Market Overview

Market Summary

This week, the cryptocurrency market experienced a volatile downtrend. Bitcoin saw a price correction, while altcoins followed with similar downward fluctuations. The market sentiment index dropped significantly from 71% last week to 36%, shifting the overall mood into bearish territory.

Stablecoin Market Dynamics

The stablecoin market continued its upward momentum from last week, with both USDT and USDC showing synchronized growth:

• USDT: Market capitalization reached $152.9 billion, a week-on-week increase of 0.65%. Weekly inflows have exceeded $1 billion for four consecutive weeks, maintaining a strong upward trend.
• USDC: Market capitalization stood at $61.2 billion, up 0.33% from the previous week, extending its modest growth trend.

The continued rise in stablecoin market cap reflects that:

• USDT’s rapid and sustained growth suggests institutional capital — primarily from non-U.S. regions — is increasing its presence in the market.
• USDC’s steady, moderate gains indicate that while U.S.-based users remain optimistic about the market outlook, they are still entering cautiously.

Overall, recent capital flows suggest that regardless of market direction, funds are actively entering the market at this stage.

Reasons for This Week’s Market Volatility

• After BTC hit a new all-time high, the $110,000 level triggered heightened market divergence, with insufficient follow-up capital inflows.
• Altcoins lack independent momentum and mostly react passively to BTC price swings.
• The market is currently lacking new macroeconomic catalysts or significant capital inflows to sustain upward momentum.
• Existing capital scale and investor sentiment are not strong enough to support continued market growth.

Negative Impacts from External Macro Factors

• Traders have voiced concerns over U.S. Treasury issues, increasing overall market uncertainty.
• Expectations that the Federal Reserve may reduce the number of rate cuts this year are dampening risk asset appeal.
• Market participants remain cautious about short-term upside potential, with fear outweighing optimism.
• Bullish sentiment has failed to persist, leading investors to adopt a wait-and-see attitude.

Potential Reversal Triggers & Investment Recommendations

• Despite weak sentiment, major assets are still consolidating at high levels, indicating underlying market resilience.
• The ongoing tug-of-war over U.S. tariff policy suggests the situation is still evolving.
• Several potential catalysts could prompt a swift reversal: Passage of the stablecoin legislation in the U.S. House of Representatives Continued flow of FTX compensation funds into the market, potentially used for crypto purchases

Investment Recommendations:

• Maintain a cautious stance; avoid impulsive buying at highs or panic selling during dips.
• Adopt a trend-following strategy and wait for clear confirmation before taking action.
• Beware of the risks associated with blind shorting, as positive news could trigger a rapid market rebound.

Next Week’s Bullish Pick: ELDE

ELDE: Highly Concentrated Token Distribution with Potential for Price Surge

On Wednesday, Binance Alpha listed Elderglade (ELDE), a GameFi project that integrates AI and NFT elements. Although the token declined following its Token Generation Event (TGE), mirroring the broader market trend, its tokenomics structure has caught our attention.

Tokenomics Analysis

ELDE has a total supply of 400 million tokens, with a highly concentrated allocation:

• Liquidity/LP: 25% (100 million tokens) — the largest share
• Marketing/Ecosystem: 17.75% (71 million tokens)
• Development/Treasury: 12.5% (50 million tokens)
• Team and Seed Investors: 10% each (40 million tokens each)
• Airdrop: Only 3% (12 million tokens)
• IDO: The smallest share at just 1% (4 million tokens)

Circulation and Holding Characteristics

Following the TGE, tokens held by regular users are minimal:

• Retail investors primarily received tokens via airdrop, which accounts for just 3% of the total supply
• Most airdrop participants exited quickly after TGE
• Retail users received very limited rewards from liquidity/LP allocations
• The vast majority of tokens remain concentrated in the hands of the project team and affiliated stakeholders

As shown in the chart, Elderglade’s in-game daily trading volume has remained relatively high in recent days but is now on a downward trend, most likely due to users farming airdrops.

As shown in the chart, the number of daily active users in the Elderglade game is declining rapidly.

Market Conditions and Potential Risks

• The current market capitalization is only $13.26 million, which is relatively low
• Actual daily trading volume is under $5 million, indicating limited liquidity
• This combination of factors (low market cap + low liquidity + highly concentrated holdings) creates favorable conditions for the project team: The team can more easily influence the token’s price movements There is a potential risk of price manipulation Even small amounts of capital can trigger significant price volatility

This tokenomics structure suggests that ELDE may face a high degree of centralization risk, making it highly favorable for the Elderglade team to drive up the token’s price.

