Market adjustments usually mean strong panic emotions and severe price drops, but when this sentiment overreacts, it often provides opportunities to buy promising projects at lower prices. During market adjustments, some quality tokens and projects may be undervalued due to the overall market downturn, and the rebound after adjustment may bring excess returns.
Potential tracks and tokens
1. Layer 2 solutions
• Reasons for potential: The scalability issue of Ethereum is still not fully resolved, and Layer 2 solutions (such as Arbitrum, Optimism) are gradually becoming key to solving high transaction costs and slow confirmation speeds. During market recovery, Layer 2 may become a focus for capital inflow, especially as Ethereum's upgrades progress.
• Representative tokens: Arbitrum (ARB), Optimism (OP)
2. Decentralized Finance (DeFi)
• Reasons for potential: DeFi remains one of the core areas of the crypto market, especially during market downturns, DeFi projects often attract more investors seeking high returns. The infrastructure of DeFi will welcome more liquidity during the recovery. Many traditional financial institutions are also gradually joining the DeFi scene, promoting its development.
• Representative tokens: Aave (AAVE), Uniswap (UNI), MakerDAO (MKR)
3. Privacy coins and privacy protocols
• Reasons for potential: With increased global attention to data privacy protection, privacy coins and privacy protocols are expected to gain more market demand in the future. In particular, with the strengthening of inter-country regulation, decentralized privacy protection solutions will become the preferred choice for users.
• Representative tokens: Monero (XMR), Zcash (ZEC), Tornado Cash (TORN)
4. AI and blockchain integration
• Reasons for potential: Applications that combine AI and blockchain are rapidly developing, especially in the fields of data markets, smart contract optimization, and decentralized computing. As technology matures, AI projects will bring more practical applications to blockchain.
• Representative tokens: Fetch.ai (FET), SingularityNET (AGIX)
5. NFTs and the Metaverse
• Reasons for potential: Although the NFT market experienced adjustments in 2023, as the creator economy and digital art gradually mature, NFTs still possess growth potential. Especially for NFT projects involving gaming, virtual real estate, artistic creation, and social interaction, market demand may see a resurgence.
• Representative tokens: Flow (FLOW), The Sandbox (SAND), Decentraland (MANA)
6. Cross-chain protocols
• Reasons for potential: With the rise of a multi-chain world, cross-chain protocols will become the infrastructure of the blockchain ecosystem. Whether it is asset liquidity or data interoperability, cross-chain technology will be a key element that cannot be ignored when the market recovers.
• Representative tokens: Polkadot (DOT), Cosmos (ATOM)
New changes during market recovery
1. Clearer regulatory framework
• Expectations: When the market recovers, governments around the world may introduce clearer regulatory policies for crypto assets, especially regarding stablecoins, decentralized exchanges (DEX), and NFTs. This will bring more stability to the market and attract traditional capital.
• Impact: The clarity of regulation may alleviate some investors' concerns, bringing greater capital inflow, especially from institutional investors.
2. Involvement of institutional investors
• Expectations: As the market gradually restores confidence, institutional investors (such as hedge funds, family offices, insurance companies, etc.) may increase their allocation to crypto assets. The inflow of large institutions will not only drive the market up but may also accelerate the construction and maturation of crypto infrastructure.
• Impact: The inflow of institutional funds will promote the decentralized development of the market, further increasing the market's maturity.
3. Further development of decentralized governance and DeFi
• Expectations: Decentralized governance (DAO) and decentralized finance (DeFi) will welcome more innovations, particularly in areas such as cross-chain liquidity, derivatives markets, and decentralized insurance. The growth of DeFi will accelerate during market recovery.
• Impact: The application scenarios of decentralized projects will expand, and traditional financial businesses will gradually shift towards decentralized models, promoting further development of the entire blockchain industry.
4. Emergence of more innovative applications
• Expectations: As the market recovers, more innovative projects may emerge, especially in areas such as NFTs, DAOs, and Decentralized Identity Verification (DID). Many emerging applications based on blockchain (such as decentralized social media and digital copyright protection) will receive widespread attention.
• Impact: These emerging applications will drive new capital inflows, providing more opportunities for project parties and investors.
Investment strategies
1. Diversified investment, seizing undervalued opportunities
• Strategy: During market adjustments, seek out undervalued quality projects for investment. Diversify investments across multiple potential tracks, such as Layer 2, DeFi, AI, NFTs, etc., to avoid the risk of a single asset.
2. Focus on technological development and team execution capabilities
• Strategy: Choose projects with clear technological routes and strong team support. Pay attention to the project's updates and iterations, especially those that continue to develop and build community even during market downturns.
3. Seize the time window of market recovery
• Strategy: When the market recovers, quickly deploy funds to seize short-term rebound opportunities. For projects with a strong existing ecosystem (like ETH, BTC, etc.), a long-term holding strategy can be adopted; for emerging innovative projects, focus on their breakthrough technologies and application scenarios, and enter the market at the right time.
4. Dynamic portfolio adjustment
• Strategy: During market volatility, regularly review the investment portfolio and adjust asset allocation according to market changes. For projects that are already profitable, moderate profit-taking can be done to lock in gains; for undervalued projects, increasing positions during adjustment periods is advisable.
Summary
Opportunities after market adjustments mainly manifest in undervalued purchases of quality projects, especially those with technological breakthroughs, active communities, and clear application scenarios. As the market recovers, the entry of institutional funds, clarity of regulatory policies, and accelerated development of decentralized applications will promote the maturation of the crypto market. Investors can seize opportunities during market recovery through diversified investment, focusing on technological innovation and team execution capabilities.
