Author: Tulip King
Compiled by: TechFlow
Alpha First
- The overall market is healthy but shows signs of overextension, and the next mainstream investment direction is unclear.
- Trumpcoin may have become the peak of the Memecoin craze - should we turn our attention to SocialFi?
- Emerging hot spots: SocialFi, AI, Dinocoins are competing for market attention.
Market Conditions
Although the market has been quite volatile recently, I believe the overall market is still in a healthy state. Looking at the three core indicators of the crypto market, the performance has been very positive.
Bitcoin Consolidating at High Levels Showing Strength
Bitcoin has been consolidating around the top of the range, indicating a bullish rather than weak market sentiment. In the current situation, around $10.5k seems to be a key level for Bitcoin. This level reflects the market's confidence in the long-term development of cryptocurrencies, while also avoiding the risk of excessive optimism.
Bitcoin's consolidation at high levels signals a healthy market.
Although we haven't seen some major news - such as strategic Bitcoin reserves (BSR) or comprehensive tax incentive policies for cryptocurrencies - the market has still made some small progress. For example, the pardon of Ross Ulbricht is a low-key but important signal that the Trump administration has not completely abandoned its support for cryptocurrencies. While the improvement in regulatory transparency has been slow, the overall trend is positive.
Steady Growth in Stablecoin Supply
Another positive signal is the continued growth in stablecoin supply. Historical data shows that the increase in stablecoin supply is often a reliable precursor to increased institutional interest and market liquidity. It's worth pondering: who is minting these stablecoins on such a large scale?
The continued growth in stablecoin supply is sending a bullish signal.
Looking at the minting scale, institutions are indeed entering the market. If you're skeptical, you can check the data from @whale_alert and other on-chain monitoring tools. Although this has not yet been clearly reflected in the performance of Altcoins, capital is flowing into the market.
Expansion of the Crypto Market Capitalization
The total market capitalization of cryptocurrencies continues to grow.
Finally, the total market capitalization of cryptocurrencies is still expanding. This growth, combined with Bitcoin's strong performance and the increase in stablecoin supply, further indicates that the market is not on the verge of collapse. On the contrary, the market is consolidating its foundation and preparing for the next stage of growth, regardless of what form it takes. The current market does not resemble the impending doom scenario.
Narrative Risk: Loss of Market Direction
An important reason for the lack of significant volatility in the Altcoin market is the lack of a clear narrative direction. This is the so-called "narrative risk" - without a clear direction, capital may flow into the wrong investment themes, increasing the risk.
Take the recent Memecoin craze as an example. Although Trump did not announce a strategic Bitcoin reserve (BSR) or other major news, he did launch a Memecoin. Subsequently, Melania also launched a similar token, and there were even rumors that Barron might be involved. Traders showed great enthusiasm for these opportunities, and I was no exception.
However, this sudden Memecoin craze has left the market full of uncertainty, leaving more questions than answers. Is this the super cycle of Memecoins, or a top signal? Should we refocus on AI tokens? Why is the price chart of XRP performing so strongly? It seems that no one, including the market itself, can clearly point out which direction the capital should be concentrated on at the moment.
Memecoins: The Craze May Be Nearing Its End
I'm sorry to say that the Memecoin trading may be entering its final wave. Trump's entry has occupied an overwhelming share of attention and market in this field, and this influence cannot be underestimated. The question now is: who else can launch a Memecoin on a similar scale? The answer is likely "no one".
In Kel's words, we have exhausted the "attention resources".
The essence of Memecoins is to convert attention into tokenized assets. They rely on attracting public attention and converting it into speculative capital. This model has driven the explosive growth of the Memecoin market over the years. However, with Trump's entry, this model may have reached its peak. Trump is not just an ordinary celebrity or internet influencer, he represents the attention of the vast majority of the global population. No other person or event can compete with his dominance in the cultural and media spheres.
Therefore, Memecoins as an asset class may have reached their peak. The growth space for attention tokenization has been fully exploited. Of course, Trumpcoin may still see further gains, and may even trigger a final parabolic rise in other Memecoins. But this is more like an ending, rather than a new chapter.
SocialFi (Clout & Yapster)
If the Memecoin narrative is to continue to evolve, it needs to shift to a more sustainable and scalable model. This is where the potential of SocialFi lies. By combining speculative enthusiasm with deeper, more personalized interactions, SocialFi has the potential to continue the Memecoin story. Rather than betting on cultural phenomena or celebrity tokens, SocialFi offers an opportunity to invest in personal relationships and community dynamics. From this perspective, it is a natural evolution of the Memecoin concept - from simply converting attention, to more meaningful interactions and long-term value creation.
