Exploring the Core Narrative and Track Sorting of the Next Stage of the Crypto Market

Recently, both the traditional financial market and the crypto market have shown some positive signals. In July, the U.S. CPI data recorded 8.5%, which is lower than market expectations. However, there are still many uncertainties in the market, and it is necessary to continue observing whether the CPI has truly reached a turning point.

From a purely "wealth destruction" perspective, this year's crypto market bear market has been more severe than any historical cycle. The collapse of Luna directly wiped out $60 billion in market value, triggering a series of chain reactions. However, on the positive side, it is unlikely that such a large-scale sell-off will occur in the short term again, and the bottom formed by this event may become a strong support in the future.

For most of this year, the correlation between cryptocurrencies and traditional financial markets has reached unprecedented levels. However, as the market gradually stabilizes, risk appetite is returning, and there are signs of recovery in the crypto market. A sideways consolidation phase may be on the horizon, especially as Bitcoin's rebound may come later than that of altcoins with clearer narratives.

From a technical perspective, the S&P 500, NASDAQ, and NASDAQ 100 have recently restored a bullish structure on the weekly charts. The current price has broken through the high point before the most recent round of accelerated decline. Compared to the rebound in April, the strength of this upward movement and the "gains" in terms of chart patterns are clearer.

The market has been anticipating the Federal Reserve to achieve a "soft landing". The recent rebound is attributed to strong employment data and a decline in CPI. Only if these data continue to improve can the Federal Reserve gain greater flexibility in adjusting monetary policy. However, risks such as the energy crisis in the Eurozone and the escalation of the Russia-Ukraine conflict still bring uncertainty to the market.

The next month or so is an important time window with multiple key events:

• August 25: Jackson Hole Annual Meeting
• September 2: August Non-Farm Payroll Data
• September 13: August CPI
• September 15-16: ETH Merge
• September 22: Federal Reserve Meeting

Before the next Federal Reserve meeting, the market may initially decline and then rebound to digest significant risk events such as the Ethereum merger and interest rate decisions. If next month's non-farm and CPI data perform well, the pullback is not expected to be strong. However, since the market is still very emotional, maintaining liquidity is important.

Ethereum

ETH has recently outperformed, not only beating Bitcoin but also significantly surpassing major public chains and other large-cap coins. Only tokens related to the merge, such as OP, Lido, GMX, etc., can keep pace with Ethereum.

Layer 2 related tokens have greater attention value during the merge cycle. OP has proven this, and Arbitrum may follow the same path in the future.

Currently, Ethereum is the only high liquidity asset available for betting during the merge for big players, thus having a much better narrative than Bitcoin. The independence of the crypto market is rising, and after a recent rebound, there is a clear differentiation, with many altcoins even failing to recover the first rebound peak after the Luna crash.

On the market, ETH below $1800 is worth buying. If it falls below the $1650 support, more caution is needed when choosing the bottom-fishing timing. As long as the $1650 support holds, recovering to $2000 for ETH during the merger in mid-September is almost a sure thing.

DOGE & SHIBA INU

The flat movement of DOGE/BTC indicates that the market is about to face a new round of choices: either the last wave of rotation for altcoins during a bear market rebound, or a new round of explosive market trends is about to arrive. Considering the recent market conditions, the latter possibility is higher.

DOGE/BTC has always been an indicator for assessing retail investor entry. Recently, the WallStreetBets community has become active again, reminding people of the GameStop and Dogecoin story from early 2021. The Dogecoin ecosystem has also added Dogechain, enhancing the narrative.

DOGE and SHIB are hardly supported by any technological innovation, primarily driven by memes, community FOMO, and the inherent capital properties of encryption. However, DOGE always manages to sprint ahead before each round of the crypto market bull run. Of course, this surge may just be a rotation of altcoins in the rebound of the bull market.

Technically, DOGE has broken through the upper edge of the consolidation range in recent months. In the short term, confirming a pullback to this newly turned support level is crucial. Google Trends data shows that the current level of interest in DOGE is still relatively low and has not yet reached the point of reversing the upward trend.

