Analysis of Hot Concepts in the Crypto Market: Performance of 14 Main Zones

This year, the overall crypto market is in a state of fluctuation and adjustment, with liquidity continuously tightening. Against this backdrop, some popular concepts and hot assets have still emerged in the market, and the rotation of these concepts has connected this year's market trends. In the absence of a long-term upward trend, chasing the rotation of different concepts may capture structural opportunities in a fluctuating market, achieving excess returns.

In-depth analysis of price changes for 114 assets across 14 concepts shows that:

1. The 32 calendar weeks that have passed this year have formed 11 concepts of rotation, including LSD/LSDFi, Appchain/stack, NFT/NFTFi, SocialFi, Layer2, MEME, Social Trading Bot, BTC, Hong Kong web3 concept, Wallets, and BRC-20. The average weekly increase of the leading concepts in each rotation reached 26.42%.

2. During the upward rotation process, the Social Trading Bot, MEME, and BRC-20 appeared the most frequently, followed by LSD/LSDFi and SocialFi, achieving the highest average weekly increase over 4-6 calendar weeks.

3. This year, the overall market has exhibited three similar upward trend segments, with the performance of most popular concept assets mirroring this. The overall upward trend has gradually weakened, with the average duration of each concept in the first upward trend segment being 48.43 days. Subsequently, the average durations in the upward trend segments were 30.04 days, 20.48 days, and 14.86 days respectively.

4. Comparing different strategies, holding BTC is likely an investment strategy with a median return level. If one can accurately grasp each hotspot, the theoretical return this year could reach 20 times.

Overview of 14 Popular Concepts

Based on this year's media reports on popular events and asset classifications, 14 popular concepts have been selected: Hong Kong Web3 concept, NFT/NFTFi, Layer 2, LSD/LSDFi, MEME, Social Trading Bot, appchain/stack, RWA, Wallets, SocialFi, BRC-20, DEX/Perp DEX, Lending/Borrowing, CEX.

These concepts include the Hong Kong Web3 concept stimulated by policy dividends, the LSDFi concept brought about by Ethereum upgrades, the BTC-20 concept resulting from the expansion of Bitcoin application scenarios, the social media trading bot concept inspired by ChatGPT, as well as the ever-popular MEME concept and past mainstream concepts like DEX, NFT, and CEX.

From the perspective of the listing trading time of the selected observation assets, only BRC-20 and Social Trading Bot are new concepts that have emerged this year. In addition, among the four popular concepts of Layer2, LSD/LSDFi, MEME, and NFT/NFTFi, some new assets issued this year have also entered the observation list, which indicates that these concepts are relatively more active this year compared to previous mainstream concepts.

Concept Token Rotation Upward Analysis

Overall, before mid-May, the average weekly increase of the 14 concepts was not significantly differentiated, but after mid-May, multiple concepts began to show a significant upward trend, with substantial increases occurring on a weekly basis.

This year, the 32 calendar weeks that have already passed have formed a rotation of 11 concepts. RWA, DEX/Perp DEX, Lending/Borrowing, CEX, and ETH have not made the list, meaning they have not led the gains this year.

During the rotation of the increase, trading robots, MEME, and BRC-20 appeared the most. LSD/LSDFi and SocialFi also had the highest average increase over 4 natural weeks this year. These 5 concepts performed the best in this year's rotation.

Trading bots are a popular concept with high volatility and appear in the rotation sequence with the highest average rise and the highest average decline many times. LSD/LSDFi and SocialFi are relatively less volatile, appearing more times in the rotation sequence with the highest average gains, and are relatively strong sectors. Wallets and NFT/NFTFi are relatively weak sectors overall.

Uptrend Segment Analysis

This year, BTC and ETH, the two major mainstream assets, have exhibited three similar upward trend segments.

1. The first uptrend segment: approximately from January 1 to February 21.
2. The second upward trend period: approximately between March 11 and April 17.
3. The third upward trend segment: approximately between June 15 and July 14.

The overall upward trend has gradually weakened, with the average duration of each concept in the first upward trend phase being 48.43 days. Subsequently, the average duration in the upward trend phases is 30.04 days, 20.48 days, and 14.86 days respectively.

For most tokens, the highest returns during the first major upward trend segment are the highest returns of the year, and some newly launched tokens this year have achieved their highest returns during the recent trend segment.

Comparison of Structural Strategies

The year-round holding strategy for BTC is defined as a simple baseline strategy, with a theoretical return rate of 60.22%.

Two concept rotation-based strategies:

1. Weekly Hotspot Tracking: Buy the assets with the highest increase in price for the week in accordance with the natural weekly time changes. This strategy has a return rate of approximately 2053.20%, but it is highly sensitive to the selected assets.

2. Reduce trading frequency: Rotate assets according to the longest duration of the upward trend segment. The yield of this strategy is approximately 1536.67%, mainly benefiting from the selection of the asset BRICK during the fourth upward trend segment. If only the first three upward trend segments are considered, the yield of this strategy is approximately 44.93%.

Overall, holding BTC is likely to be an investment strategy with a medium level of return. If one pursues trending topics weekly, the theoretical return may significantly exceed that of the baseline strategy, but the returns are greatly influenced by the selected assets. If one participates in the market at a lower trading frequency based on the duration of the upward trend, it might generate a theoretical return lower than that of the baseline strategy.

In addition to focusing on newly emerging concepts and tokens, grasping the concept of rotation can also involve paying attention to opportunities for previous concepts to rotate again.