Institutional Fund Flow: Analyzing the Five Major Potential Tracks of This "alt season"

After Bitcoin broke through $120,000 and Ethereum returned to $3,400, discussions in the market about the return of alt season have heated up again. While there are still doubts about whether alt season has truly arrived, if a new round of capital cycle begins, what investment opportunities should we pay attention to? This article discusses five tracks: asset reserves, ETF candidates, RWA, DeFi, and stablecoins, from a subjective perspective. It should be noted that the projects mentioned in this article are not short-term speculative targets, but rather directions that the author believes may attract more structural attention in the future based on current market trends.

The Differences of This "alt season" from the Past

Unlike the "barbaric growth" driven by retail investors and speculative sentiment in the past, the dominant logic of this round of the market may undergo significant changes:

1. Changes in the macro environment. With breakthrough progress in relevant legislation, the regulatory boundaries are becoming clearer, and the barriers for traditional financial institutions to enter are being removed.

2. Institutional funds participating in the market changes the ownership of pricing power. Institutional funds are larger in scale, have more rigorous investment logic, place greater emphasis on compliance and fundamentals, and possess stronger market influence.

3. Market liquidity is concentrating towards Bitcoin, with altcoin liquidity noticeably tightening. This differentiation mainly stems from the institutional drive of Bitcoin spot ETFs and the siphoning effect of publicly traded companies hoarding coins.

4. A new narrative of Ethereum as an asset reserve is taking shape. Several listed companies have incorporated ETH into their asset reserves, and currently, the Ethereum reserves held by listed companies account for 9.6% of the total ETH supply.

These trends indicate that institutional funds will largely dominate the direction of this round of "alt season". Tracks that can accommodate large amounts of capital or sectors that see an overflow of institutional funds may be more attractive for investment.

Asset Reserve Track: Tokens on Corporate Balance Sheets

Tokens included in the corporate balance sheet are more likely to become an important investment direction in this round of "alt season". Currently, publicly traded companies have incorporated some mainstream altcoins into their asset reserves, including BNB, SOL, TRX, HYPE, and others.

From the perspective of price elasticity, SOL has shown relatively weak performance in this round of price correction, with a relatively loose chip structure. Therefore, assuming that the fundamentals remain intact, once market funds flow back, the price elasticity of SOL may become more pronounced.

HYPE, as an emerging project, has a short life cycle, but it may have more "growth dividends" in the new cycle.

In the long run, tokens that can appear on a company's balance sheet will be an important part of the "institutional main line" in the crypto market. In the future, any additional tokens incorporated into corporate balance sheets will still be worth ongoing attention.

ETF Candidates: Institutional Investable Altcoins

ETF is becoming an important narrative for altcoins. Potential ETF candidate coins include SOL, XRP, LTC, DOGE, ADA, DOT, HBAR, AXL, APT, etc.

Solana(SOL) has taken the lead in the altcoin ETF arena. If a traditional spot SOL ETF is approved in the future, it could further enhance its market appeal.

XRP faces a similar situation, as the regulatory dispute between Ripple Labs and the SEC is nearing its end, and the probability of the SEC approving an XRP spot ETF this year is relatively high. From the price trend, XRP has maintained strong resistance during multiple rounds of market corrections.

The approval probabilities for LTC and HBAR are also relatively high, and neither of them has been labeled as securities, with clear compliance attributes. Among them, HBAR has also demonstrated strong resilience during multiple market shocks.

RWA Track: The On-Chain Representation of Real Assets

RWA unlocks the potential for asset liquidity, transparency, and global accessibility by tokenizing traditional assets. With the optimization of the regulatory environment, the RWA sector receives policy support.

The protocols that have formed scale and issued tokens currently include Ondo(ONDO) and Centrifuge(CFG). As an indispensable technological pillar in the RWA sector, Chainlink(LINK) is also worth paying attention to.

DeFi Track: Real Cash Flow, Institutional Exemption Catalyst

DeFi is receiving support at the policy level. The US SEC plans to launch an "innovation exemption" policy to pave the way for the compliant development of DeFi projects.

DeFi on-chain data is performing strongly, especially with the trading volume of derivative DEX reaching a historic high. In the DeFi track, the locked value of lending protocols and liquid staking protocols accounts for the highest proportion, with Aave and Lido as the leaders.

As the Ethereum ecosystem continues to heat up, DeFi projects on it are most likely to benefit from the capital overflow effect. The lending sector leader AAVE and the DEX sector leader UNI, with their mature ecological status and stable revenue models, may become priority choices for capital. HYPE, as an emerging potential project, has shown certain investment attractiveness due to its rapid growth in the derivatives trading field.

Stablecoin Track: The Narrative Closest to Real Payment Implementation

With the introduction of relevant legislation, the regulatory framework for stablecoins is becoming increasingly clear. The stablecoin sector often forms a synergistic effect with the RWA and DeFi sectors.

Sky( originated from MakerDAO), which is a leader in the decentralized stablecoin sector. It maintains a healthy financial condition by investing in tokenized U.S. Treasury bonds, demonstrating a solid fundamental basis. Currently, it is attempting to create its own ecological narrative through brand rebranding.

Ethena is a protocol that will be launched in 2024, but its capital lock-up scale is already comparable to Sky, and it is collaborating with Securitize to launch a public chain called Converge that focuses on RWA.

The real explosion of altcoin market requires the joint catalysis of capital structure, policy environment, and market narrative. As Bitcoin and Ethereum become the core assets held by institutions, a new "altcoin logic" quietly takes shape: only coins with fundamentals, capable of telling a clear story, and accepted by institutions have the potential to navigate through the fog of valuation reconstruction in the upcoming cycle and become true winners.