Solana

Solana was another winner in the public chain competition in 2021, apart from BNB. With Ethereum shifting towards a modular architecture, Solana will become a representative public chain that directly handles all transactions at layer one. Its low cost is very attractive to ordinary users, but it has also led to the network frequently being abused by bots and crashing.

Recently, Solana's network upgrade implemented Quic/Qos/localized fee market, which helps alleviate network congestion. This can be referred to as "Solana 2.0". The localized fee market allows specific parts to charge fees without impacting the entire network, thanks to Solana's parallel transaction processing capabilities.

In terms of technical analysis, once it breaks through 48.5 dollars, it will quickly open up space above. It is an ideal buying point if it bounces back without breaking the support zone of 40-42 dollars. If it falls below 39.15 dollars, one needs to be cautious of the risk of a new round of rapid decline.

Chilliz

Chiliz is one of the most successful encryption teams in the real-world consumer market, focusing on the sports and entertainment sectors. They collaborate with well-known clubs such as Barcelona and Juventus to issue team tokens through the Socios.com app.

CHZ has shown strong performance recently, breaking through the downward trend line of nearly a year. The strong resistance above is at $0.30. As long as it holds the support at $0.15-$0.17, the upward momentum is not in doubt.

XMON

Sudoswap is known as the "Uniswap of the NFT market" and aims to enhance NFT liquidity. It allows users to create different pools and set dedicated curves, completely decentralized and free.

Sudoswap's sales have reached one-tenth of OpenSea in just one month since its launch. If market enthusiasm returns, especially with more game item NFTs entering the platform, the future growth potential remains considerable.

Some Thoughts

The worst period of the market may have passed, and new lows are unlikely to occur before the Ethereum merger. However, risk hedging is still necessary, and Bitcoin, which lacks new narratives in the short term, is a better hedging tool.

Once the anxiety over economic recession weakens, market liquidity will quickly return. At that time, DOGE, on-chain options, and MEME coins may be the best follow-up choices. Chilliz is also worth paying attention to, as it provides fans with the opportunity to connect with teams.

The metaverse track still has room for exploration. LDO, OP, GMX and other assets related to the merger have performed well recently, but they may face challenges after the merger. The relaunch of Arbitrum Odyssey in September is worth paying attention to.

The Jackson Hole annual meeting may provide signals for adjustments in Federal Reserve policy, which requires close attention.

Key focus: ETH, SOL, SHIB, DOGE, CHZ, XMON Hedging options: BTC, APE Watchlist: SNX, LINK, LDO, FOLD, GMX, SYN, SCRT, UNI, AAVE, IMX, OSMO, DPX, MATIC, BTRFLY

Future Outlook

The market focus is currently on the Q4 Ethereum merge, but we should broaden our thinking. The macro environment remains uncertain, making it difficult to predict the trend of the US stock market. If a bull market or a large-scale rebound really arrives, sector rotation will be very different from that of 2021, and we need to quickly find new hot tracks.

Narratives worth paying attention to in the future:

• Sol 2.0 and localized account fee market
• Optimistic Rollups v2: Arbitrum Nitro and Optimism Bedrock
• privDeFi: Aztec Connect, Secret Network, Penumbra, Mina + zkApps
• sudoSwap & Doge
• Cross-chain security
• Interoperability between application chain accounts
• The Rise of On-Chain Options
• zkEVMs: Scroll vs. zkSync vs. Starknet vs. Polygon Hermez
• New Public Chains: Aptos & Sui
• xApps & Cross-Chain Communication: CCIP vs. StarGate vs. Synapse Chain vs. Connext vs. Wormhole vs. IBC
• Celestia & Sovereign Rollups
• dyMension and RollApps vs. Rollups
• Modular execution rollups / FuelVM
• Blockchain Games: Aurory, Illuvium, Treeverse, Strange Clans
• EIP 4844

Overall, the market may remain in good condition over the next month. If the macro environment improves further, it is necessary to seize the aforementioned new narrative opportunities in a timely manner.