What elements do the popular and trending tracks possess?

Author: Jian Shu

Why the Hype?

The reason for the explosive popularity is simple: it allows more people to know about and participate in it. Therefore, the following influencing factors are all analyzed around this point. It is important to note that the reasons for a sector to become popular do not necessarily include all the factors listed below.

1. Low Participation Threshold

Low participation threshold includes the following key points:

• Simple and Easy to Understand Principles

Simple principles mean that even outsiders who do not understand the blockchain industry can quickly accept it, making it easier to spread compared to projects with complex principles. When we search for the term "going viral" on some blockchain media, the most relevant sectors that appear are NFTs and blockchain games. Things like blockchain games, which originally existed in Web2 or TradFi, are also easier for outsiders to understand and accept. Complex principles act as a barrier for outsiders, as stated in VISA's research report "The Cryptocurrency Phenomenon: Consumer Attitudes and Usage": "55% of non-crypto users believe that a steep learning curve is the reason they have not invested in cryptocurrencies."

• No Restrictions or Low Costs for Participation

Many projects have a prerequisite for participation, requiring holders to possess certain specific NFTs or tokens, etc. While this indicates the project's popularity and increases the value of its NFTs and tokens, it also excludes a broader range of players, as the gradually rising prices reduce users' willingness to participate.

• Well-Developed Related Infrastructure

Whether the related infrastructure of a sector is well-developed determines the ease of operation and the user experience it provides. If the operation is too complex, it will significantly increase the learning costs for outsiders.

2. Continuous Discussion

• Profit Motive

The profit motive is the best marketing. Whether in GameFi or SocialFi, from the user experience perspective, they cannot compete with Web2 projects; users are merely driven by speculative psychology that seeks profit. The hot money in the market always follows the principle of increasing entropy: funds always flow from places with low profit efficiency to those with high profit efficiency.

• Cultural Attributes

Cultural attributes can increase market discussion and community cohesion, which is particularly evident in Meme and NFT projects. Such projects generally have a distinct community culture and cultural symbols, such as Milady's anti-idol culture (introduction from @codeboymadif) and the Shiba Inu symbol of Dogecoin. However, cultural attributes can only play a supplementary role, as participants are primarily speculative; once prices drop, no one will continue to "power it with love."

3. A Variety of Projects Rather Than a Single Dominant One

This factor may not apply to some Meme sectors, as it mainly pertains to areas that emphasize practicality. The more projects there are, the more intense the competition, leading to more business innovation and competitive product offerings. This is particularly evident in DeFi Summer, where various protocols adopted token incentives, launched LP pools with higher APRs, and innovated in business.

4. Especially Reflecting a "New" Element

There is an old saying in the crypto circle: "Play new, not old." New sectors have greater imaginative space. New sectors often lack a complete valuation system due to their "newness," meaning there is no predictable market value, thus allowing for greater upward potential. This essentially provides ordinary people with the opportunity to acquire low-priced tokens. Established sectors, due to having reasonable estimation systems, see "unicorn" projects from VCs launch with high valuations, making it difficult to find significant profit opportunities in the secondary market. The benefits of sector development can only be enjoyed by a few; can this sector still attract participants?

5. The Sector Concept Has Imaginative Potential

The metaverse is perhaps the best example of this factor. The metaverse is a grand concept, an extension and expansion of the real world. People are very much looking forward to the enormous opportunities and revolutionary impact of the metaverse, which has sparked the "metaverse" craze. Tokens related to the metaverse, such as $Mana and $Sand, performed well in the last bull market.
Data from: coingecko

6. Active Promotion by Project Teams and Communities

The popularity of a project is inseparable from the promotion by the project team and the community. For example, recent Ethereum inscriptions like $ETHS and BRC-20's $rats have their respective communities fervently driving traffic and creating momentum for their projects.

How Can We Safely Exit the Frenzy?

The profile of crypto users has not changed; most are speculative and profit-driven, and this is unlikely to change in the short term. As long as the market's FOMO sentiment is ignited, crypto users will actively embrace the bubble. Since it is a bubble and speculation, this also determines that there are no die-hard fans who will steadfastly hold onto their tokens.

