In the cold winter of 2018, I inspected the photovoltaic power station in the Gobi Desert in Qinghai. In the cold wind of minus 20 degrees Celsius, the engineer pointed to the shutdown photovoltaic panels and said: "These are the legacy of the previous round of expansion. Only when the market is cleared will new technologies rise." Now looking at the Binance altcoin list, those long-term sideways K-line charts are very similar to the photovoltaic panel arrays that were back then.

The crypto market is undergoing the same cycle as traditional industries. Just like the knockout match of the photovoltaic industry from 2012 to 2016, the CEX altcoin market has entered a cruel liquidation stage: the daily trading volume of many star projects in 2021 fell below 10 million US dollars, and the median market value shrank by more than 70% from its peak. This is just like the trajectory of photovoltaic, Internet and coal giants falling from high-priced stocks to low-priced stocks.

But behind the cyclical cruelty, there are often huge opportunities. Just as Longi Green Energy Technology is betting on monocrystalline silicon technology at the industry trough, the current downturn in the altcoin market is breeding new breakthroughs:

1. Reshaping of valuation logic: "paper wealth" and leverage risk of venture capital

The bull market peak in 2021, and venture capital in the primary market is like a speculator who is crazy about hoarding coal:

• Value Bubble: The median valuation of seed round projects by venture capital is as high as US$82 million (Messari 2022 report), an expansion of 16.4 times compared with 2017, resulting in the token being overdrawn by more than ten times of space when it launched CEX.
• Leverage collapse: Genesis and other institutions provided 100% LTV's Bitcoin mortgage loan in the last cycle, giving birth to an arbitrage cycle: institutions collateralize Bitcoin → obtain stablecoins → allocate high-risk tokens. The dealer can mortgage Bitcoin to buy altcoins, creating a false prosperity. However, Genesis burst in 2022, and the plunge in collateral value triggered chain liquidation. This "fund delivery pipeline" was cut off, and the altcoin market became a place for the primary market to sell inferior assets.

2. Liquidation is in progress: The liquidation cycle of the crypto industry is much faster than that of the real economy

After two years of reshuffle, we can observe the following market signals:

• Stir sentiment is sluggish: The average market value of CEX altcoin has approached the level of 2020, and the market value of many projects listed in 2022-2024 has shrunk by more than 80%; the exit rate of retail investors hit a record high, and the activity of retail investors holding coin addresses in 90 days dropped to 12.3% (Santiment), close to a historical low; the CEX altcoin panic greed index lasted for 15 weeks below 20, reaching the freezing point since March 2020.
• The budding of the new track: Although traditional market makers shrink, new mechanisms such as mother-child coins and on-chain DEX liquidity pools are rebuilding leverage circulation channels, and AI and cryptocurrencies, compliance and cryptocurrencies are trying to nurture new industrial momentum.

Conclusion: The current altcoin market is similar to coal stocks around 2015. The production capacity is quickly cleared, and the market popularity has dropped rapidly. The positive and negative factors no longer affect the industry's fluctuations, and it is also facing competition from DEX. But history is always surprisingly similar. The first principle of investment is always liquidity and low prices. Undervalued treasures are hidden in the ruins. We believe that high-quality projects will stand out after the market is liquidated.

The secret battle of altcoin funds: CEX valuation has entered a stage of volatile bottoming out, and the dawn of the new continent of DEX

1. CEX Dilemma: Venture Poison Pills Have Not Eliminated, Clearing Enters the Second Half

The altcoins of centralized exchanges are essentially the "taker" of the primary market valuation bubble:

• Strike for pricing power: In 2021, venture capital invested in projects with a valuation of 1 billion yuan, but now the secondary market only recognizes a market value of 100 million yuan, and the middle 900 million has become a "valuation fault" (for example: a certain project has a seed round of valuation 200 million yuan, and the circulating market value after it is launched on Binance is only 40 million).
• Fund dam: Bitcoin ETFs bring US$17 billion in incremental funds, but due to the tightening of risk control, market makers cannot leverage through collateral Bitcoin as they did in the past. Funds are stuck in new trading venues, and CEX altcoins have become "dry rivers" and enter a negative feedback loop of loss effect.

