Market Trend Analysis and Future Outlook

As the weekend approaches, I have more time to think and share some insights about the current cryptocurrency market.

I believe the true direction of the cryptocurrency market will only become clear after September. Given the macroeconomic headwinds, summer liquidity constraints, and quarterly position adjustments, the actual market dynamics may only emerge after the August holiday ends and market participants return. Recent market activity shows that the rise of most altcoins is primarily due to short squeezes. Traders are chasing prices influenced by previous rebounds, but this time there is a lack of support from long-term holders. Many have already been severely impacted by previous market fluctuations. As expected, most tokens that surged sharply subsequently experienced equally severe declines.

Ethereum experienced an unexpected rebound, led by sectors that were previously hit hardest, such as artificial intelligence-related and certain specific tokens. In contrast, tokens with real utility, solid fundamentals, or buyback mechanisms demonstrated stronger resilience—they performed more steadily during the downturn and recovered more quickly. Some tokens like Syrup, Hype, and AAVE are good examples. Although SPX belongs to a specific category, its structure is unique. From these phenomena, we can derive the following insights:

1. Bitcoin demand remains strong and persistent

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

The capital nature supporting Bitcoin is currently vastly different from previous periods. This is also why large-scale Bitcoin liquidations are unlikely to occur unless influenced by significant macro events.

2. The internal differentiation of alternative coins has intensified.

Ultimately, funds will flow back into the altcoin market - but it won't be comprehensive. Only those tokens with clear use cases and practical applications are likely to attract capital inflow. This is why I expect Ethereum's performance to outperform other public chains. Regulatory clarity, the continuously growing adoption of decentralized finance, a deflationary structure, and staking demand together form a strong virtuous cycle. Additionally, due to Ethereum's long-standing failure to meet expectations, there are still potential buyers waiting on the sidelines.

3. Tokens supported by venture capital face structural risks.

Token unlocks will continue to exert pressure on price movements. In the case of insufficient liquidity, ongoing sell-offs from validators and early investors limit the upside potential. This is why I believe that highly valued tokens listed on centralized exchanges have a bleak future. Tokens from certain ecosystems, in particular, face ongoing selling pressure due to their validator reward mechanisms.

4. Structural Advantages of Specific Types of Tokens

Some tokens have structural advantages, with no pressure from venture capital unlocks, adopting a fair distribution based entirely on attention. This is a purely speculative mechanism – just like in early cycles, it worked.

But I think this stage is coming to an end.

The emergence of certain token generation events and the launch of specific themed coins marked the peak of interest in this type of token. After that, people's interest began to wane. Even during the rebound in April, the performance of certain public chains was not as good as Ethereum—if everyone already holds these tokens, who will be the new buyers when the hype fades?

Some tokens may still perform well, especially those that have gained popularity through influential figures on mainstream social platforms. These may still bring about asymmetric wealth effects. However, the era of relying solely on novelty tokens as a source of profit has ended. Only those tokens with strong narratives and widespread market recognition possess true speculative value.

Interestingly, the fatigue and skepticism towards venture capital-backed tokens have created opportunities for fairly issued Web2/3 projects, which may become the source of the next wave of wealth creation.

Certain projects are great examples. However, to seize these opportunities, you need to actively participate in on-chain activities. When information asymmetry exists, big opportunities always arise. Once everyone is aware of an opportunity, it is no longer profitable.

This is why I pay more attention to on-chain market dynamics. The success of certain projects has sparked a desire to find the "next hotspot," leading capital to chase similar fair launch alternative token narratives. Just like certain traders gaining massive wealth through token trading—attention guides capital flow.

5. Future Market Trends

So, if a specific type of token is no longer the main opportunity, what will be next?

My view is: the integration of artificial intelligence and cryptocurrency.

If you have been following my updates, you would know that most of my operations during this cycle—after some early public chains and venture capital-supported tokens—have been focused on specific tokens and the artificial intelligence sector.

Just like in decentralized finance summer, most early artificial intelligence projects failed after the hype. But truly practical projects are quietly building in this bear market. We have already seen some of these projects emerge on-chain.

As the profits from certain tokens dwindle, the market's focus will naturally shift to new narratives. Artificial intelligence, with its clear practicality, is well-suited to become the next focal point.

Many projects that combine artificial intelligence and cryptocurrency adopt fair distribution, echoing the narrative of previous successful cases.

This is why I am taking the time to research and lay out plans in this field during this relatively calm period. There is no need to rush to establish a full position now—but I believe that if the market experiences a strong rally again, this field will contain the biggest asymmetric opportunities.