Crypto Market Insights: September Outlook and Future Trends Analysis

This weekend's reflection has given me some new insights into the crypto market. I believe that before September, the overall direction of the market may be difficult to determine. Considering macroeconomic resistance, summer liquidity constraints, and quarterly position adjustments, the real market dynamics may not become apparent until after the August holidays.

Recent market activity shows that the rise of most small cryptocurrencies is primarily driven by short squeezes. Traders are influenced by the reflex from previous rebounds to chase the rally, but there is a lack of support from long-term holders. Many have already been frustrated during the previous market turmoil. Unsurprisingly, most tokens that surged sharply subsequently experienced similarly severe declines.

The rebound of Ethereum was unexpected, and the sectors that were previously hit hardest, such as AI-related tokens, have instead led this wave of rebound. In contrast, tokens with practical use, strong fundamentals, or buyback mechanisms have shown greater resilience, performing more steadily during the downturn and recovering more quickly. From this, we can draw the following insights:

1. Bitcoin demand is solid and enduring.

Traditional capital is gradually entering the market through regulated channels such as ETFs. The nature of capital supporting BTC is markedly different from previous years, which reduces the likelihood of large-scale BTC liquidation unless impacted by significant macro events.

2. The differentiation of small cryptocurrencies is intensifying.

Funds will ultimately flow back to small-cap coins, but will not cover everything. Only tokens with clear use cases and practical applications are likely to attract these funds. This is also why Ethereum may outperform other public chains. The clarity of regulations, the growth of DeFi usage, the deflationary structure, and the demand for staking together create a strong positive cycle. In addition, since ETH has not met expectations for a long time, there are still potential buyers waiting in the over-the-counter market for the right opportunity.

3. Some tokens face structural risks

Token unlocks will continue to put pressure on prices. In the case of insufficient liquidity, the ongoing sell-off by validators and early investors limits the upside potential. This makes the outlook for certain overvalued tokens bleak. Tokens from certain ecosystems are particularly facing ongoing sell-off pressure due to their validator reward structure.

4. The Structural Advantages and Limitations of Meme Coins

Meme coins have structural advantages: no venture capital unlocks, fair distribution, completely based on attention. This pure hype mechanism does indeed work in the early cycles.

However, this phase may be nearing its end. Recent significant events mark the peak of interest in meme coins, after which interest began to wane. Even during the rebound in April, certain public chains performed worse than Ethereum, indicating that when the momentum of meme coins weakens, marginal buyers may decrease.

Some meme coins may still perform well, especially those projects promoted by influential figures on mainstream social media platforms. However, the era of relying solely on cute pet images as investment targets may have come to an end. Only those projects with strong narratives and broad market recognition possess true speculative value.

5. Emerging Opportunities: The Integration of AI and Encryption

As the meme coin craze fades, market attention may shift to new narratives. I believe the combination of artificial intelligence and encryption will become the next important direction.

• Similar to the DeFi craze, many early AI projects failed after the hype, but projects truly based on practicality are quietly building during the bear market. Some projects have begun to stand out on-chain.

• As the profits from meme coins dwindle, investors' attention will naturally shift to new narratives. AI, with its clear practicality, is well-suited to become the next focal point.

• Many AI x Crypto projects adopt fair distribution models, responding to the recent market pursuit of fairness.

This is why I have recently spent time researching and positioning myself in this field in advance. Although there is no need to rush to build a position now, I believe that if the market rises strongly again, this field will contain the greatest asymmetrical opportunities.