The game is intensifying. A comprehensive explanation of why this round of bull market is very different

24-05-27 11:39
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Original title: "As the game intensifies, the industry development enters a new pattern"
Original author: DaPangDun, crypto researcher
Original source: Mirror

Please note: This article is written by an individual based on market data, personal cognition and logical reasoning, and may not be correct. It is for reference only.

1. This round of bull market is different

Many people should feel that this round of bull market is significantly different from the previous round, mainly manifested in:

· The wealth effect is insufficient. There is no general rise in the last round of flourishing markets. The choice of the target is very important. If you are not careful, you will lose money. Most currencies cannot outperform BTC

· The trend of value coins is often not as good as Memecoin. The trend of many value coins listed on the stock exchange is falling all the way

· The sector is seriously divided, and the funds only circulate within their own ecosystem, and the rotation is not smooth, giving the market the feeling that there is no synergy

· Due to the development of scripting and clustering, the competition in the airdrop industry has become very fierce, and many impacts have arisen from this

· The narrative led by BTC is not as "fast and rough" as the previous narrative, and it is relatively cold and lonely. At the same time, DEFI does not seem to be favored in the BTC narrative

· Web3 Although the game received a huge amount of financing in the last round, it did not produce a hit

· ......

After observing these phenomena, I tried to explore the reasons. We called the last bull market "water release bull" because of the large amount of money released globally (mainly in the United States), and the spillover effect of funds was very obvious. In this round, we can clearly feel that "funds are not so sufficient", is this feeling correct? We can see clues from the following sets of data.

2. Changes in funds

2.1 US M2 data

First, let's look at the US M2 data for five years. The green span part is the change of M2 in the last bull market, and the yellow part is the change of M2 in this round.



Combined with the price changes of BTC in the corresponding span, we can see that:

1) During the last bull market, M2 showed a continuous growth trend, and the corresponding BTC price showed a continuous rise (some periodic pullbacks were market corrections and short-term fluctuations). Before the M2 supply approached the top, the market entered a downward channel and gradually entered a bear market due to "potential exhaustion";

2) During this round of bull market, M2 has hardly changed, and even in the early stage it was still a downward trend. Therefore, this round is indeed not a "water release bull", and funds have not yet shown an increase, so the market feels that the view of insufficient funds is correct. At present, the BTC price has reached a new high, which I think is more like a process of "value return" without the market Fomo part.

2.2 Stablecoin data

The changes in stablecoins usually reflect the inflow and outflow of external funds. At the same time, because of the special attribute of stablecoins, "active money", when stablecoins continue to grow, it means that they have attracted funds from outside the circle, which will produce a more obvious price effect.

Through Defillama, I retrieved the data from 2021 to date, and we can clearly see that:

The current amount of stablecoins in the circle is only about 10 billion US dollars more than the previous round of BTC highs, and it is still about 28.7 billion US dollars away from the previous round of highs of 187 billion US dollars.


Of course, we need to be more rigorous. The SEC approved the BTC ETF on January 11, 2024, which is believed to bring huge incremental funds to Crypto. Therefore, we need to consider this part of the incremental funds that are not reflected in the stable currency because they are real purchasing power

I counted the holdings of Grayscale Fund GBTC and the total holdings of all current larger BTC ETFs, as follows:



From the overall holdings, the increment is about 850991-655800=195191 BTC. If the holding price is calculated at 50000-60000 USD, the incremental funds are about 9.8 billion to 11.7 billion.

If we also express the incremental purchasing power of ETFs in the form of stablecoins, we can see that the number of stablecoins in the current Crypto has not yet reached the peak of the last bull market, but the difference is not large. Considering that the ETF has only been passed for 4 months, from a long-term perspective, we can indeed maintain a certain degree of optimism.

2.3 Cryto market value data

Crypto market value generally reflects the "capital heat" of the entire industry, that is, the attention and interest of market funds in the industry.

As can be seen from the figure below: the high point of the previous round was 3.009T, and the current market value is 2.439T, accounting for 81%. Although this round of bull market is obviously not over, the market is still very cautious from the data level.


We need to be deeply aware that: Although we can have optimistic expectations for the future "interest rate cuts" and ETF incremental funds, the current funds in the market are indeed not sufficient!

In a market where funds are not so abundant, limited money must be used to do more things and to allocate to different roles, which will inevitably lead to intensified game in the market, which is also the inherent reason for the various "changes" we can see. In this scenario, the development status and logic of various parts of the industry have changed, and the development of the industry will also enter a new pattern.

3. Industry Observation

3.1 There is almost no general rise

Although the funds have not reached the high point of the previous round, they are still close. Why do many currencies perform very poorly and there is no obvious general rise?

