Crypto Investors Turn to Revenue, Usage to Separate Strong Tokens From Weak Ones

Forecast Trend Report by Period

Crypto investors are increasingly selecting tokens based on fundamentals such as protocol revenue, actual usage and how much value accrues to holders, instead of relying primarily on market-cap rankings, CoinDesk reported.

Bitwise Chief Executive Officer Hunter Horsley told CoinDesk on August 16 that the crypto market is moving away from valuation methods centered on what he called the "CoinMarketCap leaderboard."

In the past, investors often valued new Layer-1 blockchains by comparing them with larger projects by market capitalization and applying a discount. More recently, they have focused on a project's addressable market, actual user adoption and how much of the economic value generated by a protocol flows back to token holders.

Horsley cited Hyperliquid's HYPE token as a leading example. Rather than treating Hyperliquid as a smaller version of another blockchain, investors have started valuing HYPE on its own business metrics, including derivatives trading volume and revenue structure.

Short-term prices, however, are still driven largely by supply and demand in derivatives markets such as perpetual futures. Jasper De Maere, an OTC trader at Wintermute, said fundamentals determine the floor and the investment universe, while capital flows determine price. Because perpetual futures volume in major cryptocurrencies still exceeds spot trading volume, funding rates, positioning and liquidations have a more direct effect on short-term price moves.