Crypto’s at a ‘crossroads’ with fundamentals: Blockworks Research

Fundamentals are starting to play a big part in crypto, so here are the metrics to watch

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Blockworks’ head of research, Ryan Connor, thinks that we’re at a “crossroads” with fundamentals in crypto. 

“It’s because the marginal investor coming into crypto as a result of legalizing crypto in the United States is going to be a traditional financial professional, not a degen,” he told me.

It can be boiled down to either the amount of market participants or those who control the capital. Both of these lead to the same outcome: Folks who want to see fundamental value in tokens.

“A lot of people in crypto still believe the primary driver of token price is ‘vibes.’ There’s ample evidence over the past, let’s say 18 months, that that’s increasingly not true,” he explained. That doesn’t mean that vibe trading isn’t a thing — and probably will still linger for a while yet — but those will remain in smaller pockets of the market, like memecoins. 

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When you have scenarios of a “silly” token soaring and then crashing, it opens the door for fundamentals to play a bigger part as crypto matures. 

“Most token projects are early-stage, and because there’s some opacity around governance models, we tend to just look at the top line first. As a general rule in TradFi, the earlier stage the project, the more you care about the top-line fundamentals as opposed to the bottom-line fundamentals. If you’re a high-growth tech company, you’re looking at sales growth, you’re looking at the [average revenue per user], and rate of change on those metrics,” Connor said.

Other fundamentals to look at, depending on the project, would be earnings, cash flows and dividend yields. For the most part, the TradFi metrics carried over will reflect what we see in high-growth tech firms. 

Right now, though, revenue is “probably the most important thing today,” and then you can pick and choose other metrics to apply depending on the token. 

One thing’s for sure: There’ll always be a place for vibes in crypto, but adding in metrics to monitor the success of a project only levels crypto up.


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