I tried to analyze the market value of each currency at the high point of the previous round (mainly the top 100) and the market value share of this round of currencies, and the data is as follows:

Data source: (snapshot data on November 14, 2021)

Data source: (snapshot data on May 19, 2024)

According to the corresponding Crypto total market value data at that time, we can make a comparison chart of the percentage data:

Produced by: by @dapangduncrypto

From the above picture we can see that: in this round, the tendency of funds to "focus on the head" is more obvious.

If we think about it carefully, we will find that:

①This round has added a lot of high-market-value and low-circulation currencies, which have diverted funds on the one hand and increased the bubble of market value on the other hand;

②Many of the previous "old currencies" still maintain a high market value under the operation of market makers;

Under such circumstances, where is the money to create a general rise in the market? ! And because there is no general rise effect, people tend to be conservative in the game and choose more stable head currencies, further exacerbating the lack of funds for other currencies.

New pattern judgment

We need to wait for the continuous increase brought by ETFs to build more consensus in the circle, and we also need to wait for a new era of water release to push up liquidity in the circle.

3.2 No mutual takeover

The saying of “no mutual takeover” has been very popular recently. Most of the “VC coins” are at their peak when they are listed. Binance recently published an article titled “Low Float & High FDV: How Did We Get Here?”, which highlights the following points:

① Aggressive valuations overdraw potential, leaving retail investors with little room for profit

② Continuous unlocking makes it almost impossible to open up the upside of tokens

This has prompted retail investors to have no motivation to take over.

The following figure shows the FDV of Binance’s recent listings and the performance of the currencies:


From the above table, we can get the following data


The average FDV of the listed currencies is 4.2 billion US dollars, which is far beyond the FDV data of Binance in the last bull market

It seems that we have found the reason for "not taking over each other", but if we change our perspective and start from the perspective of "game", we may be able to see another level of reason for "Low Float & High FDV".

In Low Float & High FDV, High FDV is the key, and Low Float is just a way to control the market, and to reduce short-term selling pressure through long-term continuous unlocking.

For a project token, the parties involved mainly include: project party, VC, exchange, market maker, secondary market users (I did not include the airdrop part here to simplify the structure).

Think about a question: Who is High FDV beneficial to?

1) For the project side, obviously they hope that the FDV is high, which represents the future value and income;

2) VC obviously also hopes that the FDV is high, which can generate a sufficient return on investment and an excellent portfolio; some VCs will sell their investment part at a discount in the form of over-the-counter to achieve delivery. After all, most people are still very interested in "discounts", and high FDV can make a good profit after the discount;

3) The exchange is a "complex" part. From the perspective of trading, the high or low FDV is not particularly important; but many exchanges themselves are also investment institutions of the project, especially large exchanges, which can get the chips of the project at a very early stage and low valuation. Therefore, they may also hope that the project FDV is high, unless this phenomenon has seriously affected its trading part (a large part of the profit source of the exchange is transaction fees);

4) Market makers. Generally speaking, market makers make markets according to given plans. For FDV The high or low FDV may not be a big deal, and the model is to earn income through quantitative programs, etc.

5) For secondary market users, high FDV is obviously a bad thing, overdrawing future expectations, and after purchasing, they need to bear the risks brought by continuous unlocking.

This builds "a world where only retail investors are likely to be hurt", so "why take over?!"

New pattern judgment

For project tokens, it is obviously not a good idea to blindly push up the FDV of the project. The project party needs to have a more reasonable FDV positioning and token release/allocation plan to show higher vitality.

The exchange needs to save itself and allocate limited customer resources to higher-quality project tokens to maintain more active trading data and better market performance.

VCs need to have a more reasonable valuation for projects, especially when investigating the test or participation data of the project, they need to fully consider the "witch content" in the data to achieve a more accurate valuation. (In the future, the witch data analysis service for TO VC projects may be a startup point)

3.3 Memecoin > Value Coin

The lack of mutual acceptance has brought a series of impacts. Users will change their previous logic of participating in Crypto when investing. For example, instead of choosing value coins (usually what we call "high FDV coins"), it is better to choose Memecoin. Compared with value coins, Memecoin has three obvious advantages:

①Memes are usually not highly valued and have high potential

②Memes are generally fully circulated and there is no need to worry about unlocking pressure, so when market makers pull them up, there will generally be people who will follow

③Most Meme tokens are fairly distributed, and ordinary users also have the opportunity to participate in them in the early stages

However, we also need to realize that:

