The market is experiencing a strong growth period before the deadline for approving the Bitcoin Spot ETF. Many Altcoin have grown strongly from tens to hundreds of percent in just two weeks.
Not only many new projects have welcomed a strong wave of growth, but many old names that seem to be “outdated” are also continuing to grow.
So what are old coins and new coins? How do you identify them? What are the pros and cons of these coins?
Let’s learn more with Allinstation!
Definition
Old Coin
Old coins are cryptocurrencies that have been around for a longer period of time and have gone through the “pump & dump” cycles of the market. These platforms have proven their technological strength and have a loyal user base.
These coins often have a high circulating supply due to the majority of them having already gone through the token unlocking phase for MMs or investors. There is less risk of volatility as most initial investors tend to take profits in the previous uptrends.
Typically, these old projects have all been sold out by small holders, with only a few people still holding tokens due to their intrinsic value. With the direction of keeping prices or future plans, these platforms are also being gathered by the project team through Marketing, Reserve, DAO, etc.
In addition, the tokens of many reputable projects have also gone through a process of deflation.
Some typical tokens: $LINK, $SOL, $APT, $LTC, $NEO, $GAS, $TRX,…
New Coin
These can be projects that are listed on major CEXs for the first time or that are launching their tokens for investors for the first time.
These can be projects that are listed on major centralized exchanges (CEXs) for the first time or that are launching their tokens for investors for the first time.
Investors often tend to invest in newly launched tokens due to the appeal of the technologies that the project offers, as well as to take advantage of the initial fomo wave.
Some typical tokens: $TIA, $ARKM, $MAV, $MEME,…
Analysis Of Pros & Cons
Pros Of The Old Coin
- The project has proven its technology
Many blockchain platforms have experienced market fluctuations but have maintained their influence and technological value to the ecosystem.
Not only small retail investors but also traditional large businesses also simultaneously support these names.
Ethereum is one of the first-generation blockchains, but the value that this ecosystem brings to date is undeniable. Until now, there are still no blockchains strong enough to compete directly with Ethereum.
In addition, there are also a few other typical old coin projects that also have a great impact in terms of technology: Chainlink ($LINK), Ripple ($XRP),…
- Low selling pressure
When a project has proven its core technology, its token use case is certainly something that users always aim for. Instead of cashing out to take profits from GameFi projects or short-term Ponzi schemes, users tend to focus on staking, yield farming, or liquid staking to increase profits and benefit from future values.
- Less risk of a sharp crash due to sell-offs
Most old coin projects that have been around for 4-5 years have a high circulating supply of tokens because most of them have already unlocked tokens. When the circulating supply is high, it is difficult for the price to crash sharply due to sell-offs from holders.
Therefore, the risk of holding old coins is not too worrying.
- Low-inflation token
Typically, when a project is first launched, its token often experiences inflation. The reason for this is due to the policies of the project itself, such as a marketing strategy to attract users to the protocol. GameFi projects are platforms that take advantage of the “short-term” factor of tokens to attract the maximum amount of capital.
After that, through the user onboarding phase, projects need to ensure a sound economic picture in order to be sustainable in the long term.
A typical example is Ethereum. This blockchain has also experienced its first deflationary period since The Merge. The transition from the Proof-of-Work (PoW) consensus mechanism to Proof-of-Stake (PoS) has had a positive impact on the long-term value of $ETH. To date, over 17,428 $ETH have been burned to ensure inflation is controlled.
E$XRP also has a deflationary mechanism – the platform’s tokens are burned to pay for transactions. However, in 2017, Ripple, the company that manages XRP, locked up tens of billions of XRP to prevent a market crash. It regularly releases them into the market, thereby increasing the circulating supply.
Cons of Old Coins
If having a high circulating supply can help old coin projects avoid selling pressure that leads to a price crash, then the circulating supply also makes it more difficult for market makers to push the price of the project. If the price can be pushed up, it will require a large cost for MM to do so or undergo a major upgrade such as the case of CCIP from the Chainlink project.
