Crypto Markets Maturing from Hype to Utility

When it comes to successful near-term
speculation in cryptocurrencies, especially Meme coins, hype is a far more
important component. After all, it’s a high level of buzz and headlines that
help to drive the level of “fear of
missing out” (or FOMO) necessary to in turn drive a rapid rise in the price for
a particular cryptocurrency.

But while hype and short-term speculation
continue to drive the cryptocurrency market, as this market matures, attention
paid to the long-term utility of coins and tokens is starting to come off the
back burner. Binance
CEO Richard Teng comments on the memecoin trends and their utility, “Memecoins,
if nothing else, highlight the robustness of the existing on-chain token
creation and trading infrastructure. It is a truly revolutionary development
that today, permissionless, globally tradeable assets can be created and traded
in multi-million dollar volumes within hours and at minimal costs. Given the
current focus on memecoins, it is expected that the ability to create new
tokens at virtually no cost will lead to a significant oversupply of various
memecoins in the market. Ultimately, attention and resources are likely to
consolidate around a select few memecoins that demonstrate longevity and
resilience.”

As this trend continues, the resultant
positive impact could be significant. Largely, because such a change could
prove bullish for the long-term prospects of both established and emerging
cryptocurrencies. With this in mind, let’s take a closer look at the “hype to
utility” pivot currently underway, and what it means for crypto investors and
developers going forward.

Profiting from ‘Meme Coin
Mania’ is Easier Said Than Done

Cryptocurrency speculators able to read the
pulse of the market can be successful when it comes to short-term trading in
Meme coins and other speculative cryptocurrencies. However, attaining these
skills necessary to profit from current and future waves of “Meme coin mania”
is a whole lot easier-said-than-done.

The reasons for this are twofold. First, while
there is an element of skill involved in profiting from short-term crypto
speculation, a lot of it hinges on fortuitous timing. For example, sometimes,
events like the recent U.S. Presidential election, can help to drive another round of “Meme mania.”

However, these events can oftentimes be tough
to anticipate, making “getting in early” more a matter of luck than skill.
Second, while we’ve seen several waves of speculative frenzy in the
cryptocurrency market, as retail traders gain sophistication, not to learn
valuable (and costly) lessons from past unsuccessful speculative activity, it
may prove more difficult in the future for Meme coins to go “to the moon” on
hope and hype alone.

Hence, going forward, market participants,
both experienced and inexperienced, may be starting to prioritize the
importance of a coin/token’s underlying utility, rather than the buzz and hype
surrounding it.

Utility is Key for Building
Lasting Value

Scores of cryptocurrencies have come and gone,
but the ones with staying power have been the cryptos offering an adequate
level of utility for their users/holders.

In the case of Bitcoin, the original
cryptocurrency and the most valuable cryptocurrency by market cap, its utility
stems largely from its functionality as a portable store of value that can be converted back to
fiat currency with ease 24/7.

In the case of Ether (commonly known as
Ethereum), its utility is derived from the token’s central role in facilitating transactions on the Ethereum Web3
network. As for another major altcoin, Solana, its value stems from the
scalability and speed of its respective network.

Beyond just Bitcoin and established altcoins,
many of the top Meme coins have demonstrated utility, helping to drive their
staying power and lasting value. Dogecoin, for instance, may have started out
as a “joke” Meme coin, but its growing use as a medium of exchange has enabled
DOGE to continue being one of the largest cryptocurrencies by market
capitalization.

The Bottom Line

Regarding the long-term importance of
cryptocurrency utility, there are several major takeaways. First, for those
developing new cryptocurrencies, a focus from the start on utility may prove
more profitable in the long run than a shortsighted focus on maximizing the
coin/token’s hype potential.

For experienced and inexperienced
cryptocurrency investors alike, building wealth over the long haul may come
down to buying and holding cryptocurrencies with high underlying present and
likely future utility.

As for the cryptocurrency ecosystem as a
whole, increased knowledge/appreciation of the long-term merits of investing in
cryptocurrencies with high utility will bring with it a highly beneficial
outcome: the further cycling of permanent capital into the space.

Yes, Meme coins stand to keep bringing new
crypto investors into the fold. However, a greater focus on long-term
investment will likely keep them there. In turn, this will help the crypto market shake off its reputation
as a financial “wild west,” enabling it
to fully become a component of the mainstream financial markets.

This article was written by FL Contributors at www.forexlive.com.