Sector Rotation Analysis (Issue 1 · Week 30, 2026)

01Executive Summary

[Core Conclusion]. The data for this period shows that FTX confirmed the distribution of $900 million on 07-17, with cumulative repayments exceeding $10 billion. Meanwhile, BlackRock transferred 8,700 ETH to Coinbase, indicating that institutional funds are shifting from traditional liquidation events to spot allocations, as the market focus moves toward Token optimization. CZ pointed out that capital flows into AI and geopolitical factors will lead to market declines in the first half of 2026, urging investors to be vigilant against external macroeconomic shocks. Considering the divergence between large-order CVD and trading volume heatmaps on 07-01, it is recommended to pay attention to key support and resistance levels to capture opportunities arising from sector rotation.

02Background and Current Market Situation

As of 2026-07-20, the total market value of the crypto market was $2.30 trillion, with 24-hour trading volume reaching $43.4 billion. BTC held a dominance rate of 56.5%. The current price of BTC was $64,520.00, while ETH was trading at $1,866.05. Market sentiment was neutral (47/100).

Since the first half of 2026, the market has experienced adjustments due to capital shifting toward AI and geopolitical factors. Recently, traditional institutions have accelerated their entry into the sector—T. Rowe Price launched an ETF, and Circle obtained regulatory approval. However, rising oil prices caused by geopolitical crises have dampened risk appetite. On 2026-07-15, BTC ETFs saw a net outflow of $420 million in a single day, indicating a reallocation of institutional funds.

There was significant sector rotation. In the 29th week of 2026, capital flowed out of privacy coins, Restaking, and GameFi sectors and shifted significantly toward AI Agents and prediction markets. The AI Agents sector saw a 24-hour gain of 3.7%, making it the strongest theme of the week and reflecting growing expectations for the practical application of AI. In contrast, Layer 2 and GameFi sectors performed poorly. Among Whales, MicroStrategy increased its Bitcoin holdings to 843,000 coins, and the four major mining pools controlled over 70% of the total computing power, indicating an increase in institutional control over the market. Despite the outflows from BTC ETFs, institutions showed heightened interest in the yield generated by ETH/SOL ETFs, signaling deeper integration between traditional finance and blockchain ecosystems.

03Core Analysis

Benchmark Date: 2026-07-20

Technical Perspective: Capital Reallocation and Sector Divergence In the 29th week of 2026, market styles underwent a significant shift. Funds flowed out of privacy coins, Restaking, and GameFi—sectors that were strong in the previous week—and moved significantly into AI Agents and prediction markets. The AI Agents sector saw a 24-hour gain of 3.7% and a weekly increase of 3.1%, becoming the strongest theme of the week, indicating that market expectations for the practical application of AI are continuing to rise. In contrast, Layer 2 and GameFi performed poorly, with noticeable outflows of capital. Among leading assets, BTC is currently trading at $64,520.00, with a slight 0.3% decline in 24 hours and a 0.8% increase over 7 days; ETH is priced at $1,866.05, up 0.4% in 24 hours and 2.2% over 7 days, showing relatively stable performance [Market Snapshot]. SOL is currently at $76.47, up 1.1% in 24 hours but down 1.2% over 7 days, suggesting weakened short-term momentum [Market Snapshot]. BNB is trading at $568.46, down 0.3% in 24 hours and 1.5% over 7 days, under considerable pressure [Market Snapshot].

Fundamental Perspective: Institutional Activity and Regulatory Progress Institutional control over the market is increasing. MicroStrategy has increased its Bitcoin holdings to 843,000 coins and raised its cash reserves, while the four largest mining pools control over 70% of the total computing power. Traditional financial institutions are accelerating their entry into the crypto space—T. Rowe Price has launched ETFs, and Circle has obtained regulatory approvals. However, geopolitical tensions have led to soaring oil prices, dampening risk appetite. The SEC is taking steps to establish a regulatory framework, meaning crypto projects will soon need an “American ID,” resulting in higher compliance costs. The Bitcoin credit market has shown resilience in initial tests, but liquidations have occurred despite daily trading volumes reaching tens of billions, highlighting the vulnerability of leveraged funds. Uniswap has activated its fee structure, and its buy-back and token destruction mechanisms are being implemented more rapidly, enhancing the attractiveness of its token economy model.

Market Perspective: Pessimistic Sentiment and Risk-Aversion The sentiment in the crypto market is neutral to bearish. The overall AI-related sentiment score is 38/100, indicating a fearful mood [Market Sentiment]. On 2026-07-17, market sentiment was low (43/100). BTC rose slightly by 0.39% to $63,959, but most sectors declined, with DEXs leading the drop at 6.5% and DeFi falling by 4.5%. Geopolitical tensions and rising compliance costs have suppressed risk appetite, leading investors to adopt a wait-and-see attitude. Whales have increased their BTC holdings slightly at key support levels, but overall activity in large-scale on-chain transactions has declined significantly. South Korea’s stock market tumbled by 8%, while Upbit’s trading volume only increased by 4%, reflecting strong risk-aversion in Asian markets. Independent miners are able to mine Bitcoin blocks using low-cost equipment, indicating a trend toward greater decentralization in mining.

