Each bull cycle in the crypto market brings unique challenges and opportunities, and the upcoming 2024 bull cycle is poised to be markedly different from the previous cycles of 2017 and 2021.
In earlier cycles, liquidity was concentrated within a select group of altcoins, making investment choices easier for retail traders. However, the crypto landscape has changed significantly, with liquidity now distributed across a growing variety of altcoins.
Liquidity Fragmentation Due to Meme Coins
The expansion of the crypto market has been especially notable due to the rise of altcoins and meme coins, driven by platforms like Pump.fun. Since launching in January 2024, the platform has facilitated the launch of over two million meme coins, generating more than $138 million in fees.
Read more: 7 Trending Meme Coins and Altcoins in 2024
This influx of tokens has led to a phenomenon named “liquidity fragmentation” by Alex Odagiu, Investment Director at Binance Labs. In a conversation with BeInCrypto, Odagiu discussed the mixed implications of this trend.
“The surge of meme coins has undeniably caused some distractions, but it’s an essential part of the Web3 evolution. While short-term liquidity fragmentation can occur, we believe that the market will eventually consolidate around projects with genuine value propositions,” he stated.
Even with their speculative nature, meme coins have been crucial in attracting new participants and building community engagement. Odagiu also noted that as the market develops, investors will likely shift their focus toward projects that offer utility and sustainable value.
Altcoin Investment Strategies
Since September 6, Bitcoin’s price has climbed almost 25%, currently trading above $65,000, suggesting a possible return to the bull market.
However, the sheer volume of tokens has diluted the attention that earlier benefited certain projects. To address this, Odagiu recommended strategies for long-term investors to navigate the competitive landscape effectively.
“In a market saturated with new tokens, investors need to focus on fundamentals rather than chasing the latest hype. Long-term investors should apply a disciplined strategy to distinguish between fleeting trends and enduring value. Projects with real-world applications, solid teams, comprehensive roadmaps, and sustainable business models are better positioned for longevity through multiple market cycles,” Odagiu emphasized.
Read more: 11 Cryptos to Consider for Your Portfolio Before the Altcoin Season
He also mentioned that although the market appears crowded, there remains significant potential in sectors like decentralized finance (DeFi), infrastructure, real-world asset tokenization, and applications aimed at achieving mass adoption.
“Projects that emphasize robust technological innovation, exhibit meaningful product-market fit, and maintain sustainable revenue models will continue to draw in interest, even amidst a crowded market,” Odagiu affirmed.
Odagiu suggested maintaining a balanced approach to developing a strong crypto portfolio, emphasizing the importance of diversification across various asset classes and sectors.
“Bitcoin remains a foundational asset due to its market stability and dominance, but altcoins that foster technological innovation and enjoy strong community support can offer considerable growth opportunities. A diverse portfolio that spans sectors like DeFi, infrastructure, and gaming can help mitigate risks while taking advantage of emerging trends,” he elaborated.
Bitcoin Continues to Remain Institution’s Preferred Crypto
In light of Bitcoin’s strong market presence, institutional interest continues to be focused on it, often overshadowing other potential altcoins. This year, Bitcoin’s price has risen over 55%, while the total crypto market cap, excluding Bitcoin, has only increased by 23%.
Read more: Who Has the Most Bitcoin in 2024?
Additionally, crypto analyst Murad Mahmudov noted that only 42 tokens among the top 300 on CoinMarketCap have outperformed Bitcoin in 2024. Odagiu elaborated on why Bitcoin continues to dominate the crypto landscape in this cycle.
“Bitcoin’s enduring dominance stems from its status as the original cryptocurrency, which leads institutional investors to see it as a more straightforward, familiar, and less risky option compared to Ethereum and other altcoins. Its narrative as a store of value—often dubbed ‘digital gold’—resonates with traditional investment tactics, making it a natural first step for institutions exploring crypto,” Odagiu explained.
However, as institutional investors become more acclimated to the crypto landscape, Odagiu anticipates a growing interest in Ethereum (ETH) and other altcoins.
“We (Binance Labs) predict that as institutions gain confidence in the broader Web3 ecosystem, interest in Ethereum and other altcoins will increase, as they recognize the utility beyond Bitcoin,” he added.
The current market cycle also reflects the rising trend of leveraged trading among crypto enthusiasts. According to data from Coinglass, open interest has reached $35.93 billion, nearing its four-year peak.
Open interest refers to the total number of outstanding derivative contracts, such as futures and options, that remain unsettled. It serves as a metric to assess market sentiment.
Read more: How to Trade Crypto on Binance Futures: A Complete Guide
Nonetheless, Odagiu warned against the allure of high-risk leverage. He emphasized that while leverage can amplify both profits and losses, it is crucial for investors to utilize it responsibly, especially in volatile environments.
“Ultimately, achieving long-term success in the crypto space relies on solid investment principles rather than pursuing quick gains through high-risk leverage,” he concluded.
Indeed, investors in the crypto market must adapt by prioritizing sustainable investment strategies, equipping themselves to tackle the challenges inherent in the 2024 bull cycle with informed confidence.
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