Weekend Reflection: Crypto Market Trends and Future Opportunities

This weekend, I have more time to think about market trends and would like to share some personal insights.

I believe the overall trend of the crypto market will only become clear after September. Considering macroeconomic headwinds, summer liquidity constraints, and quarter-end position adjustments, the real market dynamics may only emerge after the August holidays when market participants return. Recent market activities show that the rise of most altcoins is mainly driven by short squeezes. Traders, influenced by previous rebounds, are chasing momentum but lack support from long-term holders. Most people have already suffered significant losses during the previous market turmoil. As expected, most tokens that surged sharply subsequently experienced equally severe declines.

Ethereum rebounded unexpectedly, with the previously most severely affected AI and meme coin sectors leading this wave of recovery. In contrast, tokens with actual use cases, strong fundamentals, or buyback mechanisms have shown resilience, being not only more stable during the downturn but also recovering more quickly. From this, we can draw the following insights:

1. The demand for Bitcoin is real and lasting.

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

The capital nature supporting BTC now is completely different from previous cycles. This is why large-scale BTC liquidations are unlikely to occur unless triggered by macro events.

2. The internal differentiation of alternative coins intensifies.

Ultimately, funds will flow back to alternative coins, but it will not be a widespread phenomenon. Only tokens with clear purposes and actual application scenarios are likely to attract these funds. This is why I believe Ethereum will outperform other public chains. Clarity of regulation, increased usage of decentralized finance, a deflationary structure, and staking demand together create a powerful flywheel effect. Moreover, since ETH has not met expectations for a long time, there are still marginal buyers waiting in the over-the-counter market.

3. Tokens supported by venture capital have structural risks.

Token unlocks will continue to exert pressure on price trends. In the absence of liquidity, the ongoing selling pressure from validators and early investors limits the upside potential. This is why I believe that highly valued tokens listed on centralized exchanges are not a good choice for the future. Tokens from certain ecosystems, in particular, face ongoing selling pressure due to their validator reward structure, which leads to this situation.

4. The Structural Advantages and Limitations of Meme Coins

Meme coins have structural advantages: risk-free investment unlock, fair launch, fully based on attention. This is a pure hype mechanism that has played a role in early cycles.

But I think this stage is coming to an end.

The launch of certain token generation events marks the peak of interest in meme coins. After that, interest in meme coins began to wane. Even during the rebound in April, the performance of certain public chains was not as good as ETH—if everyone has already held them, who will be the marginal buyers when the momentum for meme coins fades?

Some meme coins may still perform well, especially those that have gained popularity through influencers on platforms like TikTok or Instagram, beyond crypto Twitter. These may still bring about asymmetric wealth effects. However, the era of "cute animal coins" as alpha is over. Only those coins with strong narratives and significant market recognition hold true speculative value.

Interestingly, the fatigue and skepticism towards venture capital-supported tokens have opened the door for fairly launched Web2/3 projects, which will become the next wave of wealth generation opportunities.

Some projects are great examples. But to seize these opportunities, you need to be active on the chain. When information is asymmetric, big opportunities will always arise. Once everyone knows about something, it no longer has returns.

This is why I focus more on the on-chain market. The success of certain projects has sparked the desire to find the "next hot" thing, and capital is beginning to chase similar fair launch alternative token narratives. Just like some people have made huge fortunes trading meme coins—attention directs capital flow.

5. Future Market Trends

So, if meme coins are no longer the opportunity, what comes next?

My view: The combination of AI and encryption.

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

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

As the profits from meme coins dry up, attention will naturally shift to new narratives. AI, with its clear practicality, is well-suited to become the next focus.

Many AI x Crypto projects are fairly launched, echoing the aforementioned narrative.

This is why I have been researching and positioning myself in this field during the calm weeks. There is no need to rush to build a full position now — but I believe that if the market rises strongly again, this field will hold the greatest asymmetric opportunities.