Source: Talking with Li
Today is another rainy day, so the little one didn’t insist on going out to play, but sat quietly at the table drawing. I also happen to have time to write some articles at home. While writing, there was lightning and thunder outside, so I asked her: Do you know why there is lightning in the sky?
She looked at me as if I were a fool and decisively answered: Because there are power banks in the sky.
This answer completely surprised me, but I didn't immediately correct her, as I felt her answer was quite creative for a kindergarten kid. I'll have time tonight to teach her about lightning.
Back to the market. With Bitcoin breaking new historical highs again, ETH has also shown good momentum in recent days, currently maintaining a price around $3000. I hope this momentum can continue; if ETH can continue to break through and rise, we may welcome a new mini altcoin season.
In fact, for quite a long time, the topic of altcoin season has been discussed by many people, even carrying a bit of a 'wolf is coming' hint. Now, whenever altcoin season is mentioned again, most people will scoff because every time everyone has high expectations for altcoin season, it ends up being disappointing. Thus, a fairly unified view has formed (a viewpoint that most people would agree with), that the traditional sense of altcoin season (characterized by widespread explosive growth of altcoins) is difficult to replicate.
Including some friends in the group discussing this topic a few days ago, someone humorously suggested that the altcoin season should be changed to altcoin week, altcoin day, altcoin second...
Rather than saying everyone is looking forward to the altcoin season, it might be more accurate to say that everyone is just hoping to make money more easily during a bull market, but the market often does not move in the direction most people expect. When the majority start to go long, it is likely to drop, and vice versa. As we mentioned in an earlier article: the main logic or play of the market is to make as many people lose money as possible.
For instance, BANANAS31, which appeared multiple times in the gain rankings a few days ago, after being pulled to a temporary high yesterday (July 11), started a free fall today when everyone's emotions were at a peak, with a single-day drop of 77%. As shown in the figure below.
It is hard not to sigh; yesterday it was 'altcoin season,' and today it has directly turned into an 'altcoin festival.' Many people hope to make money easily during the bull market, but the end result is often losing money easily during the bull market.
Originally, during the bear market, no one was making money, everyone seemed equal, and they were all doing poorly. But during the bull market, it ironically leads to losses; why is that?
This question has been discussed multiple times in our past articles, simply summarized as follows:
Many people forget their trading discipline completely due to the constant sight of someone making money or becoming rich overnight. The impulsive FOMO emotions during the bull market lead many to continuously chase trends, buy at highs, and leverage their positions, completely losing the plans and cautious mindset they had during the bear market, and they often feel that the money lost can be quickly regained in the bull market. As a result, the original investment plans and goals slowly become a form of gambling, leading to even greater losses during the bull market.
Therefore, in this matter, what we first need to overcome is our own FOMO mentality. As we mentioned in the previous article (July 10): as long as the market is still there, we will not lack trading opportunities. What we need to do is to persist and not be eliminated by the market. If your position management is not good or disciplined enough, leading to significant losses (or being trapped) in your investment portfolio, then we will not have enough funds to seize new, or even better opportunities.
Continuing back to the topic of altcoin season. Although the anticipated 'altcoin season' often turns into an 'altcoin festival', as we stated at the beginning of our article, if the upward momentum of the past few days can continue, especially if ETH can continue to break through and rise, we may welcome a new mini altcoin season.
The concept of mini altcoin season is just our definition in previous articles, as compared to the traditional altcoin season, the difference is that the extensive altcoin rotation and explosive growth has transformed into a structural market, i.e., a temporary explosion in a certain sector (such as AI, RWA), or significant growth of specific projects (such as PEPE, TRUMP) during specific short cycles.
I remember in the article from July 1, we discussed the possible situations in the third quarter, roughly focusing on several aspects:
- From a macro perspective, the third quarter of this year should be a relatively important market period, which we may call: the season of convergence between crypto regulation and market transformation. Whether at the macro, political, policy, or market level… we may continue to witness some different changes.
