Alon Cohen, co-founder of Pump.fun, recently commented on the state of altcoins, suggesting that many tech-based altcoins serve the same purpose as meme coins. He pointed out that both tend to have low circulation, high fully diluted valuations (FDV), and they are often backed by venture capitalists who treat retail investors as "exit liquidity." Cohen’s remarks came in response to a tweet claiming that the meme coin ecosystem on Pump.fun had disrupted the altcoin price cycle. Cohen clarified that Pump.fun had been operating well before the altcoin market downturn in April 2024.
According to Cohen, the crash in altcoin prices during that time occurred because retail investors had been burned in the previous cycle. “Retail was burned too hard last cycle to just come back to invest in the 'future of finance,'” he wrote on X. He explained that most retail traders are more interested in personal fulfillment and making small profits while having fun with trading, rather than investing in long-term technology-based projects. This view highlights the growing tension between investors focused on the technical utility of altcoins and those driven purely by speculation.
The altcoin market has faced significant challenges in recent months. In March 2024, the Total3 indicator , which tracks the total market capitalization of altcoins excluding Bitcoin and Ethereum, reached a peak of about $788 billion. However, prices collapsed by April 2024 and didn’t recover until November 2024, when the market rallied after Donald Trump’s re-election as U.S. president. Despite the oversaturation of the altcoin market, some altcoins backed by institutional investors have fared better, with institutional purchases helping support prices. Yat Siu, co-founder of Animoca Brands, explained that institutions buying assets on the open market, rather than in private sales, has helped stabilize these altcoins.
Cohen’s view on the oversaturation of the altcoin market is shared by others who believe that there are simply too many altcoins competing for attention and investment. Many of these projects lack a clear use case, which makes it difficult for them to stand out in a crowded market. This, combined with the rise of meme coins, has contributed to the volatility in altcoin prices. Despite this, the increasing role of institutional investors in the crypto space has brought some stability, particularly for projects with strong backing.
As the altcoin market continues to evolve, the debate between those focused on technological innovation and those speculating on short-term profits remains at the forefront of the conversation. The future of altcoins may depend on their ability to prove real-world value beyond speculation.
