ETH Positive Turn: Why Have Large-Cap Coins Become Bull Market Darlings?

Author: Sam

Compiled by: Deep Tide TechFlow

Those who are trying to chase the high yields of ETH through DeFi tokens will be disappointed in this bull market.

DeFi Summer has taught us that the accumulation of value flows from ETH to DeFi projects. This is a logical conclusion, after all, DeFi is the most popular area in the Ethereum ecosystem.

However, it is now clear that the real ETH high yields actually come from "established coins" (such as XRP, HBAR, XLM, ADA, TRX, ALGO, etc.). These are B-rated mainstream coins with a market capitalization of tens of billions of dollars, but lack the fundamentals to support their value. Their main drivers are the Lindy effect, the value of longevity, as well as the exposure of centralized exchanges (CEXs), which makes these tokens an easy choice for non-crypto-native users.

What we have observed is that ETH's high yields are now flowing to these "established coins" with huge market capitalizations, such as XRP, ADA, HBAR, XLM, ALGO, etc. These tokens have reached the $10 billion level of market capitalization, but there is little network activity to support their value. Their appeal lies in their longevity (Lindy effect) and the ease of opening up to non-crypto-native users through centralized exchanges.

This proves two things:

1) fundamentals are still unimportant. In a retail-driven bull market, revenue and usage metrics have minimal impact on token performance.

2) Unless you have an asymmetric advantage in the field of small and medium-cap tokens, it is wiser to hold leveraged ETH or mainstream coins with large market capitalizations than to expect medium-cap DeFi tokens to perform better.

Since the DeFi summer, the token market landscape has expanded significantly. As the number of tokens available increases, so does the risk of choice, making it more difficult and statistically less rewarding to pick the right DeFi token.

In a bull market, fundamentals are not your friends. Don't be clever: keep it simple and focus your resources on the obvious choices.

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