The cryptocurrency market has been experiencing a prolonged bearish trend, especially for the tokens that are based on narratives rather than fundamentals. These so-called “on-chain narrative coins” are projects that claim to have innovative features or use cases but lack the technical or economic backing to support their claims. Some examples of these coins are Shiba Inu (SHIB), Dogecoin (DOGE), and SafeMoon (SAFEMOON).
These coins have been losing value steadily, as investors lose confidence and interest in their stories. According to CoinGecko, SHIB is down 87% from its all-time high in May, DOGE is down 76% from its peak in April, and SAFEMOON is down 97% from its record in May. These coins have also seen a significant decline in their trading volume and social media activity, indicating a lack of demand and hype.
One of the main reasons why these coins are bleeding lower is that they have no intrinsic value or utility. They rely solely on the power of narratives and memes to attract buyers, but these narratives are often shallow, inconsistent, or unrealistic. For instance, SHIB was marketed as the “Dogecoin killer”, but it failed to deliver any meaningful innovation or differentiation from DOGE.
Tekedia Mini-MBA edition 14 (June 3 – Sept 2, 2024) begins registrations; get massive discounts with early registration here.
Tekedia AI in Business Masterclass opens registrations here.
Join Tekedia Capital Syndicate and invest in Africa’s finest startups here.
DOGE was promoted as the “people’s currency”, but it faced scalability and security issues that prevented it from being widely adopted. SAFEMOON was touted as a “deflationary token” that rewarded holders with passive income, but it turned out to be a Ponzi scheme that enriched its developers at the expense of its users.
Another reason why these coins are losing value is that they face increasing competition and regulation. The cryptocurrency space is constantly evolving and innovating, and new projects are emerging that offer better solutions and value propositions than the on-chain narrative coins. For example, Solana (SOL) is a fast and scalable blockchain platform that supports various applications and ecosystems, such as decentralized finance (DeFi), non-fungible tokens (NFTs), and gaming.
SOL has gained over 9000% since its launch in April 2020, and it recently surpassed DOGE as the sixth-largest cryptocurrency by market capitalization. Moreover, the on-chain narrative coins are also facing regulatory scrutiny and pressure from authorities around the world, who are concerned about their potential for fraud, money laundering, and tax evasion.
For instance, the U.S. Securities and Exchange Commission (SEC) has warned investors about the risks of investing in these coins, and some countries, such as China and India, have banned or restricted their use. The best way to avoid coins with no fundamentals is to do your own research before investing in any crypto project. You should look for the following indicators of quality and legitimacy:
Whitepaper: A whitepaper is a document that explains the purpose, vision, goals, features, and technical details of a project. It should be clear, concise, well-written, and well-researched. It should also be original and not plagiarized from other sources.
Team: A team is a group of people who are responsible for developing, managing, and promoting a project. They should have relevant experience, skills, credentials, and reputation in the crypto industry or related fields. They should also be transparent about their identities, roles, and backgrounds.
Roadmap: A roadmap is a plan that outlines the milestones, timelines, deliverables, and updates of a project. It should be realistic, achievable, measurable, and verifiable. It should also be updated regularly and communicated clearly to the community.
Community: A community is a network of supporters, users, investors, partners, and influencers who are interested in or involved with a project.
The on-chain narrative coins continue to bleed lower, as they have no fundamental value or competitive edge in the cryptocurrency market. They are based on weak or false narratives that cannot sustain their growth or popularity. They are also vulnerable to regulatory challenges and market forces that favor more legitimate and innovative projects. Therefore, investors should be cautious and diligent when investing in these coins and avoid falling for their hype and manipulation.