Analysis of 6 projects that have risen against the trend recently: Can this on-chain speculation boom continue into the bull market?

Original Author | Crypto Ann

Compilation of the original text | Baize Research Institute

While the situation is dire for major cryptocurrencies like Bitcoin, Ethereum, and popular altcoins, deep in the on-chain world, things aren't quite as bloody. Instead, you can often see price charts like the one below.

The summer of "on-chain speculation" is still underway.

But will they be solid and durable and extend into a bull market?

Today I want to delve into 6 coins that are currently outperforming. After a side-by-side comparison, analyze the commonalities, patterns, and traits that make them perform so well (or seem so).

The candidates analyzed are as follows, and since there is only hype surrounding them, I will call them Sh*tcoin ("sh*tcoin"):

• Perpetual DEX HMX ($HMX)
• Crypto game Sanko Game ($DMT)
• Telegram robot Unibot ($UNIBOT)
• On-chain gambling game WINR ($WINR)
• Liquidation-free, LSD-backed lending protocol ZeroLiquid ($ZERO)
• meme coin $MOG

Target: Market Cap

Market cap is the easiest metric for token holders to follow, it represents achievements, milestones.

You'll often see on Crypto Twitter: "Let's get our market cap to X million dollars!!" along with the rocket emoji.

Of the six projects studied for this article, Unibot leads the way with a market cap of nearly $200 million, and others are hoping to reach that goal.

However, market capitalization is a misleading indicator. Just like support and resistance in technical analysis. You can take profits at resistance levels, or buy when prices break through resistance levels. This doesn't really make any sense. Some projects have market capitalizations of up to $50 million, while others will never exceed $10 million. Even some projects can easily reach $5 million, and then it becomes difficult to climb up.

Liquidity is more important

Liquidity is really the only comparison you need.

The most capital efficient were $DMT and $MOG, both achieving 10x price increases with minimal liquidity.

$HMX and $WINR still have a lot of room to rise, provided they maintain liquidity at current levels.

$ZERO is more likely to be dumped because the ratio between market cap and liquidity is fairly close. The opposite is true for Unibot, as it has a market capitalization of $179 million, and it is difficult to sell/cash out with a liquidity of $7.2 million.

The bigger the gap between market capitalization and liquidity, the more people are forced to continue holding. Let's say the buyer of Unibot manages to make a profit of $5 million, but this gain is only on paper because he cannot maintain price stability while selling Unibot for ETH. (If the liquidity pool consists of $3.5M worth of ETH and $3.5M worth of Unibots, he can't sell at all because there aren't enough Unibots in the pool.)

The only strategy to win in this speculative game of chasing junk coins is to be an early buyer (or token deployer itself) while maintaining a position well below the liquidity pool. Buying early is best, because if the token fails and encounters a sell-off, you can still save the initial capital (cost) and even make a small profit. Insiders usually also gradually sell when the price rises to keep the liquidity in the pool relatively stable, thus maintaining the upward momentum.

**Why you should gradually sell? **

I used to think that the "age" of a project or token didn't matter, but then I realized I was wrong. Although this paper examines only six projects, a small sample size, a common pattern can be identified. The top performing items are neither too young nor too old, with the optimal "age" being a few months old.

Recently, more and more project parties know that it is better to maintain the rise of tokens for a period of time than to quickly sell them. They know to hold the price long enough to convince people that the project is "not going to go away", but not so long that attention falters and people slowly lose interest.

I'm sure keeping liquidity low is one of the strategies. If you are buying "garbage coins" similar to the above projects on the chain, the first thing to pay attention to is whether the liquidity has increased.

One would consider more liquidity to be bullish, as happened to the $BALD token a few weeks ago. Liquidity increased to $31 million, attracting more and more buyers, and shortly after, the token crashed completely.

Conversely, if you have a large position, you can take increased liquidity as a sell signal and sell gradually.

Unibot, the hub of memecoin

I also don't think the type of item matters for *negotiability. *Generally speaking, how "shitcoins" work is that, in general, if a coin's use case or narrative is unique, the hype around it lasts longer than other coins.

Here, I am referring to Unibot. For that, we need to talk about what exactly is a Unibot?

Proponents argue how Unibot could revolutionize the user experience. I just want to say that those are crap.

Instead, the real appeal of Unibot is the memecoin trading functionality. With it, you can get alerts of new token launches and be able to buy tokens as soon as they are listed. For on-chain traders, this is of course a good user experience, and it is also the reason why "cracking the dog" (gambling in disguise) is fascinating.

In short, Unibot is not just a memecoin itself, it is the center of the memecoin universe.

Unibot managed to sustain the hype for longer as it went from unique to race track leader. It will be difficult for other projects to replicate its successful fate.

When the hype around Unibots will end will depend on what happens with on-chain speculation and the crypto market as a whole. (Unibot keeps liquidity pools low to avoid cascading price drops.)

These "junkcoins" are vulnerable to capital rotation

Once traders take notice of changes in liquidity in the broader crypto market, they walk away from the “shitcoin” hype.

Cycles will come again where Bitcoin and Ethereum control most of the liquidity, which usually happens in the early to mid stages of a bull market.

DeFi blue-chip tokens like $UNI and $SUSHI have stagnated back in 2021 while newcomers (Layer1 - "Ethereum Killers") are pushing the bull market to the top. The situation is no different for the 6 “junkcoins” mentioned in this article.

However, the real bull market thousand-fold project is still lurking somewhere. Their token isn't going to go up 10x in 2 months, and it's certainly not another perpetual DEX in the endless stream. Currently, there is a large gap between the price of these tokens and the innovation/quality of the projects themselves. At least in the "on-chain speculation" boom of 2019-2020, DeFi blue-chip projects like UniSwap and Curve are indeed novel and pioneering, and the current "garbage coins" simply don't have these.

risk warning:

According to the "Notice on Further Preventing and Dealing with the Risk of Hype in Virtual Currency Transactions" issued by the central bank and other departments, the content of this article is only for information sharing, and does not promote or endorse any operation and investment behavior. Participate in any illegal financial practice.