When a new bull market arrives, the most dazzling projects are undoubtedly those that can bring the most profit, but behind them lie leverage and Ponzi schemes. Once the market turns, those that rose the fastest will also fall the fastest, directly transitioning from "blue chips" to "garbage."

What signals can guide us to safely exit before the bubble bursts?

• Repeated Wheel Reinvention Without Innovation, Leading to Dispersed Funds and Hype

After a project becomes popular, there will definitely be other projects that copy it, usually simple imitations of the leading project. This will only divert market attention and funds without contributing positively to the development of the sector. As the number of clones increases, the profit motive will be exhausted by these clones, making the decline of the sector inevitable. For example, during DeFi Summer, after Sushi attacked Uniswap, many other protocols engaged in liquidity theft through high token emissions, impacting the sector's development, albeit as a zero-sum game among different projects.

• Declining Hype and Prices of Leading Projects Without Stable Increases

The leading project in a sector undoubtedly plays a leading role. If the hype and prices of the leading project begin to decline, it can easily trigger a collapse in market sentiment, and related clones will inevitably suffer the same fate.

Why is the Bitcoin Ecosystem Booming, and Can the Trend Continue?

Recently, the hottest topic is undoubtedly related to the Bitcoin ecosystem, especially various inscriptions, with the enormous wealth effect attracting many people. This round of market activity is closely tied to Bitcoin's rise, which has boosted sentiment in the crypto market. However, why can various inscription tokens stand out among many sectors? We will analyze this in conjunction with the aforementioned factors of explosive popularity.

In terms of participation threshold, complex principles and inadequate infrastructure limit its further dissemination, but the fair first-level participation opportunity has become a major selling point, with retail investors creating this small bull market unrelated to VCs;

In terms of discussion, inscription tokens undoubtedly possess a significant profit effect. Whether it is the early $ordi, $sats, or some recent $atom and $pipe, they have brought substantial returns to holders. Moreover, BRC-20 tokens have sparked a culturally rich "zoo" market, with a slew of inscriptions named after animals, such as $rats, $bear, $cats, etc., along with inscriptions from previous NFT communities, like the black cat's $MMSS and the angry cat's $UCAT;

In terms of richness, the Bitcoin ecosystem is still not prosperous enough. Although there are many innovative protocols, there are still few participation opportunities for ordinary players, and it remains in a relatively early stage. Furthermore, from the perspective of various inscriptions, there is a phenomenon of repeated wheel reinvention, not only on the Bitcoin chain but also on other chains with their own inscription protocols. Consequently, market attention and funds are dispersed, making it difficult for inscriptions on other chains to replicate the prosperity seen with Bitcoin inscriptions;

In terms of novelty, inscriptions represent a new asset form, a new concept proposed during the transition from bear market to bull market, and have not yet experienced a complete bull market, thus meeting the "new" standard;

In terms of sector imagination, Bitcoin is the most well-known chain, but its ecosystem is quite limited compared to Ethereum. Ethereum has taken on the task of supporting the development of smart contracts based on Bitcoin, and now the development of the Bitcoin ecosystem is attracting attention from the entire crypto market, drawing in funds and developers, with unimaginable future growth potential.

In terms of project teams and community promotion, everyone should have experienced this. When a certain Twitter influencer talks about which inscriptions to buy, some communities will organize their members to flood the comments section promoting their tokens, such as the $rats army's spamming and the withdrawal movement initiated after discovering exchange data dumping. The well-known CX coin Π coin has reportedly also created its own token $piin, and is live-streaming recommendations and purchases on platforms like Douyin and Kuaishou, attracting many elderly participants.

In summary, the reasons for the explosive popularity of the Bitcoin ecosystem mainly include: a very fair participation threshold, profit effects and the cultural attributes of some inscriptions leading to widespread discussion, a novel sector with imaginative potential, and active promotion by various inscription communities. However, in the short term, the deployment of multi-chain inscriptions has led to the dispersion of funds and hype, causing a cooling of inscriptions on the Bitcoin chain. Nevertheless, the Bitcoin ecosystem is not limited to inscriptions; it also includes protocols like RGB, Lightning Network, and BitVM, which are still in their early stages of development and have yet to reveal their full potential. Therefore, we have reason to believe that the Bitcoin ecosystem will shine brightly in this bull market.