Thanks to high-flying, high-risk memecoins, many new investors to crypto get the wrong idea about altcoins. They think many will be “Number Go Up” because they are new.
And that does happen sometimes. But as we’ve told you over the years, you HAVE to be selective. And why? Because 95% of alts NEVER recover from their first bear market. So today, we go into why that happens and 3 altcoins are unlikely to fall into this trap.
Why do 99% of Alts Fail?
According to GeckoTerminal, there are 3.1 million different tokens out there. That said, most of them are memecoins. The real cryptocurrency number is closer to 25,000. Most will fail for one of these 2 reasons:
1) Low Float, High FDV
I know you’ve seen a lot about this recently if you are on Crypto Twitter. The idea is low float and circulating supply creates an artificial barrier that increases price. These increases come from the slightest bit of trading or even price manipulation from whales or market makers. So the FDV of fully diluted value is high. Yet a very small % of the supply is in circulation.
It’s so common many places, including us here at Altcoin Buzz, report on token unlocks monthly. Many of these fall into the low float, high FDV category. So they are easy to spot and to avoid. Where possible you want the opposite, high float and low FDV. Then when a price doubles from $2 to $4, the entire market cap also doubles.
Source: X
2) No Product Market Fit, Only Hype
We’ve all seen the hype train for alts. It’s:
- Announce launch
- Launch and try to get hype
- If you get some hype rise to an all-time high in price
- Crash hard in the following bear market cycle that happens
- Often fail to recover the old all-time high.
This is the 99% trap. 99% of alts either fail OR fail to recapture that first hype-filled all-time high. The easiest way to avoid this is looking to buy during down periods like now and looking for product market fit.
How can you tell when something has a product market fit? It has customers. So you can look at revenues or protocol fees earned and see how they are trending. If it only has hype, then it will be obvious by its lack of users and paying customers. There are other features too but if you can avoid just these 2 scenarios, then you are 90% of the way there in making money in alts. So now let’s look at 3 examples of alts likely to buck the trend of failing and see why:
1) The Graph
First, we have The Graph. We’ve been following this project for a long time. It’s been in our Master Portfolio for more than a year. It allows for the querying and organizing of blockchain data both for users and developers. The Graph makes building apps easier and enables tools like block explorers to search for transaction data.
For example, here is the link to the subgraph for Lido Finance, the leading ETH restaking platform. Here you can run a query as over 270,000 others have done to get the data you need from Lido. Maybe you want to know how many have staked there for 2 years or longer because you think those coins may never move. Or maybe you want to use The Graph’s API keys to ask Lido about what the average stake size is.
Source: X
With The Graph, you can do all these things. The Graph makes this data available that otherwise would not be unless the protocol itself organized it for you. And trust me, they will not waste their time doing that. So this is a valuable service. This type of infrastructure is key to crypto’s growth. Plus, The Graph’s $GRT token has 90% of its total supply in circulation. That means price growth = real project growth.
2) Chainlink
As DeFi makes a comeback and tokenization of real-world assets continues to grow, oracles become more important. They are the link between blockchains and data from the outside world. Like stock or crypto prices or sports scores or home values. And the leading oracle, by far, is Chainlink. LINK’s data feeds are key for proper pricing when tokenizing an asset. They also can be preprogrammed into new smart contracts or added to existing ones easily.
Source: X
You can even automate your smart contract so that it works seamlessly and in a decentralized, trustless way. These are all the things important to us early adopters in crypto. Chainlink is a great combination of being in a hot category (RWA) AND being the leader in that category. Hot narratives always perform better in crypto and leading projects in those narratives do the best.
Chainlink’s token, LINK, has other use cases like prediction markets, where we are seeing big action betting on the US Presidential election on Polymarket. These markets will grow and need accurate off-chain data, too. Chainlink won’t have low float issues to deal with either. More than 60% of the total supply is in circulation. And it’s been that way for a long time since many of the tokens not in circulation are used for paying the data feed providers.
3) Golem
Golem is one of our favorite areas of AI. Decentralized computing power. As we’ve seen from Akash and Render, among others, there is a big demand for computing power for all AI and machine learning projects.
And it’s so expensive that many new projects prefer to rent out that computing power in the early years. This keeps costs low while they find their footing and their customer base. Golem has an updated, robust roadmap for the coming months. It includes:
- Modelserve, a service that helps new LL models run inference, which they need for customer-facing applications
- API access to Golem’s AI Workers to perform or automate various small tasks
- A full GPU provider so a project can do whatever it needs to with it, and more.
Source: X
If it plays its cards right, Golem could become one of the few projects that could become the decentralized cloud computing power in crypto. The Amazon Web Services of Crypto. Golem’s token, GLM, is unlikely to fall into the 99% trap since it’s both in a hot narrative with AI AND all of its total supply is currently in circulation. So there are no low float issues to be worried about.
Disclaimer
The information discussed by Altcoin Buzz is not financial advice. This is for educational, entertainment, and informational purposes only. Any information or strategies are thoughts and opinions relevant to the accepted levels of risk tolerance of the writer/reviewers and their risk tolerance may be different than yours. We are not responsible for any losses that you may incur as a result of any investments directly or indirectly related to the information provided. Bitcoin and other cryptocurrencies are high-risk investments so please do your due diligence. Copyright Altcoin Buzz Pte Ltd.
