Reflection on the crypto market and analysis of future trends

The recent weekend gave me more time to think about market trends. I believe the true trend of the crypto market will become clear only after September. Considering macroeconomic pressures, summer liquidity constraints, and quarter-end position adjustments, the actual dynamics of the market may only become apparent after participants return from the August holiday.

Recent market activities indicate that the rise of most altcoins is primarily driven by short squeezes. Traders are chasing prices due to previous rebounds but lack support from long-term holders. Many have already been frustrated during the previous market turmoil. As expected, most tokens that surged quickly subsequently experienced similarly intense declines.

Ethereum has experienced an unexpected rebound, with sectors that were previously hit hard, such as AI and certain specific tokens, leading this wave of recovery. In contrast, tokens with real use cases, solid fundamentals, or buyback mechanisms have shown strong resilience, being not only more stable during downturns but also recovering faster. Certain tokens like Syrup, Hype, and AAVE are good examples. Although SPX belongs to a specific category, its structure is entirely different. From these phenomena, the following insights can be drawn:

1. The demand for Bitcoin is real and persistent

Traditional capital is gradually entering the market through regulated channels such as ETFs. The nature of capital supporting BTC is completely different from previous periods, which makes large-scale BTC liquidation unlikely to occur unless affected by significant macro events.

2. Fragmentation within Altcoins Intensifies

In the long run, funds will flow back into altcoins, but it will not be comprehensive. Only those tokens with clear use cases and practical application scenarios are likely to attract these funds. This is why I believe Ethereum will outperform certain competitors. Regulatory clarity, the growing usage of decentralized finance, a deflationary structure, and staking demand collectively create a strong positive cycle. Moreover, since ETH has long failed to meet expectations, there are still potential buyers waiting for opportunities off the market.

3. Tokens Supported by Venture Capital Face Structural Risks

Token unlocks will continue to exert pressure on price trends. In the case of insufficient liquidity, the ongoing sell-off by validators and early investors limits 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 continuous sell pressure due to their validator reward structures.

4. Specific types of tokens have structural advantages

Some tokens have structural advantages, no risk investment unlocking pressure, fair issuance, and are entirely based on attention. This is a purely speculative mechanism, functioning similarly to early cycles.

But I believe this stage is coming to an end. Certain token generation events and the launch of specific currencies mark the peak of interest in such tokens. After that, related interest begins to wane. Even during the rebound in April, the performance of certain tokens was not as good as ETH. If everyone is already holding, when the heat fades, who will be the marginal buyer?

Some tokens may still perform well, especially those that have gained popularity through influencers on platforms outside of crypto Twitter, such as TikTok or Instagram. These could still create asymmetric wealth effects. However, the era of "pet coins" as alpha is over. Only those tokens with strong narratives and significant market recognition have true speculative value.

5. Future Market Trends

If specific types of tokens are no longer where the opportunity lies, then what is the next hotspot?

My point of view: The combination of AI and encryption.

If you have been following my updates, you will find that most of my operations during this cycle are focused on specific tokens and AI.

Just like the DeFi summer, most early AI projects failed after the hype. However, projects that are truly based on practicality are quietly building during the bear market. We have already seen some projects emerging on-chain.

As the profits from certain tokens dwindle, 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 a fair distribution model, echoing the narratives of certain successful cases.

This is why I have been spending time recently researching and positioning myself in this field ahead of time. There is no need to rush to establish a full position now, but I believe that if the market rises strongly again, this field will hold the greatest asymmetric opportunities.