Crypto Assets Market Outlook and Trend Analysis

This weekend I have more time to think, and I would like to share some thoughts on the market.

I believe that the overall trend of the Crypto Assets market will become clear only after September. Considering the macroeconomic resistance, summer liquidity constraints, and quarterly position adjustments, the real market dynamics will only become evident after the holiday in August when market participants return. From recent market activities, most alternative coins have risen primarily due to short squeezes. Traders, influenced by previous rebounds, are chasing the rise but lack support from long-term holders. Most coins also experience severe declines after a sharp increase.

Ethereum rebounded unexpectedly, while AI-related tokens and other previously struggling sectors led the rebound. In contrast, tokens with actual utility, strong fundamentals, or buyback mechanisms performed more steadily, not only experiencing smaller declines but also recovering faster. Several insights can be summarized from this.

1. The demand for Bitcoin is real and lasting

Traditional capital is gradually entering through regulated channels such as ETFs. The nature of capital supporting Bitcoin is different from previous times, which makes large-scale liquidation unlikely to occur unless triggered by macro events.

2. The internal differentiation of alternative coins intensifies

Funds will ultimately flow to alternative coins, but will not cover everything. Only tokens with clear purposes and practical applications are likely to attract capital. This is also why I believe Ethereum will outperform other public chains. Regulatory clarity, the growth of DeFi usage, deflationary structure, and staking demand create a strong positive feedback loop. In addition, there are still potential buyers waiting in the over-the-counter market due to long-term unmet expectations.

3. Venture Capital Supported Tokens Exist Structural Risks

Token unlocking will continue to put pressure on prices. When liquidity is insufficient, the ongoing selling pressure from validators and early investors limits the upside potential. Therefore, high-valued tokens listed on centralized exchanges have a bleak future outlook. Tokens from certain ecosystems, in particular, face persistent selling pressure due to their unique validator reward structures.

4. Meme coins have structural advantages but decreasing popularity

Meme coins have structural advantages, without venture capital unlocks, fairly issued, and completely based on attention. This pure hype mechanism plays a role in the early cycle.

But I believe this phase is coming to an end. Recent token generation events mark the peak of interest in meme coins. After that, interest in meme coins began to wane. Even during the rebound in April, some public chains did not perform as well as Ethereum—if everyone already holds them, when the momentum for meme coins weakens, who will be the marginal buyer?

Some meme coins may still perform well, especially those that have gone viral on social platforms outside the crypto circle. These may still bring asymmetric returns. However, the era of relying solely on the cute imagery of meme coins as alpha has ended. Only coins with a strong narrative and broad market recognition possess true speculative value.

5. Future Market Trends

If meme coins are no longer the main opportunity, then what is the next hotspot?

My view is: the combination of AI and encryption technology.

Just like the early DeFi craze, most early AI projects failed after the hype. However, projects that are truly based on practicality are quietly building during the bear market. We have seen some projects sprouting on-chain.

As the profits from meme coins dry up, investors' attention naturally shifts to new narratives. AI, with its clear practicality, is likely to become the next focus.

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

This is why I have recently spent time researching and positioning myself in this field. While there is no need to rush into building a position right now, I believe that if the market experiences a strong upward trend again, this field will hold the greatest asymmetric opportunities.