Author: The DeFi Investor
Compiled by: Tim, PANews
The crypto bull market atmosphere is back, at least for now.
The question is: which altcoins will yield excess returns?
During the massive bull market of 2021, almost any altcoin was skyrocketing. But the situation has changed since then.
Currently, millions of new altcoins are available on the market, and to achieve excess returns, careful selection of investment targets is necessary.
In this article, I would like to share my list of crypto projects and the key points to consider when screening projects.
Let's get started
1. Narrative heat and user mindshare
Think about the best-performing tokens in the past 12 months.
The first ones that come to mind are HYPE, VIRTUAL, and memecoins.
Do they all have strong fundamentals? Platforms like HYPE do, but most of the top performers on the following list certainly do not.
Source: Coingecko’s Top Crypto Gainers in 2024 article
They all have one thing in common: they have a very high user mindshare on social media and always have a group of loyal fans tirelessly promoting them on platform X.
In addition, the success of most top performers is also related to strong narratives.
Virtual has been continuously surging during the rise of the AI concept.
Meme coins surged from Q4 2024 to early Q1 2025 due to the popularity of internet memes.
My suggestion is to look for currently popular narratives and search for tokens that have a highly active community on Twitter.
2. Growth metrics
In a bull market, market sentiment (unfortunately) is far more important than fundamentals, but the good news is: some projects can achieve high visibility while also realizing a strong product-market fit.
If a project can have both of these points, it could be a great investment, especially when its key metrics have shown explosive growth recently.
Let me give you an example: the stablecoin protocol Ethena has seen its TVL surge by 50% in the past 30 days. Meanwhile, there are many users and analysts on Twitter paying attention to and analyzing the project.
The result? Ethena's token ENA has increased by 154% in the past month.
By betting on projects that are in their early stages and have continuously growing data indicators (such as TVL, revenue, and transaction fees), while also having a certain level of community heat, you can make a big profit.
I often use DeFiLlama to discover the fastest-growing projects.
3. Reasonable token economics
If you plan to buy the token and hold it for just a few days, the significance of token economics is minimal; but if it’s a medium to long-term investment plan, the situation is completely different.
For example, the TIA token has dropped over 90% in the past 17 months due to massive sell-offs by early investors after each token unlock.
That's why it's important to understand token economics before buying a token.
Here are some key points I focus on when researching a token:
Token unlock schedule
Tokenomist can check the token economics and unlock status of many popular tokens.
Generally speaking, I hope the circulating supply is at least 30%, and the annual token release amount (i.e., inflation rate) does not exceed 20%-35%.
Additionally, if there is a large-scale token unlock coming up (for example, an unlock amount exceeding 20% of the current circulating supply), I would prefer not to buy the token.
Token utility
I always ask myself two questions:
Will the token I want to buy benefit from the success of the protocol? Why would someone be willing to buy it at a higher price than I would?
Dividend mechanisms or token buyback schemes are the best solutions I can think of.
Indeed, while strong token utility is a significant advantage, it is not a necessary condition. I have witnessed many tokens with almost no utility still perform exceptionally well.
4. Community first
Currently, projects that prioritize community are more important than ever.
More and more people are reluctant to invest in vague and boring projects; they prefer to support teams that care about the community.
This is also one of the reasons I believe tokens like HYPE and PENGU have performed so well recently.
Some features of crypto projects that prioritize community:
A massive airdrop has been conducted.
Their team always makes light promises but delivers heavily.
Team-led marketing: Their team is very active on platform X and continues to interact with the community.
A large portion of the token supply is allocated to the community.
These are some of the main factors I consider when selecting tokens.
Another important factor that may drive token prices up is the imminent appearance of significant catalysts, which have not yet been factored into the current price.
Possible positive developments include: upcoming protocol upgrades, improvements in token economic models, or the release of new products that can significantly increase project revenue.
No matter how good the asset is, buying it at a high price is still a bad investment.
Wait for the right opportunity to act, and avoid hasty FOMO chasing.