Good morning crypto market participants, every time I type that I hope that a more fitting term will magically pop into my head. A term that feels right and all encompassing of the strange, incredibly fast moving and volatile industry that we love, and the absurdly degenerate things that we partake in within it. Maybe next time.
As the market digests last weeks post ETF price action, it’s been yet again another strange, fast moving and volatile week in crypto. There being almost a full week in between the announcement of Trump speaking at Bitcoin Nashville and the actual speech, led to some strong upwards price action along with a solid build up in OI as traders anticipated a bullish stance and potential ‘Bitcoin strategic reserve’ announcement. I’m not going to do you the injustice of poorly attempting to describe the intricacies so here’s a great rundown from @Defisquared.
Today we’re gonna chat about something we haven’t in a while, the trenches. I took a fairly long hiatus from being up to date with the intraday goings on over the last 6 weeks, recently I felt they were heating up so I decided to dip my toes back in.
To be perfectly honest I did horribly at first, the fresh wallet that I’d loaded was sitting around -75% at peak. It takes a little while to sink your teeth back into the rhythm but I’m feeling more in tune with it now and the challenge wallet is back to -30%. Though it has felt generally harder than a few months ago. More pvp, faster rotations and an inability to sustain coins and push them to high valuations.
Anecdotally I think about the shitcoin market so far this cycle in three stages:
HPOS, JOE, SPX era - the market was just starting to see a renewed interest in shitcoins, number of active traders small but growing, $100m mcap was a huge milestone, daily volumes $1 - $5m, no more than a few leaders at once and they stuck around for multiple weeks or months, slow meta shifts.
WIF, POPCAT era - Multiple coins passed the 9 figure mark, the main ones crossed into the late 9 figures and even into the billions, $5 - $100m daily volumes, lots of coins able to be sustained simultaneously, faster rotations but generally still one or two main leaders, major CEX listings
Presale meta (BOME, SLERF) - Huge liquidity event caught everyone offside in ripe conditions, sending two coins into the late 9 figure and low billions mark in quick succession, two monstrous days of $1 - $2b in daily volume, rotations becoming violent, an onslaught of grift and new launches seeing diminishing returns
pump.fun era - More new coins everyday than ever before, heavy dispersion yet lots more volume and users, in the beginning a better ability to sustain multiple coins
Fast forward to now and the trenches are feeling pretty cooked. Yesterday I wrote a tweet with some thoughts and data about the low cap market at large. It seemed to really resonate with people because it blew up. I think many are feeling the exhaustion.
Basically the meat of it was that the market has become too efficient and we are experiencing mass dispersion. At present; number of coins > amount of capital needed to sustain growth, and that the main beneficiaries of the current environment are pump.fun and other infra providers, insiders and the top .1% of traders.
Resulting in a rolling selection of 5-10 coins above $10m but below $100m mcap, competing for attention until the next cohort comes along, a new meta every few days instead of every few weeks or months.
The stand out stats were that pump.fun’s daily revenue hit a new ATH yesterday at $2.3m, and a total of 1.5m coins have been created since inception.
I think a lot of people took it as bearish memecoins overall, but I don’t think so. I think we’ve just reached another local top in the natural cycle of crypto trends and how we trade them.
In March the stars briefly aligned at the start of the presale meta. The first of it’s kind, a well known crypto artist dropped a coin into ripe liquidity conditions, yet not a ridiculous amount of money was raised. Solana was approaching $200 for the first time since 2021 and the shitcoin market was hot, it was the perfect recipe to catch everyone offside and spark a gigantic liquidity event marking the top of the current meta and another micro cycle.
Similar to NFT’s in 2021. We went from manually scanning opensea listings and keeping daily price spreadsheets > bots, alerts and terminals > full blown blur farming
This time we went from devs manually deploying contracts and a few coins being traded on Uniswap > wallet tracking + other basic tooling > tg bots and sniping > to full blown pump.fun. The financial barrier to entry for deploying is removed, and every deploy acts as a lottery ticket for the deployer at the cost of wider ecosystem.
I don’t pretend to know what happens next but optimistically I think the healthiest scenario moving forward is low effort launches, CTO’s and rugs become less frequent as the trenches begin to feel the exhaustion. Then consolidation into a few and a return to quality.
As always we appreciate your readership, if you enjoyed this article please leave a like and share it around. Have a good weekend and we’ll see you next week.