Suddenly, it seems like all bad news in the crypto world.
The U.S. Bitcoin spot ETF has seen outflows of over $1.2 billion in two weeks;
The scale of stablecoin is no longer growing;
Continued capital pressure from miners after the halving has led to selling;
The 140,000 BTC from the “Mentougou Incident” has started to be compensated, putting pressure on the market;
AI concepts and meme coins are in a pullback after a round of speculation;
Altcoins continue to be unlocked for blood-sucking;
Large new coins continue to go online and also suck blood.
The total market value of Bitcoin and Ethereum has fallen by 3.5% since the beginning of the month, while Altcoins have fallen by 15%.
According to the law of the last two Bitcoin halvings, there is a gap of 12-18 months between the halving time and the peak of the bull market. The rise is not immediate, but accompanied by fluctuations and periodic declines. This halving occurred on April 20, 2024, and the market is expected to start turning around by the end of 2024.
Although net inflows this year are stronger than last year, they are still significantly lower than the levels seen during the bull market of 2021/2022, and the inflow of funds is not enough to support the arrival of a bull market. So far this year, net inflows of funds into the cryptocurrency market have reached $12 billion, with a net inflow of $16 billion into Bitcoin spot ETF. Since January, the Bitcoin reserves of exchanges have decreased by about 220,000 coins (13 billion U.S. dollars), indicating that most of the funds flowing into spot ETFs are actually transferred from existing digital wallets, rather than new funds.
Macroeconomic environment:
After the CPI was lower than expected on the evening of June 12, the crypto market rose for a few hours. At 2:00 am on June 13, during the FOMC meeting, the Fed unexpectedly indicated that it would only cut interest rates once this year, lower than the three times in March. Subsequently, the crypto market began to weaken.
The largest-scale fund outflow since March 22 totaled $600 million (by 6/15), with Bitcoin outflows reaching $621 million, while funds flowed into ETH, LIDO, and XRP. According to sosovalue data, BTC spot ETFs have been in a state of outflow daily since June 13.
The market is bleak, but there is still quite a bit of news about Ethereum.
First, Consenys announced that the SEC has stopped investigating Ethereum securities issues, followed by market news that the Ethereum spot ETF is expected to be approved for launch on July 2, and Standard Chartered Bank has been rumored to be building a trading platform for Bitcoin and Ethereum.
Despite the numerous pieces of news, the market has not seen any improvement, with Bitcoin temporarily falling below the $60,000 mark and Ethereum back below $3,400. However, compared to Ethereum’s drop to $2,900 at the end of May due to the lack of narrative, and the recent decline in mainstream coins, the ETF expectation has provided strong price support for ETH.
The trend of Ethereum this year can be described as full of twists and turns, but in terms of major narratives, it is nothing more than the London upgrade and the speculative market of the ETF.
On March 13, the London upgrade was completed, with ETH reaching a high of $3,981. Subsequently, the price fluctuated with the news of the ETF, sliding when the ETF was deemed hopeless, and then rising to $3,600 after a sharp reversal, before continuing to oscillate at a high level in tandem with the broader market.
After the “618” sell-off, the crypto market has once again entered a period of calm, and due to the lack of liquidity, prices are easily influenced by emotions. Under the panic from ETF outflows and Mentougou selling pressure, mainstream value coins continue to decline, but compared to Bitcoin’s 7.72% drop from $65,000, Ethereum’s elasticity is stronger (-3.18%), showing relatively strong support.
Returning to the market itself, Ethereum has seen a number of positive developments recently.
One is the clear non-security nature of Ethereum.
This means that the SEC will not bring charges alleging that ETH sales are securities transactions, which echoes the passing of the Ethereum ETF 19b-4, and the potential implication of the 19b-4 is that it eliminates the securities nature of Ethereum.
The second major positive is the approach of the ETF time.
On June 21, Bloomberg ETF analyst Eric Balchunas announced on social media that the issuer of the Ethereum spot ETF is expected to submit a revised S-1 form later in the afternoon. Subsequently, the SEC will notify the issuer of the final modifications and effectiveness, and the spot ETF is expected to be launched on July 2. Considering his accurate prediction of the listing of the Bitcoin ETF and the reversal of the Ethereum ETF, this timing has a certain degree of credibility.
At the current juncture, the highly anticipated Ethereum spot ETF is about to be launched. The performance after listing has become the focus of industry discussion, whether it will quickly slide after the fact, or turn the tide under institutional capital. There are quite different views on this in the market.