2. DEX breaks through: Secondary pricing power revolution

Decentralized exchanges are rewriting the rules of the game:

• Traditional path: Venture Capital Pricing → Exchange Online → Retail investors take over.
• Value Inversion: In DEX, retail investors can buy fully circulated tokens at one-tenth of the VC.
• Value reconstruction mechanism: DEX market realizes price discovery through AMM algorithm, and the premium rate of typical projects is 73.5% lower than that of CEX (Dune Analytics).
• Consensus fission: When niche concepts (such as AI Agent) become popular consensus through community dissemination, the flow of chips will be upgraded from "dealer retail investors game" (PvP) to "incremental influx" (PvE). Typical case: Virtual: From becoming popular in the DEX circle to being included in the observation list by Grayscale, its market value has increased by 20 times in three months; AI16Z: The community imitates a16z investment logic packaging project, attracting funds from traditional technology circles to enter the market.

Core logic: CEX is "state-owned enterprises are rid of burdens", DEX is "private enterprises are backdoor listing" - the former is waiting for policies to save the market, while the latter relies on mass movements.

CEX vs DEX: Two rules of survival, two wealth codes

1. CEX strategy

• Picking up behind stocks: only purchase projects with a market value of 50 million to 200 million, real products and communities, and project parties have core pricing rights, avoid "sincere stocks" (very average daily trading volume is extremely low).
• Waiting for the industrial cycle: Referring to the history of coal stocks, layout from 2025 to 2026, waiting for the liquidity easing cycle, and grasping the core targets of the industry trend (for example: buy MKR $200 in 2020, sell $6,000 in 2021).
• Liquidity arbitrage: In the continuous market, fully circulated tokens often show linear changes under the support of liquidity of different CEXs. When sentiment is sluggish, there are often mispricing opportunities in the market value range, which can be used for liquidity and emotional arbitrage. At present, we believe that Ethereum has significant opportunities for mispricing game while enjoying the liquidity of the US dollar system that is connected to Bitcoin.

2. DEX strategy

• Early sniper:

• 5 million-20 million market value: focus on team background, Github code/product quality, chip absorption/distribution signals.

• 20 million-50 million market value: expected CEX to go online (if a DeFi project was included in the watch list by Binance, the DEX price soared by 300%).

• Community empowerment: Observe the consensus construction of Meme coins. Taking the AI ??Agent track as an example, for every unit increase of the token SocialFi index (the frequency/circulation market value mentioned by the social platform) corresponds to a 47.8% excess return (LunarCrush data), capturing the key turning point from PvP to PvE.

Conclusion

At the twilight Qinghai photovoltaic base, a new generation of double-sided components are accumulating energy in the afterglow of the sunset. The altcoin market is a huge gold mine, but most people come in with their gold-digging dreams and leave with gravel.

The cyclical gear of the crypto market has never stopped rotating, and those projects that have been honed in the cold winter will eventually shine when the dawn of liquidity comes. And all we have to do is to be like experienced miners - calibrate the direction when others give up and prepare before the industry recovers. Only by combining the patience of miners, the courage of gamblers, and the calculation ability of accounting can real gold be dug out from the ruins.

Remember: The bull market is the stage for profit, and the bear market is the battlefield for accumulating chips - and now, it is the golden moment to lower your head to pick up mines. We are optimistic about the trading opportunities of Ether and Bitcoin and the opportunity to build positions in the next year.

The above is the detailed content of Altcoin Investment Guide: Teach you how to pay money on the DEX Exchange, now is a good time to build positions at low prices. For more information, please follow other related articles on the PHP Chinese website!