Crypto Assets Market Outlook and Trend Analysis

With the weekend approaching, I have more time to think about market trends. I believe the overall trend of the crypto assets market will become clearer only after September. Considering factors such as macroeconomic resistance, summer liquidity constraints, and quarterly position adjustments, the real market dynamics may only emerge when market participants return after the August holidays.

Recent market activity indicates that the surge in most small Crypto Assets is primarily driven by short squeezes. Traders, influenced by the reflex of previous rebounds, are chasing short-term momentum, but lack support from long-term holders. Many investors have suffered losses during the previous market turmoil. As expected, most rapidly rising tokens subsequently experienced similarly drastic declines.

Ethereum has experienced an unexpected rebound, with sectors that were previously hit hardest, such as AI-related tokens, leading this rebound. On the other hand, tokens with actual utility, strong fundamentals, or buyback mechanisms have shown resilience, performing more steadily during declines and recovering more quickly. Syrup, Hype, and AAVE are great examples. Although SPX is considered a more speculative token, its structure is unique. 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 ETFs and other regulated channels. The nature of capital supporting Bitcoin is completely different from previous cycles, making large-scale Bitcoin liquidations unlikely to occur unless triggered by significant macro events.

2. Internal differentiation within small Crypto Assets intensifies

Ultimately, funds will flow back to small Crypto Assets, but it will not be widespread. Only tokens with clear use cases and practical application scenarios are likely to attract these funds. This is why I believe Ethereum will perform better than other competitors. Regulatory clarity, the increasing usage of decentralized finance, a deflationary structure, and staking demand together create a strong virtuous cycle. Furthermore, since Ethereum has long failed to meet expectations, there are still potential buyers waiting on the sidelines for the right opportunity.

3. Tokens supported by venture capital carry structural risks.

Token unlocks will continue to exert pressure on price trends. In the case of insufficient liquidity, ongoing sell-offs from validators and early investors have limited the upward potential. This is why I believe that tokens with overvaluations listed on mainstream trading platforms are not ideal choices for the future. Tokens from certain ecosystems, in particular, face persistent selling pressure due to their validator reward structures that lead to this situation.

4. Social media hot tokens have structural advantages

This type of token usually has structural advantages, with no pressure from venture capital unlocking, fair issuance, and is entirely based on social hype. This is a purely speculative mechanism that has played a role in early market cycles.

However, I believe this stage is coming to an end. The issuance of tokens for certain popular events and the launch of related coins may mark the peak of interest in such tokens. After this, interest in these tokens begins to fade. Even during the rebound in April, the performance of certain popular public chains was not as good as that of Ethereum.

Some social hot tokens may still perform well, especially those that have gone viral on mainstream social platforms through influencers. These may still bring about asymmetric wealth effects. However, the era of relying solely on tokens with cute images as investment opportunities is over. Only those tokens with strong narratives and broad market recognition have true speculative value.

5. Future Market Trends

If social hot tokens are no longer the main opportunity, what will the next investment hotspot be?

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

If you have followed my previous analysis, you would know that most of my operations during this cycle have focused on social hot tokens and artificial intelligence-related projects.

• Just like the boom in decentralized finance, most early artificial intelligence projects fail after the hype. However, truly practical projects are quietly building during the market downturn. We have seen some projects emerging on the blockchain.

• As the hype around social media hot tokens fades, investors' attention will naturally shift to new narratives. Artificial intelligence, with its clear practicality, is well-suited to become the next investment hotspot.

• Many projects that combine artificial intelligence with Crypto Assets adopt a fair distribution model, echoing the narrative of certain successful projects in the past.

This is why I took the time to research and lay out my positions in this field during the relatively calm weeks in the market. There is no need to rush to establish a full position, but I believe that if the market experiences strong growth again, this field will contain the greatest asymmetric opportunities.