Crypto Assets Market Outlook and Future Trend Analysis

Recently, I've had more time to think, and I want to share some insights about the Crypto Assets market.

The overall direction of the Crypto Assets market is expected to become clear only after September. Considering macroeconomic resistance, summer liquidity constraints, and quarter-end position adjustments, the real market dynamics may only become apparent after the August holidays when market participants return. Recent market activities indicate that the rise of most small coins is primarily driven by short squeezes. Traders are chasing momentum influenced by the previous rebound but lack support from long-term holders. As expected, most tokens that rapidly rose subsequently experienced equally severe pullbacks.

Ethereum has unexpectedly rebounded, with sectors such as AI and certain small coins that were severely impacted in the early stages leading the charge. In contrast, tokens with real utility, strong fundamentals, or buyback mechanisms have shown resilience, performing more steadily during the downturn and recovering more quickly. Some tokens like Syrup, Hype, and AAVE are good examples of this. Although SPX is a small coin, 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 regulated channels such as ETFs. The nature of the capital supporting BTC is distinctly different from the past, making large-scale BTC liquidation unlikely to occur unless influenced by macro events.

2. The internal differentiation of small coins intensifies

Funds will eventually flow back to small coins, but it will not be comprehensive. Only tokens with clear use cases and practical application scenarios are likely to attract these funds. This is why Ethereum may outperform other public chains. Clarity of regulation, increased usage of decentralized finance, deflationary structure, and staking demand together form a strong virtuous cycle. In addition, due to ETH not meeting expectations for a long time, there are still marginal buyers waiting in the over-the-counter market.

3. Token Supported by Venture Capital Faces Structural Risks

Token unlocking will continue to exert pressure on prices. In the case of insufficient liquidity, the ongoing selling pressure from validators and early investors limits the potential for price increases. Therefore, highly valued tokens listed on centralized exchanges may not be an ideal choice in the future. Tokens from certain ecosystems, in particular, face ongoing selling pressure, primarily due to their validator reward structures.

4. Social Tokens Have Structural Advantages

These types of tokens typically do not face venture capital unlock pressure, adopt fair issuance, and are entirely based on attention. However, this stage may be coming to an end. Recent generation events of certain tokens mark the peak of interest in social tokens, after which interest began to wane. Even during the rebound in April, the performance of certain public chains was not as good as that of Ethereum.

Some social tokens may still perform well, especially those that have gained popularity outside the Crypto Assets sphere through influencers on platforms like TikTok or Instagram. These could still bring about asymmetric wealth effects. However, the era of purely speculative tokens is over; only those coins with strong narratives and broad market recognition possess true speculative value.

5. Future Market Trends

If social tokens are no longer the main opportunity, then what is the next hotspot?

My point of view is: the combination of AI and Crypto Assets.

Just like during the boom of decentralized finance, 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 social tokens dwindle, market attention will naturally shift to new narratives. AI, with its clear utility, is well-suited to become the next focal point. Many projects combining AI and Crypto Assets adopt a fair distribution model, reflecting recent market preferences.

This is why I have recently spent time researching and positioning myself in this field in advance. While there is no need to rush to establish a full position right now, I believe that if the market rises strongly again, this field will hold the greatest asymmetrical opportunities.