Market Trend Analysis: The Diversification of the Crypto Assets Market and Future Directions

During the weekend, I have more space to think, and I would like to take this opportunity to share some observations and thoughts about the current Crypto Assets market.

Personally, I don't think the true direction of the crypto market will be clear until September. At a time when the market is facing multiple factors such as macroeconomic headwinds, insufficient liquidity in the summer, and institutional rebalancing at the end of the quarter, the real market movement will not be revealed until the end of the August holiday and the return of major players. Looking at the recent market performance, most of the altcoin's rally is mainly due to the short squeeze effect, with traders chasing higher due to the conditioned reflexes of previous rally experiences – but this time the market lacks real long-term holder support. Most investors have been hit hard by the previous market correction. As the law of the market shows, the vast majority of fast-rising coins have subsequently experienced similarly rapid pullbacks.

Ethereum has unexpectedly rebounded strongly, while the sectors that were previously hit the hardest (such as AI-related projects and meme coins) have instead led this round of rebound. On the other hand, tokens with practical application scenarios, strong fundamentals, or buyback mechanisms have shown greater resilience—they performed more steadily during the downturn and recovered faster. Syrup, Hype, and AAVE are all good examples. Although SPX falls into the category of meme coins, its structural design is entirely different from conventional meme coins. From these phenomena, we can summarize the following insights:

1. The demand for Bitcoin is real and lasting.

Traditional capital is steadily entering the market through regulated channels such as ETFs.

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

2. The differentiation in the altcoin market will further intensify.

In the long run, capital will inevitably flow back to the altcoin market—but it will not be a comprehensive rebound. Only those tokens with clear utility and practical application scenarios are likely to attract inflows of funds. This is precisely why I believe Ethereum will outperform Solana. Regulatory clarity, the growing adoption of DeFi, a deflationary economic structure, and staking demand together create a strong positive cycle. Furthermore, due to ETH's long-standing failure to meet market expectations, there remains a considerable number of potential buyers waiting for the right moment to enter the market.

3. Venture-backed coins face structural risks.

Token unlocks will continue to exert pressure on prices. In an environment of insufficient liquidity, the ongoing selling pressure from validating nodes and early investors will constrain the upward price potential. This is also why I believe that high-valuation tokens listed on centralized exchanges have a bleak future. In particular, tokens from the Cosmos ecosystem face ongoing selling pressure due to their validator reward mechanism.

4. The Structural Advantages and Cyclicality of Meme Coins

Meme coins indeed have certain structural advantages: no venture capital unlocking pressure, fair distribution, and completely driven by community interest. It is a purely speculative mechanism—just like in the early crypto cycles, it has indeed worked.

But I think this stage is nearing its end.

The launch of Pump.fun token generation events and the Trump series tokens may mark the peak of interest in meme coins. After that, interest in meme coins began to gradually decline. Even during the market rebound in April, the performance of SOL was not as good as that of ETH - if most people already hold SOL, who will become new buyers when the heat of meme coins fades?

Some meme coins may still perform well, especially those that have transcended traditional Crypto Assets social media circles and gained popularity through influencers on platforms like TikTok or Instagram. Such projects may still bring asymmetric wealth effects. However, the era of relying solely on "cute pet images" to create excess returns is over. Only those with strong narratives and deep market understanding—projects that people can collectively identify with—possess true speculative value.

Interestingly, the market's fatigue and skepticism towards venture-backed tokens have created opportunities for fairly launched Web2/3 integration projects, which may become the next source of wealth creation.

Keeta is a typical example. However, to seize such opportunities, one needs to actively participate in on-chain activities. Major opportunities always arise when there is information asymmetry. Once the information becomes widely known, the advantage in returns disappears.

This is also the reason why I pay more attention to the on-chain market dynamics. The success of Keeta has ignited the enthusiasm for finding the "next Keeta," and capital has begun to chase similar fair-launch altcoin narratives. This is similar to early cases of gaining immense wealth through trading meme coins — attention directs capital flow.

5. Future Market Trend Outlook

So, if meme coins are no longer the core investment opportunity, where will the focus be next?

My view: The integration of AI and encryption technology will become the next hot topic.

If you have followed my analysis, you will find that most of my operations in this cycle - after early investments in SOL and venture capital-supported tokens - are mainly focused on meme coins and AI projects.

Just like the DeFi summer, most early AI projects failed after a brief hype. But truly practical projects are quietly building in this adjusting market. We have already seen some projects emerge on the chain.

As the profit margins of meme coins dry up, the market's focus will naturally shift to a new narrative. AI, with its clear utility, is very well-suited to become the next investment hotspot.

Many AI projects combined with encryption adopt a fair launch model, echoing Keeta's successful path.

This is why I have been doing in-depth research and laying out positions in this field during the relatively calm weeks in the market. There is no need to rush into building a fully invested position at the moment, but I believe that if the market experiences a strong rally again, this field will contain the greatest asymmetric return opportunities.