- If the upcoming developments in various macro or policy aspects fail to meet market expectations (resulting in a new black swan), it is possible that we will experience another wave of correction or significant volatility starting in the third quarter. However, if the scenario remains unchanged, we are likely to continue seeing Bitcoin break new historic highs in the third quarter.
- If Bitcoin can continue to reach new highs in a manner similar to the last bull market (comparing the current market to that of September 2021), it is probable that Bitcoin's dominance will decline, at which point we may have the opportunity to see the mini altcoin season for the fourth time.
- Besides Bitcoin, if altcoins hope to redistribute some positions, it is best to focus on narrative fields such as Stablecoins, RWA, etc. For example, related projects like AAVE, ENA that are associated with stablecoins still have a certain space for performance.
From the actual market trends of the last two weeks, due to the overall relatively optimistic macro and policy conditions (no new black swan events), Bitcoin has once again broken its historical high sooner than we originally expected, and Ethereum has also begun to break through key short-term resistance levels, while many altcoins have surged more than 10%. For example, AAVE's highest increase over the past 7 days was about 18%, and ENA's highest increase was about 50%.
Although many people's emotions seem to have changed somewhat due to the recent rise, we will continue to maintain the cautious stance we had in previous articles: overall, we will remain cautious about the market in the third quarter. If Bitcoin really reaches around $130,000 in Q3, there will likely be some altcoin opportunities, but it could also experience a new round of small corrections or volatile markets, lasting perhaps 1-2 months, and it is not ruled out that Bitcoin might correct back to around $100,000, while altcoins could face at least a 20-30% correction.
As we mentioned in the previous article (July 10), when it comes to making money, some people focus on the current price's cheapness, while others focus on the cyclical patterns. Whether long-term trading or short-term trading, it is essential to think clearly about how much you can earn when you are correct and how much you can afford to lose when you are wrong. Opportunities and risks are often proportional; soaring prices lead to sharper declines, and declines set the stage for new rises. In the later stages of a bull market, preserving gains is more important than risking more to gamble.
Many people, when facing unexpected market changes, always habitually say: 'This time seems different.' However, in terms of human nature, it seems that nothing is ever truly different. Just yesterday, while watching the daily discussions in the group, someone remarked: Retail investors have their own logic, buying when they see others making money and selling when they see themselves losing.
I think the above sentence describes the situation vividly. I remember at the beginning of this year, when Bitcoin was at $100,000 and market sentiment was relatively high, many people vowed to buy as long as Bitcoin dropped to $70,000. As a result, Bitcoin really dropped to around $70,000 later, but the voices of buying Bitcoin were hardly heard. Similarly, last year (2024), when Bitcoin dropped from $70,000 to $50,000, the same situation occurred; when it actually dropped, many people also stopped buying.
The same question: if Bitcoin has the opportunity to continue to rise to $120,000 or $130,000, and then drop back to around $90,000 or $100,000, would you consider buying?
I estimate that most people who missed out will still not buy, and as we approach the later stages of a bull market, the risk of buying at this stage will become higher, especially for those with short-term trading goals. They will continue to believe that Bitcoin has already risen so much that the upcoming gains will surely be limited, and it would be better to buy some altcoins or meme coins recommended by bloggers for a chance.
However, regarding altcoins, we have discussed many times in previous series of articles that it has been very difficult for most altcoins for quite some time. Given the impact of the macro environment, changes in market structure, and severely diluted liquidity conditions, it is challenging to accurately predict the next hot speculative project (token) in advance. It seems that only those projects with revenue-generating capabilities are worth looking forward to in the mid- to long-term.
Here we briefly list a few examples of projects:
For example, Hyperliquid (HYPE), which has performed well in terms of price for a period of time, has now become one of the dApps with the highest fees. As shown in the figure below.
