Is There Still Investment Opportunity for Shanzhai Coins in This Cycle with the Low Market Performance

CoinDesk reports:
In recent years, the cryptocurrency industry has experienced significant fluctuations and transformations. While the prices of Bitcoin and Ethereum have been on the rise, the performance of the altcoin market has been disappointing. In this bull market, Bitcoin and Ethereum have attracted a large amount of capital, while many investors have lost confidence in altcoins. This has led to stagnation in the returns of many investment portfolios. So, in such a market environment, are there still investment opportunities in altcoins?
Current Market Situation
The sentiment in the cryptocurrency market is volatile. Investors often exaggerate market news, especially when they are heavily invested in a particular token. However, sentiment on social media is not a reliable indicator of market prospects. To better understand the current situation, we can analyze the market’s overall condition by tracking data from various global indicators.
According to CoinGecko’s data, although the total market capitalization of cryptocurrencies has significantly increased over the past year and a half, volatility has surprisingly remained low. Despite Bitcoin hitting an all-time high, the overall market still lags behind the frenzy of 2021. The main reason is that altcoins have failed to keep up with the growth rate of Bitcoin, with less speculative funds flowing into the market than expected.
To better illustrate this phenomenon, we can compare the performance of Bitcoin and the altcoin market (excluding Ethereum) to show Bitcoin’s continuous upward trend.
Altcoin Market Performance
Comparison between Bitcoin and the altcoin market
In this bull market, Bitcoin has taken the spotlight, occupying an increasing market share. Altcoins, on the other hand, have struggled to catch up with Bitcoin, with liquidity declining in a step-like manner, hindering the possibility of starting the next altcoin season.
Performance of Ethereum
Despite Ethereum’s lackluster price performance, it still maintains a leading position in the market. Speculators seeking opportunities in the on-chain ecosystem have had a relatively easy time during the market downturn. In contrast, investors caught up in Ethereum Beta scams have been greatly disappointed.
Altcoin Investment Indicators
Altcoin investment indicators, typically used to identify favorable conditions for entering or exiting the altcoin market, have recently sent worrisome signals. Low oscillation indicator values (blue line) along with the continuously rising price of Bitcoin are usually seen as a buying opportunity for altcoins, as altcoins are considered undervalued at this time. However, recent data shows that the bullish cycle of altcoins has become brief and weak, forcing investors to make short-term investments.
Although many tokens are considered to have high upside potential, they ultimately fail to bring about excess returns. Compared to Bitcoin and Ethereum, the performance of the top 250 altcoins by market capitalization has been disappointing, further dampening market sentiment.
Finding Opportunities in the Depressed Altcoin Market
As time goes by, the market landscape has changed. Identifying trends and narratives is more important than ever to beat the index. The era of irrational surges has long gone, with liquidity dispersion and declining trading volumes concentrating most gains in a few areas. While general indicators suggest minimal appreciation of altcoins, this performance also conceals the differentiated growth of individual asset groups in the altcoin market.
By closely observing the changes in the market capitalization of various basket tokens since the rebound began, it can be seen that most mature token categories have fallen below the benchmark. On the other hand, emerging areas with abundant opportunities, attractiveness, and new developments have shown outstanding performance. To review everything that has happened so far and find corresponding opportunities, we can focus on analyzing some relevant categories and measuring the price returns of their most valuable assets.
Performance of Various Altcoin Categories
Memecoin
Memecoin is undoubtedly one of the themes of this cycle. Although the overall valuation changes are not significant, some new tokens have achieved impressive returns. Especially on the Solana platform, the returns of three memecoins have even exceeded five digits.
DeFi
The price returns of DeFi tokens have been generally lackluster. Except for Pendle and The Graph, most projects have performed poorly. DeFi 1.0 era tokens have performed even worse, with a lack of practical use cases and revenue strategies being the main reasons.
L1
L1 tokens have always been the most popular category among speculators. Solana has been hailed as the “top player” of this cycle for its returns, with its market utility and central position in memecoins being recognized.
L2
As part of the on-chain ecosystem, Rollups have solved scalability and high transaction cost issues. However, the performance of L2 tokens has been mediocre, with VC chains like Starknet and Arbitrum facing losses due to low circulation and high valuations.
Conclusion
Faced with the harsh reality of the market, many believe that the investment opportunities in altcoins have passed. With the current market sentiment low, investors need to rebalance their portfolios and consider risks. Although the future of the altcoin market remains uncertain, it does not mean there are no opportunities. In today’s market environment, identifying trends and seizing opportunities in emerging areas becomes especially important. As long as there is patience and strategic vision, there are still potential investment opportunities in the altcoin market.