In the wild world of crypto, where new tokens pop up faster than you can say "to the moon," it's easy to get overwhelmed. Recently, a conversation on X (formerly Twitter) caught my eye, highlighting a growing issue in the altcoin space: supply fatigue. This thread, sparked by @bit_hedge and amplified by investor @0xkyle__, cuts through the noise with a straightforward litmus test for tokens—including those fun, viral meme coins we all love to chase.

Let's break it down. Supply fatigue refers to the exhaustion buyers feel when the market is flooded with too many new altcoins. Think about it: exchanges like Binance are listing more and more perpetual contracts (perps, for short—these are derivatives that let you trade tokens without expiration). The chart below shows how the number of active Binance USDT perps has skyrocketed from near zero in 2020 to over 500 in 2025.

Not only is the total number climbing, but the rate of new listings is accelerating too. Check out this rolling count of new Binance USDT perps over six months—it's been hitting new highs, especially since early 2024.

This influx isn't matched by demand, leading to what @bit_hedge calls a "buyer's strike" on altcoins. Investors are hesitant because picking winners in a sea of options feels like a lottery. For example, early in the AI crypto hype, folks rallied around a handful like FET or RNDR. Now, with dozens competing, buying a basket for exposure seems pointless—your pick might not be the one that sticks.

To visualize this dynamic, @bit_hedge shared a prey-predator cycle graph, akin to how animal populations fluctuate in nature. In crypto terms, it might represent how token supply (predators) chases demand (prey), creating boom-bust cycles.

The result? Altcoin performance, as shown in this equal-weight perps index (tracking average price changes on a log scale), has been on a downward trend after peaks in 2021 and 2024.

Enter @0xkyle__'s simple yet brutal litmus test: Do you make money? And more importantly, Do you make money that justifies your FDV? FDV, or Fully Diluted Valuation, is basically what a token would be worth if all its supply were circulating—think market cap on steroids.

This test weeds out 90% of tokens right away. In the meme token realm, where projects often rely on hype, community vibes, or a clever roadmap instead of actual revenue, this is a wake-up call. Sure, meme coins like Dogecoin or Shiba Inu have made fortunes through virality, but most don't generate real income. They don't "make money" in the sense of sustainable revenue streams, like through fees, partnerships, or ecosystem utilities.

Why does this matter for meme insiders? Because in a market drowning in supply, only tokens that prove their worth through earnings will survive delistings and regain broad appeal. If a meme token's FDV is sky-high but it has zero revenue, it's likely just speculative fluff. On the flip side, memes evolving into revenue-generating machines—maybe via NFT sales, staking rewards, or merch—could justify their valuations and thrive.

Community reactions echo this sentiment. One reply noted it eliminates 99% of tokens, while another lamented how "roadmaps" substitute for real revenue, as if good intentions pay the bills. Even a quirky image of an astronaut staring at a blank canvas popped up, perhaps symbolizing the emptiness of hype without substance.

As we navigate this evolving landscape, remember: in crypto, especially with meme tokens, the real winners are those that deliver value beyond the meme. Apply this litmus test next time you're eyeing a new drop—it might save you from the fatigue.

For more insights on meme tokens and blockchain trends, stick around at Meme Insider. What's your take on this test? Drop a comment below!