04Data and Metrics

Benchmark Date: 2026-07-20

Market Macro and Liquidity Indicators

As of the benchmark date of this report, the total global crypto market value reached $2.30T, with a 24-hour trading volume of $43.4B. BTC held a dominant share of 56.5%. The market sentiment index was in the fear zone, with an AI-related sentiment score of only 38/100. In terms of key asset prices, BTC was trading at $64,520.00, down 0.3% on a 24-hour basis but up 0.8% over 7 days; ETH was priced at $1,866.05, up 0.4% in 24 hours and 2.2% over 7 days.

Sector Rotation and Quantified Capital Flow

In Week 29 of 2026, capital flow showed clear signs of style shift. Funds moved out of privacy coins, Restaking, and GameFi sectors that were strong in the previous week, and flowed significantly into AI Agents and prediction markets. The sector strength scores indicated that AI Agents topped the list with a score of 6.9, followed by prediction markets at 5.9 points. DEX and oracles both scored 5.6, while Layer 1 scored 5.5.

Token Rating and Technical Analysis

Based on token rating data, BTC has a comprehensive score of 65, with a technical score of 75, a fundamental score of 76, but a liquidity score of only 23, indicating that as the largest valued asset, it has relatively weak liquidity. ETH has a comprehensive score of 64, with excellent technical performance scoring 88, a fundamental score of 72, and a liquidity score of 26. BNB has a comprehensive score of 57, with a technical score of 72, a fundamental score of 61, and a liquidity score of 21, showing relatively low liquidity among major cryptocurrencies.

Token Unlock Pressure Monitoring

Week 29 of 2026 (peak date: 2026-07-23) saw high-pressure unlock events. PENDLE accounted for as much as 4.67% of unlocks, rated as high, and as a leading DeFi project, such a large proportion of unlocks created significant selling pressure. EIGEN had a 4.05% unlock ratio, also rated as high, indicating notable selling pressure from key projects in the Restaking sector. TIA had a 3.18% unlock ratio, rated as high, with large-scale unlocks on Layer 1 chains putting strain on liquidity. SUI had a 2.37% unlock ratio, rated as medium; the combined release from these two projects, along with risks from other projects, warrants attention.

05Competitive Landscape

2026-07-20

The current crypto market exhibits clear hierarchical differentiation, with leading public chains and payment tokens holding absolute dominance in terms of market value and liquidity. BTC maintains its status as a core asset with a market value of $1295B, followed closely by ETH at $225B. Together, these two assets account for a significant portion of the global crypto market capitalization of $2.30T. BNB ranks third with a market value of $76B, while XRP and SOL form the second tier of core assets with market values of $69B and $45B respectively.

In terms of technical capabilities, ETH boasts a strong smart contract ecosystem, reflected in its high tech score of 88. Its excellent liquidity (scored 26) supports a vast range of DeFi applications. Although BTC has a lower tech score of 75, it maintains the highest level of market consensus and stability thanks to its token economy score of 98 and daily trading volume of $15.9B. BNB, along with LTC and DOT, also has a token economy score of 98, indicating that their deflationary mechanisms or distribution models are attractive to long-term holders. However, BNB surpasses them in terms of user base size, owing to its $76B market value and advantages in the exchange ecosystem.

Regarding liquidity, BTC and ETH lead with scores of 23 and 26 respectively, demonstrating their superior ability to control slippage during large-scale transactions. In contrast, projects like AAVE, LTC, and DOT have liquidity scores in the range of 32–38. While they offer a certain degree of trading depth, their resilience under extreme market conditions is weaker than that of the top-tier assets. Emerging projects such as CASHCAT and AR, despite having liquidity scores as high as 94–95, only have a combined score of 58, with relatively low fundamental scores (35). This suggests that their high liquidity stems mainly from speculative trading rather than ecosystem value, resulting in higher market risks.

Institutional capital flows have further exacerbated this differentiation. BlackRock’s transfer of 8700 ETH to Coinbase attracted considerable attention. Meanwhile, large-scale Bitcoin transactions coexisted with net outflows from funds, as institutions assessed the trends for 2026. This behavior indicates that although BTC remains the preferred asset for value storage, ETH is emerging as an important addition to institutional portfolios due to its potential for ecosystem development. CZ noted that the sharp market downturn in the first half of 2026 was caused by multiple factors, including capital shifts toward AI, geopolitical tensions, and the four-year cycle. He remains optimistic about the long-term development of the industry. This explains why the sentiment score for AI-related sectors is only 38/100 (fear), while traditional public chains have shown greater resilience after the adjustments.