Bearish Picks: SOPH, SLF

SOPH: Hollow Layer 2 Project Struggles After Binance Listing; High Valuation and Low Activity Signal Deep Correction Risk

On Thursday, SOPH was listed on both Binance Alpha and Binance HODLer. While Sophon generated considerable hype during its pre-listing promotion, the token has plunged over 35% since launch.

Weak Market Environment and Underperforming Sector

• The Ethereum ecosystem has underdelivered in the current bull market, with most Layer 2 projects performing poorly
• Market interest in Layer 2 solutions is fading, putting Sophon at risk of being abandoned by investors
• In a highly competitive Layer 2 landscape, Sophon lacks distinctive technical or application advantages

Extremely Low On-Chain Activity and Real Usage

• On-chain DEX data shows minimal and declining user trading activity
• Daily trading volume is just $690,000, indicating very weak on-chain engagement
• The top-ranked protocol, SyncSwap, has generated only $560,000 in on-chain fees over the past year, highlighting the ecosystem’s low usage
• Insufficient on-chain activity suggests that the project has failed to attract a real user base or meaningful trading volume

Severely Lagging Ecosystem Development

• Only two on-chain ecosystem projects exist, with no native project development
• Lacks a comprehensive DeFi ecosystem, making it difficult to establish a sustainable growth cycle
• No unique use cases or killer applications to attract users
• Compared to other mature Layer 2 solutions, its ecosystem is significantly underdeveloped and lacks momentum for growth

Unrealistic User Growth and Valuation Bubble

• The surge in user numbers mainly stems from anticipation of the Binance Alpha listing, increasing from 120,000 to 430,000 within 7 days
• The user growth is likely driven by users farming points to claim airdrops rather than genuine project usage
• Without a substantive ecosystem or applications, the $132 million market cap and $661 million FDV are clearly overvalued
• Once the airdrop hype fades, Sophon — lacking real use cases — may face a severe price correction

In summary, the Sophon project currently faces multiple challenges including a weak market environment, sparse on-chain activity, a lack of ecosystem development, and unrealistic user growth. At the same time, its valuation is clearly overinflated. These factors collectively form the bearish thesis on Sophon, and investors should carefully assess the associated risks.

SLF: Investment Risk Analysis Amid Challenges of a Modular Public Chain and Upcoming Token Unlock

Self Chain is a modular, intent-centric Layer 1 project, formerly branded as Front.

Declining Market Positioning and Concept Appeal

• Over the past six months, the modular blockchain concept has gradually faded in the market, losing its hype advantage
• Although public chains have become a market focus, Self Chain has failed to capitalize on this trend and has not stood out in the highly competitive public chain sector
• The project lacks clear technological differentiation and a unique value proposition, making it difficult to establish a competitive edge among numerous public chains

Lagging Ecosystem Development

• The ecosystem lacks high-yield DeFi projects, failing to attract liquidity providers and traders
• No breakout applications have emerged; there are no killer apps driving user growth
• The project has not attracted developers to build on its platform, with ecosystem construction clearly lagging behind other public chains
• The absence of a complete application ecosystem hinders network effects and results in low user retention

Upcoming Token Unlock Pressure

• On June 7, 118 million SLF tokens will be unlocked, accounting for 3.54% of the total locked supply
• According to the white paper’s linear unlock schedule, this unlock mainly involves investment institutions and the project team
• Unlocking by institutions and the team is often accompanied by high selling pressure, especially if project development falls short of expectations
• A large token unlock will significantly increase market supply in the short term, creating obvious selling pressure

Insufficient Liquidity and Weak Market Absorption Capacity

• Daily trading volume is only about $3 million, indicating severely insufficient market liquidity
• Low trading volume means shallow market depth, making it difficult to absorb large sell orders without causing significant price fluctuations
• The amount of tokens about to be unlocked far exceeds the market’s daily buying capacity
• Without strong buy-side support, the selling pressure post-unlock is very likely to cause a significant price decline

Summary

Self Chain (SLF) faces multiple unfavorable factors including declining concept appeal, lagging ecosystem development, imminent token unlock pressure, and insufficient liquidity. These factors collectively form the bearish thesis on SLF. Without significant positive news or ecosystem breakthroughs, SLF is likely to face downward price pressure in the short term, and investors should carefully assess the associated risks.

