Forward the Original Title: Is the Crypto Market No Longer Rewarding Diamond Hands?

Once upon a time, Changpeng Zhao’s phrase “If you can’t hodl, you won’t get rich” was regarded as the golden rule of crypto investing, widely circulated in the industry. Buy, hold and hold firmly, and then sell when profits are huge to get huge profits. The HODL concept was once very popular in the industry.

Some investment firms, through in-depth research and strategic bets, achieved extraordinary returns. For example, First.VIP made hundreds or even thousands of times in profits during the last cycle with MATIC and AAVE. Such legendary wealth stories led many retail investors to firmly believe in the power of diamond hands. However, while this investment mindset may have worked in the previous cycle, it seems to have lost favor in the current one—especially for those holding large amounts of altcoins.

Under the four-year cycle, the market structure has undergone considerable changes. If you cannot 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 players?

1. Memes and AI Become the Main Theme, The Era of Broad Market Rally is Over

In past cycles of the crypto market, general gains have often reached climax half a year after the BTC halving. Market funds gathered from Bitcoin, then began to spread to Ethereum after reaching a certain level, and then flowed into mainstream altcoins. Finally, small market capitalization altcoins and meme coins were in chaos, and a typical bull market cycle came to an end.

In this cycle, the first rising wave was brought forward due to the positive events of Bitcoin spot ETF. After BTC ushered in its own highlight moment, the encryption market was silent for a long time. The rise in the Q4 quarter of 2024, which we finally waited for, turned out to be quite short-lived.

If you embraced popular assets such as Bitcoin, SOL, and Dogecoin earlier in this cycle until now, the gains from Diamond Hands are very impressive. But if the altcoin you choose is not well-received by the market, such as re-staking, inscription, games, NFT and other fields, then the book returns will most likely be “horrible”.

Recently, Binance, which has been criticized by the market, has launched new coins. It often reaches its peak when it is launched, and then continues to decline. Projects with slightly better quality and popularity may usher in a period of growth, while projects that are not popular and have no use but are still being unlocked will see buying orders weaken and continue to reach new historical lows. If the diamond player unfortunately chooses an unpopular currency on an unpopular track and refuses to sell it, he will suffer huge losses.

In addition, compared with DeFi and NFT, which were relatively popular in the previous cycle, this cycle has not seen any real out-of-circuit innovation that can compete with them. Market funds have been stagnant in Bitcoin, memes and AI concept coins for a long time.

The chart below clearly shows that the market value of Bitcoin has fallen sharply in both 2017 and 2021. This is due to the general rise in altcoins. By 2023, Bitcoin’s market capitalization ratio began to rise, rising from 38% to even exceeding 60%. In contrast, Ethereum is troubled by multiple factors, and its market value share has been declining since the beginning of 2023.

Historically, when Bitcoin dominance rises, it has been difficult for an “altcoin season” to occur.

Today, the market appears to only reward those who hold Bitcoin and a select few assets—further proving that diamond hands only succeed in the right investments.

2. Mainstream Altcoins Underperform Expectations

The difficulty of the altcoin market in this cycle is vastly different from the last one. Taking Layer 1 (L1) projects from the previous cycle as an example, if measured from their lowest points after listing on Binance, DOT achieved a maximum return of over 20x, NEAR nearly 40x, AVAX over 40x, and SOL an astonishing 250x. Even in the DeFi sector, UNI delivered returns exceeding 20x, demonstrating a strong wealth effect in the industry.

However, it is worth noting that all of these high-return tokens eventually fell to their bottom price ranges within six months to a year after reaching all-time highs.

In the current cycle, among L1 infrastructure projects, only SOL and SUI have shown relatively decent performance, while the rest have been underwhelming. Among Layer 2 (L2) projects, OP recorded a peak return of 10x, whereas ARB peaked at only 3x. However, both tokens dropped back to their bottom price ranges within five months of hitting new highs. ARB, for example, fell from its all-time high of $2.42 to a historical low of $0.34.

Some projects that are highly sought after by VC capital have performed poorly. EIGEN’s return of up to 2 times has now reached a record low. After staking ETHFI and RENZO even after being listed on Binance, they started a new low pattern. IO’s maximum 2x return has also hit a record low.

After more and more players are no longer willing to take over VC coins at high valuations, market participation in new and old projects has reached a discount.

Additionally, data from CoinMarketCap and CoinGecko shows that the number of altcoins (excluding low-market-cap meme coins) now exceeds 20,000, which is 2-3 times the number in 2021. With too many tokens in the market and the growing dominance of meme coins, mainstream altcoins have lost investor attention, leading to smaller returns across the board.

3. The Fast-Paced and Intense MEME Market

In previous cycles, VC-backed tokens were highly sought after, but they no longer hold the same appeal. As traders struggle to find significant profit opportunities on centralized exchanges (CEXs), many have shifted to on-chain trading in search of new wealth.

The Solana-based meme coin surge has taken the industry by storm. There’s no denying that tokens like WIF, BOME, and TRUMP initially generated massive hype and significant profits, drawing widespread market attention. However, if you held onto these assets without taking profits, your unrealized gains have likely plummeted by multiple times.

WIF has risen as high as around $4.8 since being listed on Binance, and has now fallen to $0.8. BOME has reached a maximum of $0.029 since being listed 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 profit and leave the market at the peak of $70, then TRUMP would have dropped to a minimum of $16 in just about a week.

While MEME coins may appear to be a fair playing field, they come with high difficulty and extreme volatility. The rise and fall of trending tokens are accelerating, and slower traders can quickly find themselves trapped in severe losses.

Taking the AI ​​meme GOAT as an example, on October 23, 2024, trader Nachi tweeted that “obtained 4% of the total supply of GOAT. This will be the best transaction of this cycle.” At that time, the price of GOAT currency was around $0.5. On December 12, Nachi still stated that he held GOAT, and the price of GOAT at this time was US$0.84. Since then, the situation has plummeted, first being robbed of the limelight by ACT, and then again by AI agents such as VIRTUAL. The currency price once fell below $0.1, and the highest price in GOAT’s history was once at $1.37.

Taking Moonshot, which is famous for its meme currency, as an example, Foresight News selected tokens listed on the Moonshot platform between November 2024 and January 2025 as research samples. Among the 116 listed tokens, only 17 have current prices higher than their listed prices, accounting for less than 15%. The vast majority of projects are currently in a downward trend, with more than 85% of the projects declining.

The cold, hard data is a stark reminder that it is not easy to pick good targets and leave the market with high returns at low costs. It is normal for MEME to drop more than 80% or even return to zero.

The high-speed, high-intensity MEME market has also impacted altcoins with already weak liquidity. Many low-hype, overvalued tokens with poor narratives—especially those listed on centralized exchanges—are now facing their “darkest moments.”

4. What Should You Do?

Looking at the long-term market trends, the requirements for being a diamond hands investor are becoming increasingly demanding. First of all, you need to access the market sentiment and identify profit-taking ranges at the top. If you make the mistake of holding on and not selling, all the profits may be wiped out in the end. Secondly, you need to carefully select the targets, and be very careful about which targets are worthy of diamond hands. If you pick the wrong narrative or asset, even if a bull market returns, you might miss out entirely.

Generally speaking, don’t be a diamond hand investor in meme coins.

Taking profit in a timely manner is also one of the better ways to enhance your lifestyle. Reducing your holdings helps ease portfolio pressure, ensuring that if a major price correction occurs, you still have capital available to seize future opportunities.

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