Crypto Market Trend Analysis and Future Outlook

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

I believe that the overall directional trend of the crypto market may not become clear until after September. Considering the macroeconomic headwinds, summer liquidity constraints, and quarter-end position adjustments, the real market dynamics will only become evident when market participants return after the August holidays. From recent market activities, the rise of most altcoins has been mainly driven by short squeeze. Traders, influenced by the reflex of the previous rebound, are chasing short-term momentum, but this time there is a lack of true long-term holders. Most investors have already suffered heavy losses during the previous market turbulence. As expected, the vast majority of tokens that surged sharply subsequently experienced equally drastic declines.

Ethereum unexpectedly rebounded, with previously hardest-hit sectors like AI and popular tokens leading the charge. In contrast, tokens with practical use, strong fundamentals, or buyback mechanisms displayed greater resilience—being more stable during the downturn and recovering faster. Syrup, Hype, and AAVE are good examples. Although SPX belongs to the popular tokens, its structure is completely different. From this, we can draw the following insights:

1. The demand for Bitcoin is real and enduring

Traditional capital is gradually entering the market through ETFs and other regulated channels.

The capital nature supporting BTC at present is completely different from the previous cycle. This is why large-scale BTC liquidations are unlikely to occur unless triggered by significant macro events.

2. The differentiation within altcoins will intensify.

Ultimately, capital will flow back into altcoins — but it won't 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 regulation, the increasing adoption of decentralized finance, the deflationary structure, and the demand for staking together create a strong positive feedback loop. Additionally, since ETH has long failed to meet expectations, there are still potential buyers waiting in the wings.

3. The 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 selling pressure from validators and early investors limits the upward potential. This is why I believe that tokens with overvalued listings on centralized exchanges have a bleak future. Tokens of certain ecosystems, in particular, face sustained selling pressure due to their validator reward structures.

4. Structural Advantages and Limitations of Popular Tokens

These types of tokens have structural advantages, with no unlocking pressure from venture capital, and are often fairly launched, completely based on attention. This is a pure speculation mechanism—just like in the early cycles, it indeed worked.

But I think this stage is coming to an end.

Certain token generation events and the launch of popular tokens mark the peak of interest in these types of tokens. After that, interest in these tokens begins to wane. Even during the rebound in April, the performance of certain public chains was not as good as ETH—if everyone already holds these tokens, who will become the marginal buyer when the hype fades?

Some popular tokens may still perform well, especially those that have become popular through influential figures on mainstream social platforms. These may still bring asymmetric wealth effects. However, the era of relying solely on eye-catching tokens as investment alpha is over. Only those projects with strong narratives and strong market recognition—projects that people can collectively identify with—hold true speculative value.

Ironically, the fatigue and skepticism towards venture capital-backed tokens have opened the door for fair launch Web2/3 projects, which will become the next wave of wealth generation opportunities.

Some emerging projects are good examples. But to seize these opportunities, you need to actively participate in on-chain activities. When there is information asymmetry, big opportunities always arise. Once everyone knows about an opportunity, it no longer offers excess returns.

This is why I focus more on on-chain market dynamics. The success of certain projects has sparked enthusiasm for finding the "next hit" as capital begins to chase similar fair launch altcoin narratives. Just like some traders make huge profits by trading popular tokens—attention guides capital flow.

5. Future Market Trends

So, if popular tokens are no longer the main opportunity... what will come next?

My view: The combination of AI and cryptocurrency.

If you have been following my updates, you would know that most of my operations during this cycle—after the early stages of certain public chains and venture capital-backed tokens—have focused on popular tokens and AI-related projects.

Just like the DeFi summer, most early AI projects failed after the hype. However, truly practical projects are quietly being built during this bear market. We have already seen some of these projects emerge on-chain.

As the profits from popular tokens dwindle, investors' attention will naturally turn to new narratives. AI, with its clear practicality, is very well-suited to become the next focus.

Many AI x Crypto projects adopt a fair launch model, echoing the narrative of recently successful projects.

This is why I take the time to research and position myself in this field during relatively calm weeks in the market. There is no need to rush into establishing a full position right now—but I believe that if the market experiences a strong rise again, this field will hold the greatest asymmetric opportunities.