In summary, BTC and ETH constitute the twin cores of the market, thanks to their large market values, advanced technology, and institutional recognition. BNB, XRP, and SOL, as part of the second tier, maintain competitiveness in specific ecosystems such as exchanges, cross-border payments, and high-performance chains. Other projects need to make breakthroughs in optimizing their token economies and building stronger ecosystems to counter the pressure from the leading projects.

06Risks and Opportunities

2026-07-20

Key Risks

1. Risk of Macro Capital Reallocation (Probability: High) The continuous flow of capital toward AI and cloud service providers, coupled with geopolitical tensions, is putting pressure on the crypto market. Mitigation Strategy: Avoid small and mid-cap assets that are sensitive to liquidity, and focus on top-tier assets with strong fundamental support to withstand volatility.

2. Uncertainty in Institutional Capital Flow (Probability: Medium) BlackRock’s transfer of 8,700 ETH to Coinbase has sparked speculation concerns. Meanwhile, large-scale Bitcoin transactions coexist with net outflows from funds, as institutions assess trends for 2026. Mitigation Strategy: Closely monitor large-scale on-chain transfers and ETF capital flows to avoid recklessly chasing prices during institutional portfolio adjustments.

3. Spread of Panic Among Market Participants (Probability: Medium) The Fear & Greed Index is currently at 38/100, indicating a fearful market mood that can easily lead to irrational selling. Mitigation Strategy: Strictly adhere to stop-loss rules, and build positions in batches during periods of low valuations to avoid exposing oneself to significant downside risks by investing heavily all at once.

Key Opportunities

1. Liquidity Release from FTX Repayments FTX has confirmed the distribution of $900 million by July 31, bringing its total repayments to over $10 billion, with additional $18 million going to preferred shareholders. Mitigation Strategy: Keep an eye on the flow of dollars back into the market, and proactively invest in highly liquid mainstream cryptocurrencies to capture short-term rebound opportunities driven by these repayments.

2. Trading Opportunities at Technical Support Levels Data from July 1 shows that deviations between large order CVD values and volume heatmaps can help identify key support and resistance levels. Mitigation Strategy: Use CVD deviation signals along with heatmap data to establish long positions at critical support levels and optimize entry timing.

3. Long-Term Industry Recovery Outlook Despite significant declines in the first half of 2026 due to multiple factors, there is a positive outlook for the industry’s long-term development. Mitigation Strategy: Adopt a regular investment strategy to allocate capital to high-quality public chains and leading DeFi projects, thereby reaping the benefits of the industry’s long-term growth.

07Conclusions and Recommendations

Report date: 2026-07-20

The current crypto market sentiment index stands at 38/100, indicating a fearful mood. The global total market value is $2.30 trillion, with BTC maintaining a dominance rate of 56.5%. There is a structural divergence in capital flows. FTX confirmed on 07-17 that it would distribute $900 million, bringing its total repayments to over $10 billion, but the funds were distributed in U.S. dollars and not directly injected into the crypto industry. Meanwhile, strategies for purchasing AI computing power have changed, with capital flowing out of memory chip sectors and into large-scale cloud service providers, shifting market focus toward token optimization. CZ noted that the sharp market decline in the first half of 2026 was caused by capital shifting to AI, geopolitical tensions, and the resonance of a four-year cycle, though he remains optimistic about the long-term development of the industry.

For institutional investors, it is recommended to pay attention to the speculative signals triggered by BlackRock’s transfer of 8,700 ETH to Coinbase on 07-10. Combined with the daily net inflow of $132 million into BTC ETFs, this can help assess institutional investment strategies for 2026. By utilizing the divergence between large-order CVD data and volume heatmaps on 07-01, investors can identify key support and resistance levels to optimize entry timing.

For retail investors, given that the funds used for FTX’s repayments do not flow directly into the crypto industry, they should be cautious about short-term liquidity illusions and avoid buying at high prices. They should focus on the capital absorption trends in the AI sector, follow the trends set by cloud service providers and token optimization efforts, and steer clear of sectors like memory chips that already show signs of reaching their peak.

For developers, it is advised to adapt their underlying architectures to meet the needs of tokenization, aligning with the trend of capital shifting toward AI and cloud service providers. At the same time, they need to evaluate the impact of geopolitical factors and the four-year cycle on the long-term viability of their projects, ensuring that their technical approaches are in line with the industry’s long-term outlook.

08Related Reads

1. “FTX Distributed $900 Million: The Mystery of Where the Funds Went”
2. “BlackRock’s Token Swap Sparks ETH Speculation; Hidden Secrets Behind Institutional Capital Flows”
3. “Shift in AI Computing Power Acquisition Strategies Drives Capital Flow to Cloud Service Providers”
4. “CZ Claims That Capital Flows into AI and Geopolitics Are Causing the Crypto Market to Decline”
5. “BTC/USDT Spot CVD and Heatmaps Reveal Institutional Capital Flows”