Market Sentiment Index Analysis

The market sentiment index sharply declined from 71% last week to 36% this week. BTC fell by 4.6%, ETH dropped by 1.2%, and TOTAL3 decreased by 4.14% this week. Overall, altcoins have entered a bearish territory.

Hot Sector

Hyperliquid: From Precision Attacks to Market Recovery — Growth Drivers and Risk Analysis of the On-Chain Perpetual Contract DEX

Overview

In March, Hyperliquid was repeatedly targeted by on-chain traders exploiting order book vulnerabilities for precise attacks, causing significant losses for Hyperliquid and leading to a sharp decline in both TVL and trading volume. In response, Hyperliquid’s team improved the existing trading rules and shut down suspicious trading activities, effectively curbing these attacks.

Starting in April, as the market continued its upward trend, Hyperliquid’s trading volume gradually recovered. Notably, on-chain whales returned, placing large contract orders on Hyperliquid, which began to attract market attention. Consequently, Hyperliquid emerged as a market hotspot, with key metrics showing substantial rebounds, and the HYPE token price reaching new all-time highs.

On-Chain Data Analysis

TVL (Total Value Locked)

From the chart above, it can be seen that Hyperliquid’s TVL hit a recent low of $230 million on April 7, following the precision sniping incident. Since then, it has maintained a rapid upward trend for over a month, indicating a continuous return of capital. As of now, the TVL has surpassed $500 million, marking an increase of over 100%.

Open Interest Volume

As shown in the chart, Hyperliquid’s open interest has grown rapidly over the past month, reaching a historic high of over $9.3 billion, demonstrating the rapid expansion of Hyperliquid’s business volume.

Trading Volume

From the chart above, it can be seen that Hyperliquid’s trading volume has been rapidly increasing recently, indicating a fast growth in Hyperliquid’s business activity.

Project Revenue

From the chart above, it can be seen that Hyperliquid’s revenue has remained at a relatively high level recently, reaching a peak of $4.32 million per day. It is estimated that Hyperliquid’s annual revenue will exceed $700 million.

From the chart above, it can be seen that Hyperliquid’s project revenue (30-day average) ranks eighth among all crypto projects. Excluding the top two, which are the issuers of USDT and USDC, Hyperliquid ranks sixth, with a monthly revenue of $64.46 million, second only to Jito’s $73.02 million, and even approaching Pump.fun

Combined with Hyperliquid’s buyback policy — where 97% of project revenue is injected into the buyback fund — this provides strong support for the price of the HYPE token.

HLP amount

HLP is an innovative feature of Hyperliquid and the fundamental basis of the project. As shown in the chart above, Hyperliquid’s HLP amount declined after being precisely targeted in March and April, but then resumed an upward trend. It has now recovered to its previous level and reached a new high of $64.5 million.

Market share of trading volume among major on-chain Perp DEXs

The above chart shows that Hyperliquid holds a dominant share of the trading volume among all top on-chain Perp DEXs.

Project fund flow

From the above chart, it can be seen that Hyperliquid has maintained a high level of capital inflow over the past month. This indicates that on-chain users are continuously entering Hyperliquid to participate in trading, which has driven the project’s trading volume and TVL growth.

Comparison of New User Numbers and Trading Volume

From the chart, it can be seen that Hyperliquid’s trading volume reached a historic peak within the past month. However, the number of new users is still far behind the levels seen at the end of 2024. This indicates a significant increase in average trading volume per user, likely driven mainly by large whales such as James Wynn and “50x Brother” opening positions. On the other hand, we can also observe that the number of new users has dropped significantly compared to before.

Comparison of Futures Trading Volume between Binance and Hyperliquid

As shown in the chart, Hyperliquid has experienced rapid growth recently, continuously eroding Binance’s market share in the futures market. It has now reached 21.8% of Binance’s volume, with the upward momentum still ongoing.

Whale holdings ratio

From the chart above, we can see that Hyperliquid currently has a total open interest of $9 billion, with 306,731 users holding positions. The top 20 addresses alone hold $2.186 billion, accounting for 24.28% of the total. This indicates that the majority of Hyperliquid’s trading volume is contributed by a small number of large holders.

Validator Staking Balance

As shown in the chart above, the staked balance of HYPE has remained very stable, indicating strong and consistent confidence from HYPE holders in the Hyperliquid project.

