We have finally entered a bullish phase in the crypto market, yet this period has revealed certain weaknesses in the Web3 economic landscape.
For participants who have spent recent years optimizing their investment portfolios, this牛市 feels somewhat "stingy." Many newer tokens have underperformed, while established coins like XRP, ADA, DOT, and ATOM have delivered impressive returns.
Market Performance: Old vs. New Tokens
Historically, newer altcoins—those with less than two years since their Token Generation Event (TGE)—tend to outperform older tokens over various periods. However, the current cycle tells a different story. Veteran projects such as XLM, XRP, ADA, DOT, and ATOM are leading the market, while new tokens struggle to gain traction.
Below, we explore the reasons behind this shift, its implications, and what it may signal for the future.
Key Insights into the Shift
New Capital Inflow, Not Rotation
The broad-based rally in older altcoins suggests that this trend is not driven by internal capital rotation within the crypto market. Instead, it is more likely fueled by new money entering the space, particularly from retail investors re-entering the market.
The Return of Retail Investors
Increased Coinbase app rankings and rising viewership of crypto-related YouTube content indicate the return of retail participants. Contrary to expectations that these investors would flock to high-risk memecoins, capital appears to be flowing into mature projects from the previous bull cycle. This may reflect an older, more risk-averse demographic or familiarity with well-known altcoins.
Familiarity and Trust as Drivers
The standout performers in this cycle are largely established names from the last牛市. This suggests that returning retail investors are likely between 25 and 45 years old and have prior experience with cryptocurrencies. They may be less familiar with newer narratives like DePIN (Decentralized Physical Infrastructure Networks), RWA (Real-World Assets), or AI-based tokens, leading them to opt for familiar choices.
Generational Differences
At the same time, Gen Z investors—often introduced to crypto through TikTok or meme-driven content—tend to have less disposable capital. This may explain why memecoins have not attracted significant inflows despite the broader retail resurgence.
The Impact of Inflation
Another critical factor dampening the performance of new tokens is inflation. Older tokens often have a higher percentage of their supply in circulation, meaning new capital is not diluted by continuous token issuance.
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Inflation: The Silent Killer of Crypto Returns
The current bullish sentiment masks a harsh reality: inflation is quietly eroding investor gains. Understanding how inflation impacts asset value is essential for anyone looking to profit in this market.
Consider this example:
In 2021, SOL reached $258 with a market cap of $75 billion. Today, SOL is again priced at $258, but its market cap has grown to $122 billion. Why? Increased circulating supply. As more tokens enter the market, individual token value is diluted, requiring more capital to maintain price levels.
Other examples include:
- TAO: Its market cap is 46% above its all-time high (ATH), yet its price has not reached new peaks.
- ENA: The market cap is near its ATH of $2.12 billion (currently $1.84 billion), but the price has dropped from $1.49 to $0.64.
- ARB: The March ATH market cap was $4.6 billion; it’s now $3.8 billion. The price fell from $2.1 to $0.8.
- SEI: ATH market cap was $2.8 billion, now $2.25 billion; ATH price was $1.03, now $0.53.
These cases are not isolated. Even during "altcoin season," inflation undermines potential returns. As circulating supply grows, more capital is needed to sustain or increase token prices. For assets with high inflation, investors face an uphill battle even in a bull market.
Strategies to Combat Inflation
To protect returns, consider these approaches:
- Analyze Tokenomics: Before investing, review a project’s inflation rate and token distribution model. Favor projects with slow supply growth or capped inflation.
- Diversify Wisely: Allocate capital to tokens with limited total supply or defined inflation ceilings, like Bitcoin.
- Adjust Return Expectations: Factor inflation into your calculations to better assess real returns.
Inflation isn’t just a macroeconomic term—it’s a real force in crypto markets. Recognizing and addressing it is key to navigating this牛市 successfully.
Generational Perspectives: TikTok vs. CoinMarketCap
If you’re reading this, you’re likely an experienced investor who has weathered multiple market cycles. You’ve probably researched new protocols, participated in airdrops, and explored emerging narratives. In contrast, the average retail investor entering the market now—perhaps motivated by election optimism or Bitcoin approaching $100,000—has a very different background and mindset.
To understand these investors, recall your own early days in crypto. You might have held a centralized exchange (CEX) account filled with unfamiliar token codes.
Current retail entrants can be broadly categorized into three groups:
- Gen Z: Typically introduced to crypto via TikTok, they may engage with memecoins (often volatile, entertainment-focused tokens).
- Gen X: Often has prior experience from earlier bull markets.
- Gen Y (Millennials): Attracted to crypto after participating in stock trading, they may bring a more measured approach.
Recent analysis of Gen Z investors reveals distinct behavioral patterns. Compared to other generations, they are more risk-sensitive and prefer low-commitment activities like completing Galxe quests, playing Hamster Kombat, or participating in airdrops. These activities require time, not money, making them more accessible.
Trading, however, is a different story. When Gen Z encounters the牛市 through TikTok, it may initially feel exciting. But market volatility and potential losses can quickly lead to disillusionment.
Millennials, on the other hand, often have a different profile. If they develop an interest in crypto, it’s usually after gaining experience in stock trading. This background makes them less susceptible to high-risk memecoins.
They are more likely to open CoinMarketCap, analyze token charts, and make data-driven decisions. With higher disposable income than Gen Z, they also tend to invest more rationally.
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Frequently Asked Questions
Why are older tokens outperforming new ones in this bull market?
Older tokens benefit from higher circulating supply, reducing dilution from inflation. They also attract returning retail investors who recognize them from previous cycles, creating stronger demand and price stability.
How does inflation affect my crypto investments?
Inflation increases token supply, diluting individual token value. Even if prices appear stable, market cap may rise due to new tokens entering circulation. This can suppress real returns and require more capital to maintain value.
What strategies can I use to minimize inflation risk?
Focus on projects with transparent tokenomics, low emission rates, or fixed supplies. Diversify into assets like Bitcoin with predictable issuance, and always factor inflation into your return projections.
Are memecoins still a good investment during this bull run?
Memecoins remain highly volatile and speculative. While they may offer short-term gains, they carry significant risk. Investors should assess their risk tolerance and avoid overexposure to such assets.
How do generational differences impact crypto market trends?
Younger investors (Gen Z) often prefer low-risk, time-based activities like airdrops, while older generations (Gen X, Millennials) may invest more capital and prioritize established projects. These patterns influence which tokens gain traction.
Should I adjust my portfolio based on these trends?
Consider allocating a portion of your portfolio to inflation-resistant assets and projects with strong tokenomics. Stay informed about market sentiment and generational trends, but avoid making impulsive decisions based solely on short-term movements.
Conclusion
The above observations align with recent market behavior, though they are not exhaustive or absolute. The crypto landscape remains dynamic, and investors should stay adaptable, informed, and critical of emerging trends.