Crypto Investors Shift to Revenue, Usage in Picking Winning Tokens

Crypto investors are increasingly selecting tokens based on fundamentals such as protocol revenue, real usage and a token’s value-capture structure, rather than simply following market-cap rankings, according to an analysis.

CoinDesk reported on Aug. 16 that Bitwise Chief Executive Officer Hunter Horsley said the crypto market is moving away from valuation methods centered on the so-called CoinMarketCap leaderboard.

In the past, investors often valued new Layer 1 blockchains by comparing them with the market capitalizations of top projects and applying a discount. More recently, the focus has shifted to a project’s addressable market, actual user adoption and how much of the economic value created by a protocol accrues to token holders.

Horsley cited Hyperliquid’s HYPE as a leading example. Investors have begun valuing HYPE on its own business metrics, including derivatives trading volume and revenue structure, rather than treating Hyperliquid as a scaled-down version of another blockchain.

Short-term price moves, however, are still driven largely by supply and demand in derivatives markets, including perpetual futures. Jasper De Maere, an over-the-counter trader at Wintermute, said fundamentals help establish the floor and narrow the investable universe, while capital flows determine price. With perpetual futures trading volume in major cryptocurrencies still exceeding spot volume, funding rates, positioning and liquidations have a more direct effect on near-term price action.

Over longer investment horizons, fundamentals matter more. In sectors including decentralized finance, perpetual futures exchanges and decentralized physical infrastructure networks, or DePIN, revenue and usage are increasingly shaping investment decisions.

Institutional trading is reinforcing that shift. Wintermute said institutional counterparties accounted for about 72% of OTC spot trading in the first half of this year, up sharply from about 59% a year earlier. Institutional money was concentrated in Bitcoin and a handful of revenue-generating tokens, while tokenized real-world assets, or RWA, emerged as a new investment theme.

The metrics used to evaluate projects are also becoming more sophisticated. Brendan Ma, head of investment strategy at the Arbitrum Foundation, said on-chain indicators that can be verified and involve real economic costs tend to be more reliable.

Examples include fee revenue, the number of users who actually pay fees, and the amount of stablecoins and tokenized assets that remain on a network. By contrast, active addresses and total value locked, or TVL, can be inflated through incentives or bots, limiting their usefulness as standalone gauges.

The crypto market may also see a sharper divide based on fundamentals. Zach Pandl, head of research at Grayscale, said Bitcoin is likely to retain its role as a macro asset tied to demand for alternatives to fiat currencies, while other digital assets face stricter scrutiny of their own economics and revenue models.

Pandl said a small group of tokens with strong fundamentals will play a central role in the next phase of the digital-asset market. Projects with weak fundamentals will fall behind.