- The technology may be outdated
Representative examples: Near Protocol, Polkadot.
Near is a prominent Layer 1 platform during the ‘Uptrend 2021’ with a peak TVL of $579M. However, currently, the blockchain’s TVL is around ~$146M according to DeFiLlama.
The projects in the platform’s ecosystem also do not have too many notable activities, showing the inefficiency of this Layer 1 compared to other projects such as Sui, Solana or Polygon.
In addition, Polkadot, a project that once “caused a storm” at the 2017 ICO and became famous in 2020-2021, must also be mentioned. With the goal of building a Parachain ecosystem to create a truly decentralized system that allows users to interact on the network. The most prominent of these is Moonbeam, the representative face of this old-generation blockchain.
However, with the decline in the number of users as well as no major updates, Polkadot has also become less attractive at the moment.
- Many tokens have gone through a profit-taking phase.
Due to being launched for a long time, most old Coin projects have been driven up in price and cashed out by Market Makers since the 2020-2021 bull run. After that point, the project’s tokens either went through several deep collapses with no bottom to be seen or were sold off to enter the next accumulation cycle.
However, since the early holders have already cashed out, the upward momentum of old-generation tokens is not too high.
Pros Of The New Coin
- FOMO Community
When a token is launched, the community often tends to FOMO at the initial time. This is a factor that is very easy to encounter in a project when holders want to take advantage of the initial wave to make a profit. In particular, there are many cases where it was launched and has been continuously boosted like the case of $ORDI.
- Many price-driving factors
Due to being a newly launched token, investors participating in Private Sales are still not satisfied with the listing price. Thanks to that, the project can look forward to growth prospects in the future. The most noticeable feature of these projects is that new coins will go through a short accumulation period of 2 weeks to 2 months before moving on to a strong uptrend.
Typical examples are projects from Binance Launchpool and Binance Launchpad such as Maverick Protocol ($MAV), CyberConnect ($CYBER) or SpaceID ($ID).
- Avoiding the limitations of previous projects.
In previous market cycles, many projects have faced difficulties or obstacles leading to losing market share to rivals with better technology platforms.
Being a pioneer in a segment in the crypto market can attract a large number of users to use the protocol, but this cannot avoid technological and operational errors. Many projects that come after also take advantage of this opportunity to upgrade operating quality and provide more “premium” types of services than their predecessors, thereby attracting the attention of the community.
- Prominent examples include Blur.io and Opensea
Cons Of The New Coin
- Prone to triggering FOMO
If you are a token that leads the narrative like the case of $BLUR, then you will surely understand the harm of FOMOing into tokens of those “leaders”.
Blur.io is a project in the NFT-fi segment, which was initially strongly FOMOed and soon overtook Opensea, a large NFT Marketplace at that time. While a few CEXs such as Bybit listed the Spot token pair immediately after its launch on February 14, 2023, Binance only listed the token on Futures, a derivative tool. This seems to be a price discovery activity by investors when there is no unit in the same segment to compare.
As a result, the price of $BLUR from the time it was listed on Binance Futures at around $0.7 fell to a low of $0.15 before recovering again.
- Inflation status
Projects often have a plan to unlock tokens in a linear cycle of about 5 to 10 years to ensure that the economic picture is maintained. If the economic stability is not ensured, inflation can occur in that protocol.
- Decrease in users post-Airdrop phase
Many projects like Arbitrum, after announcing an Airdrop for users, witnessed significant capital inflows into this Layer 2 ecosystem. However, upon token distribution, $ARB faced not only the pressure of heavy sell-offs from Airdrop recipients but also experienced withdrawal phases as the Airdrop concluded.
Summary
Just now, Allinstation has provided you with information on the definition of what is a new coin and an old coin, along with their advantages and disadvantages.
Please note that the content of the article is for informational purposes only!
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Bitcoin | Inflation Deflation Deflation Inflation Cryptocurrencies
* We hope this information will help you in your investment process, but this is not investment advice. Every investment carries risk, especially in this industry, so DYOR before making a decision.
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