How to Identify the New Market Trend?
Trend-based investments are a popular game plan for many VCs (especially small ones), and for a myriad of crypto investors. The large players normally look for something long-term and for something that will not be tomorrow’s trend but for the next decade's trend.
Generally, we don’t think it makes sense to expect any short-term return in venture investments. It’s the same if you plant a small plant and will be expecting it to grow 100 feet tall the next day. It takes time, a lot of patience, and professionalism to build wealth in the VC field.
But let’s get back to the actual strategy - how to identify the trend before all of your buddies and make some money while they’re watching motivational videos and hustling for a new Bugatti by building an SMMA agency in 3 hours. Anyway, let’s go.
First, before you start generating returns, you have to understand that all the trends were created intentionally.
There’s always a main beneficiary to them. Yes, one more conspiracy theory, so put your foil hat on and let’s get to the point.
Generally, there are two main approaches that you could combine to be more prepared for the new trend:
1. Before the trend becomes a trend, it has a preparation phase. The social volume is growing, mainstream media and influencers start talking about it, moguls start to mention it, etc.
At this stage, we could identify several topics which are gaining popularity and attracting way more attention than usual. The best way is to consume as much content as possible, watch, read, learn, listen, etc to make sure you are in context.
This way, many people have identified the DeFi trend in 2020, the NFT trend in 2021, and more. Also, use Lunar Crush which is an amazing tool to understand how the hype around something is going. You could compare social media mentions, media mentions, etc.
2. Keep watching who is pumping what. If you know that a certain large market player owns a huge chunk of some of the projects (for example heavily invested in AI), and now they are very vocal and active about how AI will save all of us from ourselves, then more than likely there will be a pump in there.
A good example is the Binance listing strategy. Right before every significant market trend, they make investments into the projects from there and then list them. We have seen that with DeFi, NFTs, and Metaverses. So, we believe you got the point.
Of course, we have seen dozens of failed trends that were trying to emerge but failed. That’s why you need to be very reasonable and careful with that strategy. Don’t buy on the hype only. Even if you buy in the trend, make sure you buy the player who has real value, users, revenue, or at least a good chance to get it.
That’s why we at Xillion are building a diversified portfolio of projects. For example, we have an RWA project AllSet, AI-fund Hedge, SocialFi platform Amplify, and EdTech Learn2Earn.
All XIL holders who bought XIL tokens automatically get tokens from all of those projects by simply holding 1 token - XIL. That’s diversification, but you ideally need to have 10-20 players in your portfolio to diversify your chances and make a reasonable profit at the end of the day.
Have a great investment!
Xillion.one - a Web3 Tokenized Incubator that provides every XIL token holder with free tokens of every project it incubates.
We build projects from scratch and create synergy between them. We combine the VC and PE approach to building companies by growing their value and managing investor capital. We simultaneously operate as investors and founders to amplify the results.