Market Reflection: Analysis of Crypto Assets Market Trends

Recently, I had the opportunity to reflect on the market, and I would like to share some thoughts.

The overall direction of the Crypto Assets market is expected to become clearer only after September. Considering macroeconomic headwinds, summer liquidity constraints, and end-of-season position adjustments, real market dynamics may not emerge until after the August holidays. Recent market activity shows that the rise of most small coins has been primarily driven by short squeezes. Traders are chasing the rally influenced by previous rebounds, but there is a lack of support from long-term holders. Many coins have experienced a significant drop after a sharp rise.

Ethereum has experienced an unexpected rebound, while AI-related sectors are leading the charge. Tokens with real use cases, strong fundamentals, or buyback mechanisms have shown resilience, with smaller declines and quicker recoveries. From this, we can draw the following insights:

1. The demand for Bitcoin continues to exist.

Traditional capital is gradually entering through compliant channels. The nature of the funds supporting Bitcoin is significantly different from previous periods, which reduces the likelihood of large-scale sell-offs.

2. The differentiation of small coins is intensifying.

Funds will ultimately flow back to small coins, but will be more selective. Only tokens with clear use cases and application scenarios are likely to attract capital. This is also one of the reasons why Ethereum may outperform other public chains. Clear regulations, increased DeFi usage, inflationary mechanisms, and staking demand together create a virtuous cycle.

3. Some tokens have structural risks.

Token unlocks will continue to put pressure on prices. In the case of insufficient liquidity, the ongoing sell-off by validators and early investors limits the upside potential. This makes the highly valued tokens listed on certain centralized exchanges not a good choice.

4. The coin has structural advantages.

Meme coins usually have no pressure from venture capital unlocks, making their issuance fairer and entirely based on attention. This pure speculation mechanism performs well in the early cycles.

But this phase may soon come to an end. After some landmark events, the popularity of meme coins has begun to decline. In the future, only those coins with strong narratives and broad market recognition will have real speculative value.

5. New opportunities emerge

The fatigue of venture capital-supported projects has created opportunities for fairly issued Web3 projects. To seize these opportunities, active participation in on-chain activities is required. Information asymmetry often contains tremendous opportunities.

6. Future Market Trends

I believe the combination of AI and Crypto Assets will become the next hotspot.

• Like the DeFi summer, most early AI projects may fail, but the ones with real practical value are being built.
• As the popularity of meme coins fades, the market's attention will naturally shift to new narratives. AI, with its clear use cases, is likely to become the next focal point.
• Many AI and Crypto Assets combined projects adopt fair issuance, responding to the market's demand for fairness.

Therefore, I am laying out plans in this field in advance. While there is no need to rush into building positions, I believe that if the market rises strongly again, this field will contain the greatest asymmetric opportunities.