Why SocialFi is Worth Watching
SocialFi is a potential hot spot worth watching. Successful projects in this field may blend elements of social media and online gaming to create a hybrid platform that is both appealing and profitable. One can imagine it will be a combination of "social platform and online entertainment", with immense potential for large-scale application.
Currently, two projects are worth noting:
Here is the English translation of the text, with the specified terms translated as instructed:- Clout: Clout focuses on tokenizing social influence, allowing users with large followings (over 10,000) to create personal tokens. Built on Solana, it combines the monetization features of Friend.tech, simplifies token issuance, and integrates with decentralized exchanges like Raydium. Clout has seen early success, with its first token $PASTERNAK reaching an $80 million market cap in just a few hours. Through a seamless onboarding process with credit cards and Apple Pay, Clout significantly lowers the entry barrier for Web2 users. However, its open structure distributes liquidity across multiple influencers, which may weaken community cohesion.
- Yapster: Yapster is another innovative SocialFi project, blending social media, gaming, and cryptocurrency, also built on Solana. In contrast, Yapster's approach is more centralized, focusing the community around a shared goal, rather than distributing liquidity across multiple influencers. Users can participate in daily game shows, paying a 0.25 SOL entry fee to create and vote on Memes. Winning Memes can even be minted as tokens, with their distribution tied to participants' scores. This model, focused on a single Meme rather than multiple influencers, creates stronger and more unified liquidity flows. Yapster's invite-only Beta testing further fosters a tightly connected and actively engaged community. A notable example is that its first token reached a $25 million market cap in just 10 minutes, demonstrating its powerful user engagement and value creation.
@yapsterxyz: We understand that many users have experienced lags and other issues during the game runtime! We are working around the clock to fix these problems and aim to resolve them as soon as possible. Thank you all for your understanding and patience during the Beta testing experience.
Stability issues caused by excess demand are usually a bullish signal for the market.
While Clout offers many advantages for influencers in terms of scalability and operational simplification, I am more inclined towards Yapster's centralized mechanism and community-driven design. It focuses on converting public attention into actual value, a model that appears more sustainable and appealing compared to distributing liquidity across numerous individuals.
Dinocoins (XRP, HBAR, XLM)
"What is dead may never die, but rises again, harder and stronger." - George R R Martin
Dinocoins (including XRP, HBAR, and XLM) are typical "hated trades" in the current crypto cycle. This trade pattern works because it reveals the emotional biases of market participants. The market's skepticism and dismissal of these assets often means that investors are underallocated to them, leaving a large amount of capital on the sidelines. When these assets start to rebound, investors are often forced to buy in, further driving the price increase.
Price chart of Bitcoin vs XRP.
Crypto Twitter users have long viewed Dinocoins as outdated relics, believing they have lost competitiveness in the face of newer, more compelling narratives. However, it is this very dismissal that creates opportunities for their unexpected resurgence.
Why should you pay attention now?
Despite their poor reputation on Twitter, Dinocoins have shown significant strength in price performance and institutional adoption. Here's why they are worth considering:
- Institutional Recognition: These tokens have strengthened their "more formal" positioning in the crypto space, focusing on real-world use cases and partnerships. For example, Ripple's launch of the new stablecoin RLUSD demonstrates its efforts towards mainstream financial integration. Collaborations such as XRP with Santander and HBAR with the World Gemological Institute further prove their commitment to institutional adoption.
- Regulatory Landscape: With the expectation of a more crypto-friendly regulatory environment, these tokens are in a favorable position. The ISO 20022 compliance of XRP and XLM (closely related to traditional financial system compatibility) enhances their credibility. Additionally, the rumors surrounding XRP and HBAR ETFs (exchange-traded funds) add another layer of appeal, although Bitcoin ETFs remain the market's primary focus.
The contrast is stark: on one hand, many crypto enthusiasts dismiss them with disdain; on the other, institutions may be quietly embracing these tokens. Whether you like them or not, Dinocoins are taking action, which may redefine their role in the market. Their focus on compliance, partnerships, and real-world use cases could ultimately become a winning strategy, especially if they can gain the favor of regulatory bodies.