①The short-term Meme craze is not a new thing. There was also a Meme craze in the last round. Meme fever has given rise to world-renowned memes such as doge and shib, but most meme coins provide emotional value, which has problems such as "fast transfer, large fluctuations, and lack of durability". Most (or 99.9%) memes are short-lived; ② Among the top 50 currencies, meme coins occupy 4 seats (DOGE/SHIB/PEPE/WIF), and most are still firmly held by value coins; New pattern judgment

The popularity of Meme is limited. The truly valuable value coins will still [return in value] after solving some of their own problems

3.4 The strange phenomenon of airdrops

The airdrop industry was not very popular in the last round. After several large airdrops, especially Arb, airdrops began to enter the "multi-account era", and the airdrop track has also become one of the most popular tracks. About 50% of KOLs on Twitter are in this track. After that, the industry changed very rapidly, and specialization, clustering, and automation gradually evolved and matured. There are derivatives such as specialized studios, automatic interaction systems, and generation interaction services. Due to the particularity of airdrops, it has become the most competitive track.

①「Airdrop」has become a necessary skill for users

Let’s take a look at a few pictures, namely: Arb’s daily number of new cross-chain addresses/Starknet’s daily number of new cross-chain addresses/L0’s daily number of transactions/Zksync’s daily number of new cross-chain addresses

It can be clearly seen that after the project party released a snapshot or suspected of releasing snapshot information, the data dropped significantly, proving that most of the participating addresses participated in the project for the purpose of airdrops. According to the estimated value of actual active users in Crypto, it is an obvious fact that one person has multiple accounts.

Data source:

Data source:

② Professionalization, automation, and strategy become the mainstream

When an industry has excess profits, it will definitely roll. For airdrops, there is always a limit to a single person with multiple accounts, so automation becomes the first development direction. Automatic clicks, automatic simulation operations, automatic contract interactions, etc. quickly become the focus of development, and a large number of studios have emerged; then participants found that blind interaction is not only insufficient in dimension, but also not cost-effective, so "professional interaction solutions" and "professional dimensional analysis" were produced; in the meantime, "witch" became the "Sword of Damocles" hanging over the head of every airdrop user, so more in-depth strategic theories such as "simulating real users" and "effective interaction" have also been gradually proposed.

③ Game of Spear and Shield

There are two parties involved in the airdrop track: project owners and users. Users are further divided into "ordinary users" and "clustered users".

For project owners, they need Farmers to "provide" good project data, which is conducive to project financing, but they also hope to be able to incentivize airdrops to "real users" as much as possible. On the one hand, it is to reward real participants, and on the other hand, it can also reduce the early selling pressure after the airdrop is issued (because clustered users basically sell as soon as they get it, and have no faith in the project).

For users, because they have no chance to participate in the primary market, a possible way to get chips is to strive for the project's airdrop. They need to earn income through Farm. Although clustering has a high threshold (some proxy services have greatly reduced this threshold), once successful, they may be able to obtain several times, dozens of times or even hundreds of times the manual income, so they have the motivation to develop clustering.

The emergence of clustered users is not good for ordinary users, because it has caused the generation of a large number of accounts (you can observe that the current project has millions of participating addresses), and the income of ordinary users has been greatly reduced, so they have the motivation to see the project party investigate and ban clustered users.

Therefore, the "mutual benefit" between project owners and users in the low-volume and immature stage has evolved into the current "love-hate relationship".

In this process, as the dominant position of the project owners becomes stronger and stronger, they have an increasingly dominant position in the game, and many "strange phenomena" have been born.

①Early projects tend to use "standard screening" to remove some low-quality interaction addresses and then "treat everyone equally" to get as much satisfaction as possible for participants;

②Hop started analyzing "batch addresses" on Github with great fanfare, opening the "Witch Checking Era";

③Some project parties appropriately adjusted the distribution method of airdrops by increasing airdrops for other dimensions (such as developers and contributors);

④Project parties began to become increasingly powerful: some projects continued to PUA users but only gave extremely low allocations in the end, some projects even took user data for free and "broke their promises", some projects started the "community reporting" (mobilizing the masses) tactic to solve the witch problem, and some project parties were even unwilling to disclose the screening criteria... Such "strange phenomena" will continue

⑤During this period, the means of data analysis were gradually upgraded, from manual investigation and standard screening to cluster AI Analysis, and across multiple chains.

The game is still going on, and the airdrop track has entered the deep water zone

New pattern judgment:

Clustering has indeed had a huge impact on this track, and has also made the airdrop industry extremely involuted. The difficulty of obtaining airdrops will become higher and higher. This track will definitely still exist, but the excess returns will gradually decrease until they are close to the industry average;

For project parties, they need to cooperate deeply with "truly professional witch analysis teams" (professional data analysis teams are not necessarily professional witch analysis teams) to discover clustering traces from multiple dimensions;

For clustered users, they need to deeply study participation strategies with full consideration of risks, make small clusters, decentralize, and be able to meet the screening standards;

For ordinary users, they should do a good job in project research, and use limited time/funds to participate in more cost-effective projects. They should use the "companion idea" that is deeply bound to the project (community of interests) to extend the strategy, and fully explore the blue ocean sub-tracks in the airdrop track.

