Crypto market hot concept rotation analysis: How are the returns of 14 mainstream zones?

This year, the overall crypto market is in a state of oscillation and adjustment, with liquidity continuously tightening. Against this backdrop, some popular concepts and assets have emerged in the market, and the rotation of these concepts has linked 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 the oscillating market and achieve 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 concept rotations, 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, Social Trading Bot, MEME, and BRC-20 appeared the most frequently, followed by LSD/LSDFi and SocialFi, achieving the highest average weekly increase within 4-6 natural weeks.

3. This year, the overall market has shown three similar upward trend segments, and the performance of most popular concept assets has been similar. The overall upward trend has gradually weakened, with the average duration of each concept in the first upward trend segment being 48.43 days, followed by average durations of 30.04 days, 20.48 days, and 14.86 days in the subsequent upward trend segments.

4. Considering the concept of rotation, comparing different strategies reveals that holding BTC may be an investment strategy with a medium-level return. If one can accurately grasp each hotspot, the theoretical return this year could reach 20 times.

Among the 14 popular concepts, only BRC-20 and Social Trading Bot are newly emerged concepts this year. Additionally, 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, indicating that these concepts are relatively more active this year compared to mainstream concepts in the past.

Overall, before mid-May, the average weekly increase of 14 concepts was not significantly differentiated. However, after mid-May, multiple concepts began to show a significant upward trend, with a substantial increase occurring in natural week cycles.

During the upward rotation process, trading bots, MEME, and BRC-20 appear the most. In contrast, during the downward rotation process, trading bots appear the most frequently. Overall, trading bots belong to a highly volatile hot concept. LSD/LSDFi and SocialFi have relatively small fluctuations and belong to relatively strong zones. Wallets and NFT/NFTFi generally belong to relatively weak zones.

This year, BTC and ETH, the two major mainstream assets, have exhibited three similar upward trend segments. The first upward trend segment occurred approximately between January 1 and February 21, the second upward trend segment occurred approximately between March 11 and April 17, and the third upward trend segment occurred approximately between June 15 and July 14.

In comparing structural strategies, we considered three strategies: the BTC year-round holding strategy, the weekly hot topic chasing strategy, and the asset rotation strategy based on the duration of the uptrend segment. The results indicate that holding BTC is likely to be an investment strategy with a median return. If we chase hot topics on a weekly basis, the theoretical return could be much higher than that of the baseline strategy, but the level of return is greatly influenced by the selected assets.

Different understandings of concept rotation may lead to significant differences in final returns. However, in general, if one can participate in the rise of a popular concept, it will significantly boost the theoretical annual return on investment. In addition to focusing on newly emerging concepts and tokens, one can also pay attention to the opportunities for past concepts to rotate again.