Crypto Assets Market Trend Analysis and Outlook

This weekend, I have more time to think about market trends, and I would like to share some insights.

The overall trend of the Crypto Assets market may not become clear until after September. Considering macroeconomic resistance, summer liquidity constraints, and quarter-end position adjustments, the real market dynamics may only manifest after the August holidays when market participants return. Recent market activities show that the rise of most small coins is mainly due to short squeezes. Traders, influenced by previous rebounds, chase momentum but lack support from long-term holders. As expected, most tokens that surged sharply subsequently experienced equally severe declines.

Ethereum unexpectedly rebounded, with sectors that had previously suffered heavily, such as AI and certain coins, leading this wave of rebound. In contrast, tokens with practical use, strong fundamentals, or buyback mechanisms demonstrated greater resilience, being not only more stable during the downturn but also recovering more quickly. Syrup, Hype, and AAVE are good examples. While SPX belongs to the category of coins, its structure is entirely different. From these phenomena, we can draw the following insights:

1. The demand for Bitcoin is real and persistent.

Traditional capital is gradually entering the market through regulated channels such as ETFs. The nature of the capital supporting BTC is fundamentally different from previous periods, which is why large-scale BTC liquidations are unlikely to occur unless triggered by significant macro events.

2. The internal differentiation of small coins is intensifying.

In the long run, funds will flow back to small coins, but it will not be widespread. Only tokens that have clear use cases and practical application scenarios are likely to attract these funds. This is why I believe Ethereum will outperform certain public chains. The clarity of regulations, the continuously growing usage of decentralized finance, the deflationary structure, and the demand for staking together create a strong positive cycle. Additionally, as ETH has long failed to meet expectations, there are still marginal buyers waiting in the over-the-counter market.

3. Tokens supported by venture capital have structural risks.

Token unlocks will continue to exert pressure on price trends. In the case of insufficient liquidity, the ongoing selling pressure from validators and early investors limits the upside potential. This is also why I believe that highly valued tokens listed on centralized exchanges have poor future prospects. Tokens in certain ecosystems, in particular, face ongoing selling pressure due to their validator reward structures.

4. Structural Advantages of Popular Coins

These types of coins usually have structural advantages: risk-free investment unlocks, fair distribution, completely based on attention. This is a purely speculative mechanism, similar to how it worked in early cycles.

However, I believe this phase is coming to an end. The token generation events of certain platforms and the launch of specific coins mark the peak of interest in such coins. After this, people's interest in these coins begins to wane. Even during the rebound in April, the performance of certain public chains was not as good as ETH—if everyone has already held these tokens, when the hype fades, who will become the marginal buyer?

Some popular coins may still perform well, especially those that have gained popularity through well-known figures on social media outside of Crypto Assets, such as short video platforms or image-based social networks. These may still bring about asymmetric wealth effects. However, the era of "cute animal coins" as alpha has undoubtedly ended. Only those coins with strong narratives and broad market recognition—things that people can collectively identify with—hold true speculative value.

5. Future Market Trends

If popular coins are no longer the opportunity, then where is the next windfall?

My view is: the combination of artificial intelligence and Crypto Assets.

If you have been following my updates, you would know that most of my operations in this cycle—after some public chains and venture capital-backed tokens early on—have focused on popular coins and AI.

Just like the hype around decentralized finance, most early AI projects failed after the speculation. However, truly practical projects are quietly building during this bear market. We have already seen some of these projects emerge on the blockchain.

As the profits from popular coins dwindle, attention will naturally turn to new narratives. AI, with its clear practicality, is likely to become the next focal point.

Many AI projects combined with Crypto Assets adopt a fair distribution model, echoing the narrative of certain successful projects.

This is why I research and strategically position myself in this field during calm market periods. There is no need to rush to build a full position now, but I believe that if the market experiences a strong rally again, this field will hold the greatest asymmetric opportunities.