3.5 The coldness of BTC ecological narrative

The most important main line of this round is the narrative of BTC ecology, which includes not only ETFs, but also the ecological needs generated by it, but it is different from the narrative brought by DEFI+NFT in the previous round: we have seen N BTC-L2s, and we have also seen many projects doing various DAPPs based on BTC, but the narrative of BTC in this round is still relatively cold, with a feeling of thunder and rain. After doing in-depth research, I made the following "reasonable" reason analysis:

① Different quality. BTC holders are significantly different from ETH holders. They have extremely high demands for "security" and "fund control", which makes them always wary of various L2s and have low recognition. Many people even only recognize the value storage attribute of BTC and do not agree that BTC should participate in financial activities at all. This requires a long educational process. For example, Babylon's "BTC staking solution based on Time-Lock" is doing such education.

2) High technical difficulty. Due to the complexity of BTC technology and the lack of scalability of the BTC mainnet, the technical difficulty of developing based on BTC, especially native development, is particularly high. Therefore, the development of many projects cannot be launched quickly or more elegantly. There may be various problems in the whole process, and the experience is insufficient.

3) DEFI is path-dependent. Many people think that as long as DEFI is based on BTC, the grand occasion of the previous round can be reproduced. This is an illusion caused by "path dependence". Let's look at a few sets of data:


This is the TVL distribution chart on ETH. We can see that the main part has shifted from "MakerDAO+Uniswap+Opensea" to "Eigenlayer+Lido Finance".

The former is a representation of DEFI+NFT, which are all on-chain activities, generate a lot of fees, and are very active funds, while the latter are all "pledged funds" and are inactive funds.

We can also verify the activity of funds from the cost, see the figure below:


It is already obvious on ETH that users' investment tendency has shifted from active investment to passive investment, so it is unrealistic to expect the BTC ecosystem to flourish as long as there is DEFI in the short term.

New pattern judgment:

The BTC ecosystem narrative needs time to develop, and DEFI is only basic infrastructure, but it may not be able to lead this round of development.

Activating BTC holders to use BTC is the top priority, and the staking and re-staking tracks will be the key to achieving this step. The native staking scheme realizes the safe use of BTC, and the yield of Restaking attracts the continuous development of this process.

3.6 Exploration of the Game Industry

Games were a star track in the last round and received huge amounts of financing. We once thought that they were one of the keys to achieving Web3 mass adoption. However, until now, we have not seen such an effect. Although there are factors such as "it takes time to develop good games", in my opinion, the core problem of "Web3 game economics" has not been solved.

The most eye-catching game in the last round was the popular "running shoes", but its life cycle of only about "2-3 months" made this economic model destined not to be a paradigm that can achieve sustained success.


Of course, we can see a lot of exploration in the game track, such as:

① Start to emphasize the combination of "playability" + "economy". Excessive pursuit of economy will inevitably turn the game into a short-lived Ponzi. Moreover, Crypto users pay special attention to "economy" due to their characteristics. Once the economy declines, they will move positions. At the same time, the number of people in the circle is limited after all. Only by attracting more people outside the circle through "playability" can the game develop longer-term;

② No longer excessively pursue data, there is a more prudent design for the token economic model, and various means are used to control the release and consumption of tokens within the game to maximize the game cycle.

Take Big Time and Pixels as examples. After 6 months, the former and 3 months, the latter still have many people participating and making profits.



New Pattern Judgment

The game industry is constantly exploring. With many games to be launched in the second half of the year, the current market lacks hot spots, and the game track may usher in an explosion.

The simple "buy mother coin strategy" is likely to fail in this round, because game projects will focus on maintaining long-term nature, so it is likely to be a good strategy to allow game participants to profit during the game process, rather than pushing up token prices; but at the same time, the profit margin of the single number will also be greatly compressed, so the studio is likely to have more advantages.

4. Conclusion

In my limited understanding, the fundamentals (main tone) of this round of industry have changed, and the endogenous logic of many tracks has also changed dramatically. What we can and must do is to "adjust our cognition" to adapt to the [new pattern of industry development]. Here, we are not only ordinary users like you and me, but also participants of other identities in the industry.

As the industry gradually matures, the degree of game will further intensify. It is meaningless to be complacent and complain. Considering from the opposite side of the game, perhaps we can find the "balance point".

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