Market Trend Analysis and Future Trend Outlook

Recently reflecting on the market situation, I believe the true direction of the cryptocurrency market will become clear only after September. Considering macroeconomic headwinds, summer liquidity constraints, and quarterly position adjustments, actual market dynamics may only manifest after the August holidays when market participants return. Recent market activities indicate that the surge in most altcoins has mainly been driven by short squeezes. Traders, influenced by the previous rebound, are chasing the highs, but there is a lack of support from long-term holders. Many coins surged sharply and then subsequently fell back significantly.

Ethereum experienced an unexpected rebound, led by sectors such as AI and certain small-cap coins that had previously suffered significant setbacks. In contrast, tokens with actual utility, strong fundamentals, or buyback mechanisms demonstrated greater resilience, being more stable during the downturn and recovering faster. A few insights can be drawn from this:

1. Bitcoin demand remains stable.

Traditional capital is gradually entering through regulated channels such as ETFs. The nature of capital supporting BTC is different from previous times, making large-scale BTC liquidations unlikely to occur unless influenced by macro events.

2. Diversification of small cryptocurrencies intensifies

Funds will eventually flow back to small tokens, but only those with clear use cases and real applications are likely to attract capital. This is why Ethereum may outperform certain public chains. Regulatory clarity, increased DeFi usage, deflationary structures, and staking demand together create a strong flywheel effect.

3. Venture-backed tokens face structural risks

Token unlocks will continue to put pressure on prices. In situations of insufficient liquidity, the ongoing selling pressure from validators and early investors limits the upside potential. Tokens from certain ecosystems, in particular, face persistent selling pressure due to their validator reward structures.

4. Some tokens have structural advantages.

No venture capital unlock, fair distribution, and fully attention-based tokens have structural advantages. This is a purely speculative mechanism that has played a role in the early cycle.

But this stage may be coming to an end. Some token generation events and the launch of popular coins may mark the peak of attention. After that, interest in small tokens begins to weaken. Even during the rebound in April, the performance of certain public chains was not as good as ETH.

Some small cryptocurrencies may still perform well, especially those that gain popularity through influential figures outside the crypto circle. These may still bring about asymmetric wealth effects. However, the era of relying solely on "cute" concept coins as alpha is over. Only coins with strong narratives and market recognition truly possess speculative value.

5. Future Market Trends

If small cryptocurrencies are no longer the main opportunity, what is the next hotspot?

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

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

As the profits from small cryptocurrencies dwindle, attention naturally shifts to new narratives. AI, with its clear practicality, is well-suited to become the next focal point.

Many AI x Crypto projects adopt fair distribution, echoing the narrative of certain successful projects.

This is why I have recently focused on researching and positioning in this field in advance. Although there is no need to rush to build a full position right now, I believe that if the market rises strongly again, this field will contain the greatest asymmetrical opportunities.