Author: 1912212.eth, Foresight News

Once upon a time, Zhao Changpeng's words "If you can't HODL, you won't get rich" were regarded as the golden rule of cryptocurrency investment. Buy, hold and hold firmly, and then sell when the profit is huge to get huge profits. The HODL concept was once very popular in the circle.

Some investment institutions have obtained very rich returns by conducting in-depth research and placing bets. For example, the first-class warehouse has obtained hundreds or even thousands of times of returns on MATIC and AAVE in the last cycle. Various legendary wealth stories have made retail investors generally believe in the powerful power of diamond hands. However, if this investment concept was relatively effective in the last cycle, it is no longer believed in the market in this cycle, especially by players who are full of copycats.

In the four-year cycle, the market structure has changed a lot. If you fail to adjust your style in time, you will often face the risk of standing guard on the top of the mountain. Is the market really no longer rewarding diamond hands?

1. Memes and AI become the main theme, and the general rise cycle is no longer

In the past cycles of the crypto market, the general rise often came half a year after the BTC halving. Market funds gathered from Bitcoin, and then spread to Ethereum after reaching a certain level, and then flowed into mainstream altcoins, and finally small-cap altcoins and meme coins, and a typical bull market cycle was declared over.

In this cycle, the first wave of rising prices was brought forward due to the positive events of Bitcoin spot ETF. After BTC ushered in its own highlight moment, the crypto market was silent for a long time. The rise in the fourth quarter of 2024 was finally seen, but it seemed quite short.

If you have embraced popular assets such as Bitcoin, SOL, Dogecoin, etc. earlier in this cycle, then the returns of Diamond Hands are very considerable. However, if the altcoins you choose are not favored by the market, such as re-staking, inscriptions, games, NFTs, etc., then the book returns you will receive are likely to be "terrible."

Recently, Binance, which has been criticized by the market, has launched new coins, which often peaked as soon as they were launched, and then fell all the way. Projects with better quality and popularity may usher in a period of growth, while projects with no popularity, no use, and continued to unlock will see weak buying and continue to hit new historical lows. If Diamond Hand unfortunately chooses an unpopular track and unpopular currency, and keeps holding it without selling, it will suffer huge losses.

In addition, compared with DeFi and NFT, which were relatively popular in the previous cycle, there has been no real innovation that can compete with them in this cycle, and market funds have stagnated in Bitcoin, memes and AI concept coins for a long time.

The figure below clearly shows that the market share of Bitcoin has dropped sharply in both 2017 and 2021, due to the general rise of altcoins. In 2023, the market share of Bitcoin began to rise, from 38% to even over 60%. In contrast, Ethereum was troubled by multiple factors, and its market share began to decline since the beginning of 2023.

Historically, it is difficult for the so-called general rise and altcoin season to occur when the share of Bitcoin's market capitalization continues to rise.

Today, the market seems to only reward diamond players who hold very few coins such as Bitcoin.

2. Mainstream knockoffs perform below expectations

The difficulty of this round of altcoin market is incomparable to that of the previous cycle. Taking L1 of the previous cycle as an example, based on the lowest point after listing on Binance, DOT has a maximum return of more than 20 times, NEAR is nearly 40 times, AVAX is more than 40 times, SOL is more than 250 times, and UNI in the DeFi field has also returned more than 20 times. The wealth effect of the industry is very significant.

It is worth mentioning that after the above-mentioned high-return tokens hit their historical highs, they all fell to the bottom range six months or even a year later.

In the infrastructure L1 of this cycle, except for SOL/SUI, the performance of the rest is unsatisfactory. In L2, OP recorded a maximum return of 10 times, and ARB recorded a maximum return of 3 times. After hitting a new high, both fell to the bottom range within 5 months. ARB even fell from a historical high of $2.42 to a historical low of $0.34. Stablecoins such as USUAL/ENA have recorded considerable returns, but from the bottom, they are all less than 10 times.

Some projects that are highly sought after by VC capital have performed poorly. EIGEN has a maximum return of 2 times, which has now hit a record low. ETHFI and RENZO have even started to hit a new low after being pledged on Binance. IO has a maximum return of 2 times, which has also hit a record low.

As more and more players are no longer willing to take over highly valued VC coins, market participation has been discounted for both new and old projects.

In addition, data from CoinMarketCap and CoinGecko show that there are currently more than 20,000 altcoins (excluding memes with low market capitalization), which is 2-3 times as many as in 2021. The wide variety of tokens and the prosperity of memes will inevitably have an impact on the attention of mainstream altcoins, and the returns will also be relatively small.

3. The MEME market is fast-paced and strong

The VC coins that attracted much attention in previous cycles are no longer popular. After market players failed to find the elusive wealth effect on CEX, they all chose to dig for gold on the chain.

Solana's trend of rushing to buy local dog swept the industry. It is undeniable that the wealth effect of memes such as WIF/BOME/TRUMP has attracted great attention from the market, but if you choose diamond hands and have not cashed out yet, the profit of the retracement will be several times more.

WIF has risen to around $4.8 since its launch on Binance, but has now fallen to $0.8. BOME has risen to $0.029 since its launch on Binance, and is now priced at $0.002. Although TRUMP has brought wealth effects to some players on the chain, if you did not choose to take profits and exit the market at the peak of $70, then in just a week or so, TRUMP fell to a minimum of $16.

MEME seems fair, but in fact, it is not easy. The pace of growth and decline of market targets is getting faster and faster. If participants are not careful and run slowly, they will easily be seriously trapped.

Take the AI meme GOAT as an example. On October 23, 2024, trader Nachi tweeted that he had "acquired 4% of the total supply of GOAT. This will be the best deal of this cycle." At that time, the price of GOAT was around $0.5. On December 12, Nachi still said that he held GOAT, and the price of GOAT was $0.84 at that time. Since then, the situation has plummeted. First, it was overshadowed by ACT, and then it was overshadowed by AI agents such as VIRTUAL. The price of the coin once fell below $0.1, and the highest price of GOAT was once $1.37.

For example, Moonshot, which is famous for its meme coins, was selected as a research sample by Foresight News. Among the 116 listed tokens, only 17 are currently priced higher than their listing prices, accounting for less than 15%. The vast majority of projects are currently in a downward trend, with the proportion of falling projects exceeding 85%.

The real and cold data tells market players that it is not easy to pick good targets and exit the market with high returns at low costs. It is normal for MEME to fall by more than 80% or even to zero.

The fast pace and high intensity of MEME also spread to some altcoin markets where liquidity was already precarious. A number of altcoin exchanges with low narrative ceilings, no popularity, and high valuations have all ushered in their "dark moments."

4. What to do?

From a macro-cycle perspective, the market has higher and higher requirements for diamond hands. First, you need to judge the market sentiment and the top profit-taking range. If you hold on to the wrong stocks and don’t sell them, all your profits may end up in vain. Secondly, you need to carefully select the targets, and you need to be very cautious about which targets are worthy of diamond hands. Once you choose the wrong target track, even if the bull market comes again, it may have nothing to do with you.

Generally speaking, don’t be a diamond hand in the memecoin race.

Cashing out in time to improve your life is also a good way. Reducing positions helps reduce the pressure of subsequent holdings. Once a large retracement occurs, the realized profits can ensure that there are still funds to capture opportunities in the future.