However, because the current market capitalization of this project has reached $15.5 billion (currently ranked 11th with a price of $47), and its Mcap/TVL ratio is 33.39, although there may still be some upward potential, we believe the short-term upside is already limited. If you still want to participate in such projects now, it seems that you should appropriately lower your profit target.
Moreover, projects like Pendle and AAVE, which we have mentioned several times in previous articles, including in the March 28 article, I have always believed that they belong to the category of good projects, as they can generate sustainable income.
Currently, Pendle ranks 101 in market capitalization, with an Mcap/TVL ratio of 0.13, while AAVE ranks 29 with an Mcap/TVL ratio of 0.16. Therefore, for the projects mentioned above, if you wish to select participating projects based on income + market capitalization, it seems that Pendle or AAVE may have better opportunities.
Of course, the above is just a simple example, based on the project’s revenue + market capitalization as two single dimensions for consideration. You may need to combine other dimensions or indicators for a more comprehensive analysis to improve your investment success rate, such as aspects of token unlocking, product roadmap, project investment/collaboration, etc.
Moreover, the Hyperliquid, Pendle, and AAVE mentioned above all belong to the DeFi Yield track. Additionally, in our previous article (the one mentioned on March 28), we also noted: from a mid- to long-term narrative perspective, DeFi, Stablecoins, and RWA are narratives that are worth looking forward to and focusing on this year.
We have talked quite a bit about the topic of Stablecoins in our previous articles, so here we will continue to briefly discuss RWA. For a long time, many people (retail investors) seemed pessimistic about the RWA field, but some large companies are continuously laying out, such as BlackRock launching its own on-chain fund, JPMorgan launching a stablecoin on the Base platform, and Robinhood introducing tokenized stocks on-chain...
We expect that as more and more companies participate in tokenization this year (currently many companies are primarily speculating based on the stock market), this speculative effect may also return to part of the crypto field and have a positive impact on some tokens related to the RWA track.
That is to say, the RWA narrative in this year's third quarter (or fourth quarter) is theoretically worth everyone's attention. Of course, I cannot directly tell you which RWA token will make money; here we are merely providing a way of thinking or approach. According to data from the Coingecko platform, there are now over 500 projects under the RWA concept. If you are interested in such projects, you might want to research and focus on them from two angles:
Firstly, those RWA projects that already have relatively successful products.
Secondly, RWA projects that have the ability to continuously attract more on-chain funds.
However, for the convenience of some new partners studying this, let's simply list a few related RWA projects:
For example, Ondo Finance was recently reported in Cointelegraph that they will acquire a compliant brokerage platform, Oasis Pro, and plan to launch tokenized stock trading services for non-U.S. users in the coming months. This also means Ondo is intensifying its efforts to develop tokenized business. Currently, Ondo already has tokenized bond products like OUSG (short-term treasury bonds) and USDY (yield-bearing US dollars), and they also plan to launch a dedicated cross-chain bridging tool to strengthen asset transfer, in collaboration with Pantera to launch a $250 million RWA investment fund. Overall, Ondo seems to maintain a stable leading position in on-chain U.S. treasury bonds.
For instance, Backed Finance, which recently launched the very popular xStocks, is a product they introduced. xStocks are a series of tokenized securities backed 1:1 by real stocks. This product officially launched at the end of June and has introduced over 60 types of tokenized stocks, including Apple, Tesla, Nvidia, etc. They plan to continue expanding to more DeFi platforms in the third and fourth quarters of this year. However, the project has not yet launched its own platform or governance token, only xAssets (i.e., tokenized real-world assets).
For example, Chintai Network (they plan to bring RWA assets into the Bitcoin ecosystem), Robinhood (one of the main promoters of Tokenized Stocks), Lendr Fi (reportedly launching its mainnet soon, introducing a liquidity token named LsRWA for protocol collateral and yield participation) … and so on. Interested friends can further expand their focus from here.
