Metrics Ventures Market Observation: The release of capital market risks is orderly, and the speculative chips still need to be consolidated
Altcoins rebounded after the FOMC broke the emotional ice, but they are still driven by a vacuum of chips, and the market trading volume remains sluggish.Author: Metrics Ventures
Metrics Ventures September Market Observation Guide for the Crypto Market Secondary Fund:
1/ Recently, Bitcoin has continued to fluctuate within the range of 50,000 to 60,000, with market sentiment being low. Daily trading volume has hit a new low, fees remain negative, and the Ethereum exchange rate has once again fallen to a new low, indicating that the market has entered a freezing point. Altcoins have rebounded slightly after the FOMC broke the emotional ice, but they are still driven by a vacuum of chips, and market trading volume remains sluggish.
2/ Continuing from last month's analysis, altcoins are generally in a consolidation phase after a pullback from the highs of March/April. However, the accumulation of time in the chip dynamics is crucial, and we have yet to observe signs of altcoins being ready in bulk. It is worth noting that many targets' chips have not formed effective distribution and have passively pulled back to low points, which means market makers still have the motivation to maintain prices or drive a rebound in the short window after the emotional freezing point. This could be a positive signal.
3/ From the current perspective, we believe that the international risk market has released risk for the first time since August. Although some altcoins have shown decent recovery trends this month, we believe that crypto assets still need time to build strength. Currently, the market will continue to be in a state of disorderly fluctuations. Looking ahead, we believe that the adjustment and accumulation this year will serve as a good foundation for next year's market, and there is no need to worry excessively about the volatility of the market.
Overview and Commentary on Overall Market Trends:
This month's market performance has been lackluster, with the hotspots for speculation and their duration being weaker than at the beginning of 2023. The market is once again widely discussing the issues of blockchain-native innovation represented by Ethereum and its penetration rate facing obstacles. From a certain perspective, the current level of sentiment is even lower than in 2019. Following the FOMC, sentiment has eased somewhat, and some altcoins have shown decent recovery trends, but the market still suffers from scattered hotspots and low trading volume.
Looking back at the trends, Bitcoin has continued its disorderly wide fluctuations since April. This is mainly due to the simultaneous shrinkage of trading volume, market attention, and risk appetite. It is noteworthy that we are witnessing a disorderly wide fluctuation close to new highs, which confirms our consistent view—that we may be experiencing a unique macro asset cycle. From the perspective of altcoins, current market opportunities are mainly concentrated on chip games. This highlights the essence of the current narrative scarcity and weak internal driving force within the industry. Apart from AI and Meme, there has yet to be a significant convergence of funds and a main narrative trend. As we mentioned earlier, the market's pricing model and gameplay transformation has gradually become recognized by more practitioners.
However, the characteristics of a reflexive market remain unchanged. If this trend continues, we may see a resurgence of pure speculation driven by narratives and chips, further highlighting the "casino" nature of the market. From the perspective of secondary market operations, grasping the escape window and choosing the right escape posture will become increasingly important.
Overall, our focus will continue to revolve around waiting. The wide fluctuations will eventually end, and at that time, the risk-reward ratio of profiting through "buying low and selling high" will significantly decrease. Maintaining focus on the market and doing a good job of identifying turning points after market lows is the wiser choice.
Industry Development Trends:
- The primary market VC is undergoing a severe reshuffle, with small and medium-sized VCs clearing out, and many projects' DPI even falling below 1. In contrast, leading VCs continue to grow, rapidly completing a new round of financing within just five months. The future primary market will show an extreme polarization trend. Apart from leading VCs, only incubators focused on early-stage projects with unique tastes or vertical VCs focused on specific ecosystems can leverage ultra-high odds and competitive advantages in vertical fields to find a space for survival in the market.
- The most discussed application tracks are SocialFi and AI Crypto. The implementation of AI faces hard obstacles, requiring a wait for key technological breakthroughs. Pumpfun is the most successful SocialFi case, while the truly suitable SocialFi for Web3 is not a Web3 version of Twitter, but rather a socialized casino.
- BTC, stablecoins/payments, and casinos are currently the only proven effective business models in the industry. Stablecoins have become the new "roll king" track in the primary market, but no one can clearly explain how to break Tether's network effect. The development trend of the industry is becoming clearer; apart from BTC, the ultimate business model of Web3 is a casino.
- Quantitative returns continue to be under pressure, with many quantitative teams transitioning from the A-share market flooding into the crypto market. However, considering the current overall scale of the quantitative market compared to active trading liquidity, quantitative returns are expected to shrink further. At the same time, we should be wary of high-leverage quantitative strategies, as the risk of liquidation for these strategies is continuously rising in extreme market conditions.
