In the crypto market, each bull cycle presents various challenges and opportunities. The 2024 bull cycle is shaping up to be a distinct departure from its predecessors, notably the 2017 and 2021 cycles.

This is because, in previous cycles, liquidity was concentrated in a handful of altcoins, simplifying investment choices for retail traders. However, the crypto market has evolved dramatically, with liquidity now spread across a rising number of altcoins.

Liquidity Fragmentation Due to Meme Coins

The crypto market’s expansion has been particularly marked by the proliferation of altcoins and meme coins, facilitated by platforms like Pump.fun. Since its inception in January 2024, the platform has been instrumental in the creation of over two million meme coins, amassing more than $138 million in fees.

Read more: 7 Hot Meme Coins and Altcoins that are Trending in 2024

The surge in such tokens has led to what Alex Odagiu, Investment Director at Binance Labs, refers to as “liquidity fragmentation.” In an interview with BeInCrypto, Odagiu highlighted the dual-edged nature of this trend.

“The surge of meme coins has undoubtedly created noise, but we see it as part of the natural evolution of the Web3 space. While it may cause short-term liquidity fragmentation, over time, the market will likely consolidate around projects with true value propositions,” he explained.

Despite their speculative nature, meme coins have played a pivotal role in attracting new users and fostering community engagement. Furthermore, Odagiu believes that as the market matures, investor focus will shift towards utility-driven projects that offer sustainable value and practical use cases.

Altcoin Investment Strategies

Since September 6, the price of Bitcoin has surged by nearly 25%. It is currently trading above $65,000, signaling a potential return of the bull market.

Yet, the overwhelming number of tokens has diluted the attention and hype that previously benefitted certain projects. Addressing this, Odagiu outlined strategies for long-term investors to navigate the crowded market effectively.

“In a market flooded with new tokens, it’s crucial for investors to focus on fundamentals rather than chasing hype. Long-term investors should take a disciplined approach when differentiating between short-term trends and long-term value. Projects with real-world use cases, strong teams, solid roadmaps, and sustainable business models are more likely to survive multiple market cycles,” Odagiu stressed.

Read more: 11 Cryptos To Add To Your Portfolio Before Altcoin Season

He also revealed that despite the apparent saturation, substantial potential remains within specific sectors such as decentralized finance (DeFi), infrastructure, real-world asset tokenization, and applications that aim to achieve mass adoption.

“Projects that prioritize strong technological innovation, demonstrate meaningful product-market fit, and have sustainable revenue models will continue to attract interest despite the crowded market,” Odagiu stated.

Odagiu advised a balanced approach to building a strong crypto portfolio. He believes that a solid crypto portfolio should be diversified across different asset types and sectors.

“Bitcoin remains a foundational asset due to its stability and market dominance, but altcoins that drive real technological innovation and have strong community support can present substantial growth opportunities. Diversification across sectors—such as DeFi, infrastructure, and gaming—can also help mitigate risk while capturing opportunities in emerging trends,” he elaborated.

Bitcoin Continues to Remain Institution’s Favorite Crypto

Amid Bitcoin’s dominant market position, institutional focus remains largely trained on it, often at the expense of other promising altcoins. Year-to-date, Bitcoin’s price has increased by over 55%, while the total crypto market cap, excluding Bitcoin, has risen by just 23%.

Read more: Who Owns the Most Bitcoin in 2024?

Moreover, according to crypto analyst Murad Mahmudov, only 42 tokens among the top 300 on CoinMarketCap have outperformed Bitcoin so far in 2024. Odagiu explains why Bitcoin remained a dominant crypto in the 2024 bull cycle.

“Bitcoin’s dominant position in the market is deeply rooted in its status as the first cryptocurrency, which institutional investors often view as a simpler, more familiar, and less risky asset compared to Ethereum and altcoins. Bitcoin’s narrative as a store of value, often referred to as ‘digital gold,’ aligns with traditional investment strategies, making it a natural entry point for institutions new to the crypto space,” Odagiu explained.

However, as institutional investors gain familiarity with the crypto ecosystem, Odagiu anticipates increased interest in Ethereum (ETH) and other altcoins.

“With that said, we (Binance Labs) expect interest in Ethereum and other altcoins to grow as institutions continue to gain confidence in the broader Web3 ecosystem and see the utility beyond Bitcoin,” he added.

The current market cycle also highlights the rise of leveraged trading among crypto traders. Data from Coinglass indicates that open interest stands at $35.93 billion, near its four-year high.

Open interest refers to the total number of outstanding derivative contracts, like futures and options, that have not been settled. It’s used as an indicator to gauge market sentiment.

Read more: How To Trade Crypto on Binance Futures: Everything You Need To Know

However, Odagiu cautioned against the lure of high-risk leverage. He stated that leverage can amplify both gains and losses, so it’s important for investors to use it responsibly, especially in volatile markets.

“Ultimately, long-term success in crypto comes from sound investment principles rather than chasing short-term gains with high-risk leverage,” he concluded.

Indeed, the crypto market demands that investors adapt by prioritizing sustainable investment strategies, enabling them to navigate the challenges of the 2024 bull cycle with informed confidence.