Hedge Funds' Liquid Token Maneuvers
If you still believe in the concept of "fair launches," then you need to face the reality that the life cycle of most tokens is not as democratic as it appears on the surface.
- Project teams develop the project: Project teams typically develop projects with a vision of decentralized finance or infrastructure, and create a token as part of the ecosystem.
- VCs provide funding in exchange for locked tokens: Venture capital (VC) firms provide funding to the project in exchange for locked or gradually unlocked tokens. This arrangement theoretically aligns the VCs' interests with the long-term success of the project, as the tokens cannot be sold immediately.
- VCs sell unlocked tokens to liquid capital OTC: As the tokens start to unlock or be released in phases, VCs typically sell these tokens to liquid capital through over-the-counter (OTC) transactions. This liquid capital is often well-capitalized institutions that buy these tokens in bulk at a discounted price.
- Liquid capital sells the tokens when market trading volume is high (you are now in this stage): After acquiring these tokens, the liquid capital will attempt to create or capitalize on market hype. They promote narratives through platforms like Twitter to attract market attention and increase trading volume, allowing them to sell the tokens at higher prices for profit when the conditions are favorable.
The Reality
Taking Raydium as an example, its tokens appear to have been largely unlocked by now.
Between 2021 and 2023, venture capital has flooded the crypto market, particularly in DeFi and infrastructure projects. These investments are often made in the form of locked or gradually released tokens. However, as most tokens have now unlocked, VCs need to liquidate these assets to deliver investment returns to their limited partners (LPs). Starting from mid-2024, many prominent VCs have begun calling for more liquid capital. This liquid capital purchases these illiquid tokens through OTC transactions, providing VCs with a market to cash out their unlocked tokens.
Rather than blaming the participants, it's better to understand the rules themselves. VCs are driving the need for people to raise liquid capital, so that they can offload their tokens through OTC, and start distributing the profits from the previous cycle to their LPs.
The relationship between VCs, liquid capital, and the market is not malicious, but a natural phenomenon of capital flows in the crypto ecosystem. VCs need to rely on well-capitalized liquid capital to absorb their tokens, which are often sold at discounted prices due to lack of liquidity. In turn, the liquid capital will attempt to create or amplify market narratives through platforms like Twitter, attracting market attention and increasing trading volume, so that they can sell these tokens at higher prices for profit when the market conditions are favorable.
The market narrative and the timing of events.
This is not necessarily a malicious act, I have even bought some of these tokens myself. But you need to understand your trading counterparty and have a clear understanding of the token's life cycle.
AI Agents and DeFAI
DeFAI may replace many existing crypto tools. If enough functionality is integrated, a DeFAI router can simultaneously serve as a yield aggregator, a decentralized exchange (DEX) and perpetual contract aggregator, a portfolio management tool, and even more.
However, I am cautious about AI agents that claim to "help you make money". The dynamics of the market determine that excess returns (alpha) will gradually diminish over time. Nevertheless, DeFAI may still be able to provide important support to individual investors by simplifying personal trading strategies and portfolio management.
Currently, AI is at a critical stage of development. The AI hype has gone through several stages: first were infrastructure projects like Bittensor, then agent projects like AIXBT, followed by agent launch platforms (like Virtuals) and frameworks (like AI16Z). The latest trend is around DeFAI.
An emerging important trend
AI is undoubtedly one of the most important market hypes in this cycle, but its long-term development direction is still unclear. The rise of DeFAI is particularly worth watching, as it does not promise magical "money-making AI", but focuses more on practical functions, such as simplifying the process of yield optimization, trading and portfolio management.
The uniqueness of DeFAI lies in its potential to integrate the fragmented ecosystem of current crypto tools. Imagine a router that can seamlessly integrate multiple financial tools, which can greatly reduce user friction. Although the idea of "money-making AI agents" seems unrealistic, the advantage of DeFAI is that it helps users execute their own strategies more efficiently.
Changing market trends
Like all major market hypes, the AI field is evolving rapidly driven by hype and experimentation. From the initial promise of AI bringing financial freedom, to the practical functions provided by DeFAI today, this change reflects that the market is gradually shifting from fantasy to practical application. It can be foreseen that AI will continue to be a core theme, but the eventual winners will be those projects that can meet real needs and avoid over-promising.
The crypto market is still full of unknowns. Market hypes change rapidly, and the future winners will be those who can anticipate where public attention will flow. Stay sharp and flexible, while keeping an eye on the big picture, and don't be misled by short-term fluctuations.