P/E Ratio Comparison

The main competitors to Hyperliquid among perpetual DEXs include: dYdX, Drift, GMX, and Jupiter. Their buyback policies are as follows:

• dYdX allocates 25% of its revenue to DYDX token buybacks (annualized revenue: $13.43M).
• Drift currently has no active buyback mechanism, though DIP-4 proposes a buyback of 4 million DRIFT tokens, which has yet to be voted on (annualized revenue: $14.95M).
• GMX does not have a buyback mechanism in place (annualized revenue: $23.98M).
• Jupiter allocates 50% of its revenue to JUP token buybacks (annualized revenue: $87.9M).
• Hyperliquid allocates 90% of its revenue to HYPE token buybacks (annualized revenue: $742.91M).

This enables a horizontal comparison using two metrics: Market Cap / Revenue and Market Cap / Buyback Amount:

In summary, since most perpetual DEXs have implemented or proposed token buyback programs — which not only help support token prices but, more importantly, boost market confidence — Hyperliquid maintains a clear advantage when evaluated from the perspective of market cap-to-buyback ratio. Despite having a significantly higher market cap than other perpetual DEXs, its price-to-earnings ratio remains lower, underscoring the strength and efficiency of its economic model.

Summary

Based on the analysis above, Hyperliquid is currently in a rapid growth phase and holds a significant advantage in the Perp DEX market. The presence of many well-known traders executing large contract trades on the platform suggests that Hyperliquid’s market influence and brand recognition are likely to continue increasing. From key indicators such as business growth and price-to-earnings ratio, Hyperliquid demonstrates a strong development trend and retains substantial growth potential for the future.

However, Hyperliquid also faces certain risks, primarily due to its heavy reliance on a small number of large-volume traders (i.e., “whales”). If these whale users incur significant losses or leave the platform, it could result in a notable decline in trading volume and revenue. Therefore, optimizing the user base and reducing dependence on a single group will be critical areas for Hyperliquid to focus on going forward.

Overall Market Theme Overview

Weekly Return Rate Statistics: SocialFi Sector Performs Best, Depin Sector Performs Worst

• SocialFi Sector: In the SocialFi sector, TON and CHZ hold a large proportion, accounting for a total of 94.52%, with TON alone making up 90.11%. Their price changes this week were 8.11% and -7.46%, respectively. The strong performance of TON this week is the main reason why the SocialFi sector performed the best.
• Depin Sector: In the Depin sector, RENDER, FIL, THETA, IOTA, and HNT have significant shares, totaling 74.93%. Their weekly price changes were -13.46%, -7.63%, -11.49%, -13.81%, and -12.39%, respectively. The average decline is noticeably higher than projects in other sectors, which led to the Depin sector having the worst performance.

Next Week’s Major Crypto Events Preview

• Monday (June 2): U.S. May ISM Manufacturing PMI
• Wednesday (June 4): U.S. May ADP Employment Change; Second Hearing on Stablecoin Legislation by the House Financial Services Committee
• Friday (June 6): U.S. May Unemployment Rate; U.S. May Seasonally Adjusted Nonfarm Payrolls

Summary

This week, the cryptocurrency market showed a choppy downward trend. After hitting an all-time high, Bitcoin pulled back, and altcoins generally followed the decline. Although the market sentiment index sharply dropped from 71% to 36%, entering a bearish territory, this indicates that investors remain cautious about market prospects.

The stablecoin market continued to grow, with USDT’s market cap reaching $152.9 billion (up 0.65% weekly) and USDC’s market cap at $61.2 billion (up 0.33% weekly), signaling sustained capital inflows into the market. However, U.S. user participation remains relatively cautious.

In the short term, the market may maintain a sideways consolidation pattern, but potential reversal factors exist: progress on stablecoin legislation in the U.S. House of Representatives and the inflow of FTX compensation funds. Investors are advised to stay cautious, avoid chasing highs or panic selling, and adopt a right-side trading strategy by waiting for trend confirmation.

Next week, attention should be focused on U.S. economic data releases (PMI, nonfarm payrolls) and the second hearing on stablecoin legislation by the House Financial Services Committee, as these events may significantly impact market trends.

Overall, despite short-term adjustment pressures, the continuous inflow into stablecoins indicates that the market’s long-term liquidity remains healthy. Investors should seize structural opportunities with caution.

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