The altcoin market is in a slump, how should investors respond?

Since the beginning of this year, the cryptocurrency market has shown a persistent weakness. This trend has not only affected niche alts on trading platforms, but even mainstream on-chain assets that performed well in the fourth quarter of 2024 have not been spared, facing the dilemma of significant declines.

Taking AI-related coins as an example, the decline over the past three months is as follows:

• Virtual down 79.2%
• Ai16z dropped by 85.5%
• AIXBT dropped 68%
• Griffain dropped 80.3%
• Buzz dropped 72.4%
• Fartcoin dropped 67.5%
• ARC dropped 62%
• Swarms dropped 45%

These data reflect that even the leading projects in once popular sectors have evaporated up to 80% of their market value in less than 90 days. Although it cannot be directly concluded that the field has failed, the attention from investors has indeed significantly decreased, and it is difficult to rekindle market enthusiasm in the short term.

Another highly anticipated trend is celebrity tokens. This craze started with Trump and quickly spread to other public figures, with even some countries following suit by issuing their own. However, the performance of these tokens is equally concerning:

• Trump dropped by 77.1%
• Melania's decline reached 91%
• Vine's drop was 92.7%
• jailstool fell by 93.5%
• Jellyjelly has plummeted an astonishing 98%
• CAR fell by 98.5%
• Libra has decreased by 94.3%

There is a saying in the cryptocurrency circle: "Invest in the new, not the old," which means that funds often tend to chase after the latest emerging concepts. However, compared to AI tokens, the decline in the celebrity coin sector has been more severe. So, what are the main issues currently facing these two fields? In the current market environment, which lacks emerging narratives, is there still a possibility for breakthroughs?

Current Market Dilemma: Over-Reliance on Concept Speculation

In terms of AI tokens, most projects are still at the "concept demonstration" and "future planning" stage, lacking practical and widely promotable products. Even though some projects have launched operational services, they often face issues such as complex interfaces and poor user experience, making it difficult to attract ordinary investors for long-term participation. Worse still, some project teams, in order to cater to investors' expectations for "AI + blockchain," often exaggerate promotions to inflate prices, while actual application implementation is repeatedly delayed. Over time, funding patience is exhausted, attention begins to shift, leading to a significant decline in the prices of related tokens.

In terms of celebrity tokens, although Trump sparked a wave of interest, he subsequently encountered the issue of "celebrity effect decay": it is difficult to find another public figure who can match Trump in terms of topic and influence. Although political leaders, internet celebrities, and stars from various countries tried to imitate this, none could replicate the initial funding enthusiasm and market sentiment. As market enthusiasm waned, the celebrity coin track exhibited the characteristics of "flash in the pan," with investor confidence rapidly eroding and prices following suit.

The fundamental reason these sectors are experiencing significant volatility is that many projects only remain at the "speculative concept" level, lacking real and sustainable profit models. Whether it's AI tokens or celebrity coins, their core narratives rely on the rapid influx of capital and hype, but lack the motivation for users to participate in the long term. Once the hype fades, prices become difficult to maintain and it becomes even harder to attract new funds.

Finding real yield projects becomes key

In the current market environment, where narratives are scarce, the key to standing out is to find projects that offer "real yield" and are "willing to share with users." "Real yield" refers not only to short-term gains realized during the listing but also to the ability to generate continuous returns through actual business models and trading activities, and to reward token holders or participants in the ecosystem.

Some decentralized trading platforms have adopted this model. Their revenue mainly comes from contract trading fees, which are used to buy back platform tokens. Since trading fees are directly related to trading volume, this mechanism closely ties the value of the tokens to the platform's business performance.

Data shows that certain decentralized perpetual contract trading platforms maintain a high level of activity even during the current market downturn. For example, one platform processes an average daily trading volume of about $3.78 billion, accounting for approximately 45% of the total 24-hour trading volume of all similar platforms, with daily revenue of about $1 million. It is precisely due to this stable revenue model that, even in the recent case of widespread declines in alts, the price of its platform token still performs strongly.

In the end, no matter how popular a concept may be, it will eventually lose its luster. What can truly exist long-term in the crypto market are those projects that find a product-market fit, have high user stickiness, and generate real profits.