Crypto Assets Market Outlook: Bitcoin Strength, Alts Differentiation, AI and Encryption Fusion into New Opportunities

As Bitcoin once again approaches the $110,000 high, market sentiment continues to soar, especially as the altcoin sector heats up again. However, the subsequent market fluctuations have given investors a cold shower. Unlike the panic seen with other alts, Bitcoin continues to climb towards $110,000 amidst the volatility, and Ethereum is also starting to show signs of a breakout.

After deep reflection over the weekend, I have the following views on the current market situation:

The overall trend of the Crypto Assets market may not become truly clear until after September. Considering macroeconomic headwinds, summer liquidity constraints, and position adjustments at the end of the quarter, the real market dynamics will only emerge after the August holidays end and market participants return in full force. From the recent market performance, the rise of most alts is mainly due to short covering. Traders are influenced by previous rebounds and exhibit a reflexive response, chasing short-term momentum, but lack support from long-term holders. As expected, most tokens that surged dramatically subsequently experienced a corresponding drop.

The rebound of Ethereum was unexpected, with previously underperforming sectors such as AI and popular coins leading this wave of recovery. On the other hand, tokens with practical applications, solid fundamentals, or buyback mechanisms demonstrated strong resilience, not only being more stable during the downturn but also recovering faster. From this, we can draw the following insights:

1. The demand for Bitcoin is real and lasting

Traditional capital is gradually entering the market through regulated channels such as ETFs. The nature of capital supporting Bitcoin is fundamentally different from previous cycles. Therefore, unless influenced by significant macro events, large-scale sell-offs of Bitcoin are unlikely.

2. The Internal Differentiation of Alts Intensifies

Funds will eventually flow back into alts, but it won't be comprehensive. Only tokens with clear use cases and practical applications are likely to attract this influx of funds. That's why I believe Ethereum will outperform some other public chains. Regulatory clarity, increased usage of decentralized finance, deflationary structures, and staking demand together create a strong virtuous cycle. Additionally, due to Ethereum's long-term failure to meet expectations, there are still potential buyers waiting for opportunities in the over-the-counter market.

3. Tokens supported by venture capital face structural risks

Token unlocking will continue to exert pressure on price movements. In the case of insufficient liquidity, the ongoing sell-off from validators and early investors limits the upside potential. This is why I believe that tokens listed on certain trading platforms at inflated valuations are not ideal choices for the future. Tokens from certain ecosystems face ongoing sell-off pressure due to their validator reward structure.

4. The structural advantages of popular coins are diminishing

These types of coins previously had structural advantages, with no risk capital unlocking, fair distribution, and completely based on attention. However, I believe this phase is coming to an end. Certain token generation events and the launch of specific coins mark the peak of attention for these types of coins. After that, related interest began to wane. Even during the rebound in April, the performance of certain public chains was not as good as Ethereum.

Some popular coins may still perform well, especially those that have gained popularity through influential figures on mainstream social platforms. These may still bring about asymmetric wealth effects. However, the era of relying solely on cute-themed coins as profit opportunities has ended. Only those popular coins with strong narratives and broad market recognition possess real speculative value.

5. Future Market Trends

If popular coins are no longer the main opportunity, then where is the next windfall?

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

Just like the craze for decentralized finance, most early AI projects failed after the hype. However, the truly practical projects are quietly building during this bear market. We have already seen some such projects emerge on-chain.

As the profits from popular coins dwindle, investors' attention will naturally shift to new narratives. AI, with its clear practicality, is very well suited to become the next focal point. Many projects that combine AI with Crypto Assets adopt a fair distribution model, reflecting the recent market preferences.

This is why I have recently spent time researching and positioning myself in this field ahead of time. While there is no need to rush to establish a full position right now, I believe that if the market experiences a strong rally again, this area will hold the greatest asymmetric opportunities.