Crypto Investment Trends Indicate Hedge Funds’ Bet on Memecoins, Bitcoin’s Layer-2, and UEFA Fan Tokens

• The market attempts to recalibrate and adapt to the recent shifts in investment patterns and trust levels.
• With the rising influence of memecoins, this new interest could catalyze significant market shifts.
• As the European Football Championship draws near, fan tokens’ volatility and trading volumes are expected to surge.

Overall, this week has seen a broad cryptocurrency market decline. The downward market pressure is driven by uncertainty in Bitcoin (BTC) price, which is yet to find a new equilibrium level after the fourth halving.

Increasing trading volumes in USDT and other stablecoin pools, as well as the net cash outflow from U.S. Bitcoin spot exchange-traded funds (ETFs) for the third consecutive week, indicate a flight to safety.

This cautious-to-bearish sentiment was reinforced by the first day of spot ETF trade in BTC and ETH in Hong Kong: the total closing trading volume constituted only $12.4 million.

While analysts point out that the relative equity market size in Hong Kong is much smaller than that in America, the adjusted data was still significantly below the market expectations. An increasing number of short future orders show that the next likely support level will fluctuate around $60,000.

Telegram and TON: riding the crest of ecosystem attention

Telegram’s ecosystem has attracted significant attention after its founder, Pavel Durov, appeared on Tucker Carlson’s podcast on April 16, breaking the radio silence for the first time in seven years.

Durov and the Telegram team have been working on The Open Network (TON, native token Toncoin) for several years without significant traction. In recent months, however, the TON ecosystem has developed rapidly, with a large number of ecosystem and memecoin tokens entering the market from the TON’s Launchpad.

The wealth effects of high-volume Launchpad tokens ranged from 10x to 100x. If successfully replicated in future tokens, the network can become a powerful competitor for the memecoin trades of Solana and Base.

The TON’s engineering team is also reaping the benefits of interconnectedness with the Telegram messenger. On May 2, Pantera Capital invested  in the TON, citing the blockchain’s capacity to introduce crypto to the masses as its main competitive advantage.

It isn’t just the shared user base that drives the synergies between the messenger and its Layer 1. Just days ago, Pavel Durov made another appearance at TOKEN2049 Dubai, announcing the integration of USDT stablecoin into the TON chain and the availability of peer-to-peer USDT payments via the official Telegram bot.

With the growing downloads of Telegram, users from English-speaking countries are also becoming increasingly interested in TON—the network is on the rise in the Google search index.

Memecoins: caught in the hedge funds spotlight

Memecoins have always been a manifestation of the cryptocurrency market’s attention economy. Although last week’s volatility has somewhat eroded the market capitalization of top memecoins by trading volume, memecoins significantly outperformed other altcoins during the preceding bull run.

Due to the ease of issuance and extremely low initial minting costs, traders primarily choose Solana and Base for the top memecoins by trading volume: PEPE, BONK, and FLOKI. Recently, Dogwifhat (WIF) and MANEKI (not to be confused with NEKO) have also joined their ranks.

The continuous growth of TVL in the Solana ecosystem and the performance of leading projects will directly affect the entire sector. Promotions by top projects in the Solana ecosystem, such as Jupiter and Backpack, can also lead to high wealth effects for certain memecoins, like the increase in WEN token price during the early stages of the WEN trading promotion on Backpack.

Another driver for the memecoins’ resurging popularity is the reported attention from institutional investors through hedge fund investment vehicles. Growing past the crypto-native Pantera Capital, which claimed that memecoins hold “gigantic trading opportunities,” memecoins volatility has also attracted more conventional Wall Street institutions.

So far, they seem to be more of a diversification opportunity than a significant commitment. However, following the sector developments during the current bearish trends may unveil more information regarding the future hedge fund intentions and the impact on memecoins price.

Fan tokens: the impact of the European Football Championship

With the European Football Championship approaching in June 2024, the football fan token sector began to heat up.

Despite the market downturn, this sector has shown resilience, with the leading tokens experiencing approximately a 10% drop, over the past seven days, which is less than the typical 7-day decline seen in altcoins.

While fan tokens are exploring lesser-known blockchains like Chiliz and generally tend to have lower market caps in the range of $10 to $30 million, the investors’ interest is likely to increase as the Championship comes closer.

The trading activity has also picked up in fan tokens that aren’t directly related to the European Championship, such as tokens from Santos FC, a Brazilian football team, and OG, a cybersport organization.

Bitcoin Layer-2 and restaking: new launches

Increased market attention from the Bitcoin halving still affects the ecosystem products. Recently, the focus has shifted to BTC Layer-2 solutions and staking projects, as these areas tend to bear the largest share in BTC wealth creation in 2024. Among the trending tokens are CKB and BounceBit (BB).

CKB is a recently popular RGB++ protocol developed as part of the BTC ecosystem’s asset issuance protocols. A prototype project for the UTXO Stack, CKB remains in active development.

BounceBit is a BTC staking chain financed by Binance Lab. Several days earlier, BounceBit’s launch was announced on Binance Megadrop, with participants sharing 8% of the project’s native tokens.

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