot sustain the cash-out exodus of these sickle projects.
What’s most heart-wrenching is that even if a project generates revenue, the tokens fail to capture real value and remain essentially worthless.
They are euphemistically termed governance tokens.
A prime example is Layer 2 solutions on Ethereum, including the previous cycle’s speculative coin UNI.
Airdrops are essentially a means to deceive, colluding with speculators to manage people’s expectations, fuel fantasies, entice new retail investors, and complete the harvest.
If you steadfastly adhere to the mantra of “trading new, not old,” disregarding market dynamics and the logic of powerful funds, then facing losses is inevitable.