Author: Finish, Crypto KOL
Compiled by: Felix, PANews
This cycle has been extremely difficult, worse than any previous cycle. Many even call it the "crime cycle" as the number of Rugs and fraudulent projects has been growing.
The purpose of this article is to reflect on the past and try to predict what will happen next.
The Birth of Pump.Fun
On January 19, 2024, Pump.fun was born, changing the well-known meme tokens forever. People of all ages, occupations, and nationalities have the opportunity to issue tokens.
The hype was not that strong at the time, but eventually, in March of last year, with the emergence of tokens like MICHI and FWOG, Pump.fun began to rise. Almost anyone can publish a meme in just a few seconds, a phenomenon that has transformed the entire crypto space.
Due to the bundling of many tokens, Pump.fun is a fair launch opportunity without insider dumping. Although it looks good, it also charges a lot of fees.
Since its launch, Pump.fun has generated over $2.86 million in SOL, about $577 million. It may be one of the most successful startups ever.
This liquidity has been permanently extracted and captured by the Pump.fun developers, which is one of the key reasons that sets this cycle apart.
The Bitcoin Halving
Next is one of the most critical moments in the current cycle. On April 20 last year, the reward for mining BTC blocks decreased from 6.25 to 3.125 coins. With the first ETF approved on January 10, many thought the halving was a "sell the news" event, but instead, new ATHs emerged.
ETF + Bitcoin halving is the most bullish setup, as many have been waiting for institutional liquidity to start flowing in, which is exactly what happened next. Fidelity, BlackRock, and MicroStrategy have been buying daily, injecting more and more liquidity.
This gave traders hope. Many traders thought this cycle would be similar to the previous one, but this time, everything is different. The market's direction always seems to go against the "masses".
Your Expectations Are Your Problem
Looking back at the 2017 and 2021 cycles, these two cycles were actually very similar. Making money was not difficult and did not require any special knowledge. Back then, there were 10-20 Altcoins that everyone knew about and kept accumulating.
First, BTC would rise, then ETH as the cycle's beta play would follow closely, often with higher investment returns. Then the transition from ETH to Altcoins, from high-cap coins to low-cap coins.
This is why many decided to skip the BTC phase in 2024 and go straight to ETH or Altcoins. If ETH can 5x, even large Altcoins can 10x, why wait for BTC's 2-3x returns?
The logic is simple, but the "masses" did not consider that this cycle might be different. The number of projects, tokens, and memes is a hundredfold compared to the past, and people buy familiar tokens like DOT, ATOM, ADA, expecting 10x returns.
It turned out that when liquidity shifted to Altcoins, due to the abundance of Altcoins, especially the emergence of new ones, all the old Altcoins were left behind.
Scams Are Different Compared to 2021
Crypto KOL OverDose mentioned a reasonable point. In 2021, the scammers were creative in "Rugging", and users could only hold back if they were not too greedy.
- Do Kwon's Terra $LUNA
- Sam Fried's FTX
- 3AC had long-term investments before the collapse
- Alameda pushed different narratives and manipulated the market
Scams are now easy, just using big names, celebrities, or even presidents to promote their junk projects.
Players have gotten used to gambling and are starting to FOMO into TRUMP and MELANIA, wanting to make money on CAR or LIBRA, only to suffer heavy losses.
Personally, I know of 10-15 excellent traders who have invested heavily in LIBRA (up to $1 million), while insiders have dumped over $100 million.
Time for a Change
It's time to understand that the cycle will never be the same, and Altcoins are not just the "beta version" of BTC or ETH, but a completely different niche market with more risks and opportunities.
You can't expect DOT or ATOM to perform well just because BTC hit a new all-time high in 2021 and drove Altcoins.
Undoubtedly, I still remain bullish on BTC and believe it will continue to be one of the best composite assets in the next 10-20 years, but the returns will be similar to stocks, no longer easily achieving 200% annual growth rates.
The key lessons you need to learn from this cycle:
- Holding is cowardly behavior, and if you don't sell at the right time, you'll face losses. Murad has been advocating "hold", and almost all of his memes have dropped 80-90% from ATH.
- You need to have a strategy for when to sell. This may sound harsh, but that's how the market works, you need to have a specific exit strategy before trading.
- Narrative rotation. We've experienced crazy rotations from memes to AI agents to TRUMP, etc. If you fall behind at any point, most of the gains may be wiped out. Always follow the narrative and remember that liquidity is limited.
- Timely is better than early. Don't overthink it, rotate when the timing is right.
- No matter how much you believe in the protocol, make sure to secure stable profits and continuously accumulate BTC, as BTC is still better than most stock or real estate opportunities.
Hopefully, this cycle is not over yet, and the current BTC consolidation will determine what will happen in the next 2-3 months.
