Crypto Market Outlook: The Fusion of AI and Blockchain May Become the Next Hotspot

Recently, I have had more time to think, and I would like to share some thoughts on the crypto market.

The overall directional trend of the crypto market is expected to become clear only after September. Considering factors such as macroeconomic resistance, summer liquidity constraints, and quarterly position adjustments, the real market dynamics may only manifest after the August holiday when market participants return. From recent market activities, the rise of most altcoins has been mainly driven by short squeezes. Traders, influenced by the reflex of the previous rebound, chase momentum, but this time there is a lack of support from long-term holders. Most investors have already suffered losses during the previous market adjustments. As expected, the vast majority of tokens that surged sharply also experienced a similarly intense pullback afterward.

Ethereum experienced an unexpected rebound, with sectors such as AI-related and small-cap coins that had previously seen significant declines leading this wave of recovery. In contrast, tokens with practical applications, solid fundamentals, or buyback mechanisms demonstrated strong resilience, not only being more stable during downturns but also recovering faster. From this, we can draw the following insights:

1. The demand for Bitcoin is real and enduring

Traditional capital is gradually entering through regulated channels such as ETFs. The nature of the capital supporting BTC is completely different from previous cycles, which makes large-scale BTC liquidation unlikely to occur unless triggered by macro events.

2. The internal differentiation of small cryptocurrencies intensifies

Funds will eventually flow back to small cryptocurrencies, but it will not be comprehensive. Only tokens with clear purposes and actual application scenarios are likely to attract this influx of funds. This is also why Ethereum may outperform other public chains. Regulatory clarity, the increasing usage of DeFi, deflationary structures, and staking demand together create a powerful growth momentum. Moreover, due to ETH's long-term failure to meet expectations, there are still marginal buyers waiting in the over-the-counter market.

3. Tokens supported by venture capital carry structural risks

Token unlocks will continue to put pressure on price trends. In the case of insufficient liquidity, the ongoing selling pressure from validators and early investors limits the upside potential. This is also why highly valued tokens listed on centralized exchanges may not be a good choice in the future. Certain ecosystems’ tokens, in particular, face persistent selling pressure due to their validator reward structures.

4. Popular cryptocurrencies have structural advantages

No unlocking of venture capital, fair distribution, completely based on attention. This is a pure hype mechanism that worked in the first cycle.

But I think this phase is coming to an end. Certain token generation events and the launch of popular coins mark the peak of attention. After that, interest in related tokens begins to wane. Even in April's rebound, the performance of certain public chains was not as good as ETH - if everyone is already holding it, who will be the marginal buyer when the momentum fades?

Some popular cryptocurrencies 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 an asymmetric wealth effect. However, the era of "cute animal coins" as alpha has ended. Only those cryptocurrencies with strong narratives and strong market recognition possess real speculative value.

Ironically, the fatigue and skepticism towards venture-backed tokens have opened the door for fairly launched Web2/3 projects, which will become the next wave of wealth generation opportunities. To seize these opportunities, you need to be active on the chain. When there is information asymmetry, big opportunities always emerge. Once everyone knows something, it no longer offers returns.

This is why I spend more time closely monitoring the on-chain market. The success of certain projects has ignited the desire to find the "next hot one," and capital has started to chase similar fair launch narratives. Just like certain traders earn huge profits by trading popular coins - attention guides capital flow.

5. Future Market Trends

So, if popular cryptocurrencies are no longer the opportunity... what's next?

My view: The combination of AI and cryptocurrency.

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

Just like the DeFi summer, most early AI projects failed after the hype. However, projects that are truly based on practicality are quietly building during this bear market. We have already seen some of these projects appear on the Blockchain.

As the profits from popular coins dwindle, attention will naturally shift to new narratives. AI, with its clear practicality, is well-suited to become the next focal point.

Many AI x Crypto projects are fairly launched, echoing the previously mentioned fair launch narrative.

This is why I took the time to research and position myself in this field during the quiet weeks. There is no need to rush into establishing a full position now - but I believe that if the market experiences a strong rally again, this field will hold the greatest asymmetrical opportunities.