Crypto Market Analysis and Outlook

This weekend, I have time to think deeply and share some insights about the market.

I expect the overall trend of the crypto market to become clear only after September. Considering the macroeconomic resistance, insufficient liquidity in summer, and quarterly position adjustments, the real market direction may only emerge after the August holiday ends and market participants return. Recent market activities show that the rise of most altcoins is mainly driven by short squeezes. Traders are chasing gains influenced by previous rebounds, but there is a lack of support from long-term holders. As anticipated, most tokens that surged then experienced a corresponding decline.

Ethereum experienced an unexpected rebound, with sectors that were previously hit hardest, such as AI-related tokens, leading the recovery. In contrast, tokens with practical use, strong fundamentals, or buyback mechanisms demonstrated resilience, remaining more stable during the downturn and recovering faster. Syrup, Hype, and AAVE are great examples. Although SPX belongs to the token category, its structure is completely different. From these phenomena, the following insights can be drawn:

1. The demand for Bitcoin is real and lasting.

Traditional capital is gradually entering the market through regulated channels such as ETFs.

The current nature of capital supporting Bitcoin is completely different from previous periods. This is also why large-scale Bitcoin liquidations are unlikely to occur unless triggered by macro events.

2. The internal differentiation of small cryptocurrencies intensifies.

Funds will eventually flow back to small-cap coins, but it will not be a widespread phenomenon. Only tokens with clear use cases and practical application scenarios are likely to attract these funds. This is why I believe Ethereum will outperform other public chains. The clarity of regulations, the increase in decentralized finance usage, the deflationary structure, and the demand for staking together create a strong positive cycle. Additionally, Ethereum has long failed to meet expectations, and there are still potential buyers waiting to enter the market.

3. Venture capital-backed tokens have structural risks.

Token unlocks will continue to put pressure on price trends. When liquidity is insufficient, the ongoing selling pressure from validators and early investors limits the upside potential. This is also why I believe that high-valuation tokens listed on centralized exchanges are not a good choice for the future. Certain ecosystem tokens, in particular, face ongoing selling pressure due to their validator reward structure that leads to this situation.

4. Meme coins have structural advantages.

Meme coins have structural advantages, no venture capital unlocking pressure, fair issuance, and are entirely based on attention. This is a purely speculative mechanism that is quite effective in the early cycle.

But I think this stage is coming to an end.

Certain token generation events and the launch of specific meme coins mark the peak of interest in meme coins. After that, interest in meme coins began to decline. Even during the rebound in April, the performance of certain public chains was not as good as Ethereum — if everyone already holds them, when the momentum for meme coins fades, who will become the marginal buyer?

Some meme coins may still perform well, especially those that have gone viral outside the crypto market through influential figures. These could still bring about asymmetric wealth effects. However, the era of "cute animal coins" as alpha is over. Only coins with strong narratives and market recognition, which people can collectively believe in, hold true speculative value.

Ironically, the fatigue and skepticism towards venture-backed tokens have opened the door for fairly issued Web2/3 projects that will become the next wave of wealth creation opportunities.

Some projects are great examples. But to seize these opportunities, you need to be active on the chain. Big opportunities always arise when there is information asymmetry. Once it becomes widely known, the opportunity no longer exists.

This is why I pay more attention to the on-chain market. The success of certain projects has sparked the desire to find the "next blockbuster," and capital has begun to chase similar narratives of fair distribution of small tokens. Just like some people have earned huge wealth by trading meme coins—attention directs capital flow.

5. Future Market Trends

So, if meme coins are no longer where the opportunity lies... what will come next?

My point of view: The combination of artificial intelligence and cryptocurrency.

If you have been following my updates, you will know that most of my operations during this cycle—after certain public chains and venture capital-supported tokens in the early stages—have focused on meme coins and AI.

Just like the DeFi summer, most early AI projects failed after the hype. However, the truly practical projects are quietly building during the bear market. We have already seen some of them appear on-chain.

As the profits from meme coins dry up, attention will naturally shift to new narratives. AI, with its clear practicality, is very suitable to become the next focus.

Many AI x encryption projects adopt fair issuance, echoing the narrative of the aforementioned successful cases.

This is why I have been researching and strategically positioning myself in this field during the calm weeks. There is no need to rush to establish a full position, but I believe that if the market rises strongly again, this field will hold the greatest asymmetric opportunities.