Matrixport Research: Observations on BTC, ETH, and MEME Coin Ecosystems Amidst the Rotation in the Crypto Market

BTC's allocation value in institutional portfolios has been further reflected, while the performance of ETH and some altcoin ecosystems shows divergence. Although ETH implemented transaction fee optimization in March 2024, it still needs to drive more innovation in an increasingly competitive public chain ecosystem. Meanwhile, the activity in the MEME coin market has experienced a decline after a rapid rise, and market risk appetite has cooled.

BTC's Market Dominance Rises, Market Tilt is Obvious

BTC's market dominance has steadily increased over the past year. After Trump's victory in November 2024, market expectations for BTC as a potential strategic reserve asset strengthened, pushing BTC's price close to $100,000. However, as the December FOMC meeting clarified a relatively tight monetary policy, market expectations for liquidity easing cooled, and investor sentiment gradually became more cautious.

The core logic of the market lies in the adjustment of capital flows. Recently, funds have gradually flowed into relatively low-risk assets, with BTC demonstrating relative stability due to its higher market recognition and liquidity. In contrast, the altcoin market has been more affected by volatility, with trading activity in some high-risk assets declining. This trend of capital rotation reflects the asset allocation tendencies of market participants in the face of tightening liquidity.

ETH Ecosystem Seeks Optimization Amid Competition, Institutional Demand Yet to be Released

ETH implemented transaction fee optimization in March 2024, aiming to enhance network efficiency and user experience. However, despite the reduction in transaction costs, ETH still faces competitive pressure in certain application scenarios. Solana and other public chains have achieved growth in some areas due to lower transaction costs and faster settlement speeds, while ETH's Layer 2 solutions are gradually being promoted to address these challenges.

The launch of ETH ETFs has attracted some institutional attention, but its market impact still needs to be continuously observed. Compared to BTC ETFs, the demand for ETH ETFs remains relatively limited, mainly due to its functional attributes as a smart contract platform differing from BTC's value storage attributes. In the future, ETH's institutional adoption may rely more on the further maturation of the DeFi ecosystem and the widespread application of Layer 2 solutions.

MEME Coin Market Activity Declines, Investor Risk Appetite Adjusts

In 2024, Pump.fun, as a decentralized token issuance platform, boosted the activity of the MEME coin market, with Solana and its DEX platform Raydium also benefiting in this process. However, with changes in market sentiment, speculative demand in the MEME coin market has cooled, and the daily issuance of new tokens on the Pump.fun platform has decreased from its peak.

The adjustment in the MEME coin market may be related to changes in overall market risk appetite. Initially, MEME coins attracted a large influx of short-term capital, driving trading activity in the Solana ecosystem. As the prices of some high-volatility assets have retreated, market speculation has weakened, and some investors have begun to reassess their holding structures. This trend is particularly evident in the meme coin market, where the inflow of funds into new projects has slowed recently, with some trading volume concentrated on more mature projects.

Large Holders Adjust Strategies, Capital Rotation Affects Market Structure

Recent data shows a decrease in the number of large addresses holding over 10,000 SOL, which may indicate that some early investors are adjusting their holding structures. In contrast, BTC's market share remains stable, and some funds may be rotating from more volatile assets to asset classes with greater long-term allocation value.

This trend also aligns with market cycle characteristics. In the early growth phase, funds often flow into high-volatility assets to achieve higher short-term returns. During market adjustment periods, investors tend to reduce high-risk exposure and shift towards more stable assets. The rise in BTC's market share and the outflow of funds from the Solana ecosystem reflect this shift in market style.

Macroeconomic Policy, Liquidity Environment, and Market Confidence Will Become Key Variables

The future evolution of the market will continue to be influenced by a combination of macroeconomic policies, liquidity environments, and market sentiment. A core variable in the current market is the potential cryptocurrency regulatory policies that the U.S. government may introduce. The market generally expects the new government to promote a clearer regulatory framework.

The direction of the Federal Reserve's monetary policy remains a key focus for the market. Although there are certain expectations for liquidity easing in the first half of 2025, the pace of policy adjustments remains uncertain. If the liquidity environment tightens, the market may face greater capital pressure, while the relative stability of mainstream assets like BTC may further increase.

Some of the views above are derived from Matrix on Target. Contact us for the complete report on Matrix on Target.

Disclaimer: The market has risks, and investment should be cautious. This article does not constitute investment advice. Trading in digital assets may involve significant risks and volatility. Investment decisions should be made after careful consideration of personal circumstances and consultation with financial professionals. Matrixport is not responsible for any investment decisions made based on the information provided in this content.