Taiwanese YouTuber Shen Jieshi, who has surpassed 1 million subscribers, recently analyzed that ETH may be about to start a major rally.
Shen Jieshi first explained that looking at the weekly trend chart of ETH from December 2016 when ETH was still close to $6, until now, the red line below the uptrend line has been supported. In October 2023, ETH fell below the red line for about 7 weeks, but then rebounded:
So, between 2016 and 2024, this line has always held. I still judge it to be an effective support trend line.
And now, we are at the bottom of the support trend line that Ethereum has held for years, still far from the trend pressure line above, which means there is still a huge room for growth.
Shen Jieshi then pointed out that all three momentum indicators of ETH’s weekly chart are bullish, which is a pattern that could indicate an impending major rally. According to cryptocurrency trader Justin’s backtesting, this method of judgment is simple and effective, and indeed captures very large swings.
Shen Jieshi concluded by listing a third bullish reason, pointing out that the MACD indicator on the weekly chart of ETH is showing a golden cross above the zero axis, indicating a bullish trend. He stated that many people consider MACD to be a “sheep indicator” because after the golden cross, there is usually a significant increase, and that entering the market at this time is usually easy to get buried:
But I think many people may not fully understand the true use of MACD… In short, based on the full-year history of Ethereum, the probability of a significant increase after the golden cross above the zero axis is over 60%. (In the entire history, there were two times when there was no significant increase, and three times when there was a significant increase. But even if there was no significant increase, there would be an increase a month later).
Therefore, in Shen Jieshi’s view, based on the above data, the probability of an increase being greater than a decrease at the bottom of the red slope line of ETH, he emphasized that one should never go against math, and perhaps buying at the bottom of the red slope line would be a good choice.
However, in contrast to Shen Jieshi’s optimism, Andrew Kang, co-founder of Mechanism Capital, recently
is pessimistic
about the future of ETH. He believes that the key to determining how much upside potential the Ethereum spot ETF can provide to ETH lies in whether Ethereum can develop innovative economic improvement pathways.
Andrew Kang stated that if Ethereum can achieve significant breakthroughs in technology and applications, its upside potential will be more considerable. On the other hand, if effective economic improvement methods cannot be found, its upside potential will be limited. He predicts that the ability of the Ethereum spot ETF to attract funds is limited, and after the ETF is launched, the price of ETH is expected to range between $2,400 and $3,000.
Returning to Ethereum itself, as the largest application platform in the crypto space, the price of ETH actually represents the development of the entire crypto ecosystem. However, in recent years, as applications and ecological development have entered a bottleneck, the narrative of Ethereum’s cycle has turned to upgrades. Apart from the vitality brought by staking, it also exists as a symbol of mainstream coins.
Compared to Bitcoin’s value consensus, Ethereum’s position in the eyes of institutions is rather ambiguous. It is both a blue-chip stock in the technology sector, an absolute head in the blockchain world, but at the same time, it is also a more easily replaceable investment product in the market, with less value stability than Bitcoin, sometimes not rising with the market, and with less price increase than some U.S. stocks. Especially against the background of limited application innovation, the growth of Ethereum’s ecosystem has slowed down, and the MEME cycle has also rotated accordingly, with occasional rumors of Solana surpassing Ethereum.
Although there is much controversy over the investment value of Ethereum compared to Bitcoin, no one can deny the position and network effect of Ethereum. This is also why the market is highly focused on the Ethereum ETF. The funds of Ethereum may be transmitted to the altcoin market through staking, but not Bitcoin’s funds.
Looking at various price viewpoints, it is highly probable that Ethereum will experience high volatility after the ETF is launched. Paying attention to the fact of selling, short-term downward and long-term upward expectations also match the market’s price expectations. Before the launch, various currency speculation in the ecosystem has already begun, perhaps another alternative way to profit.
This round of bull market crypto market hotspots and narratives
Combining AI and Crypto
Nvidia estimates that there are over 40,000 companies worldwide using GPUs for AI and accelerated computing, with a developer community of over 4 million people. Looking ahead, the global AI market is expected to grow from $515 billion in 2023 to $27.4 trillion in 2032, with an average annual growth rate of 20.4%. At the same time, the GPU market is expected to reach $400 billion by 2032, with an average annual growth rate of 25%.
It is predicted that AI + Crypto will unlock a huge market of $20 trillion. As a track closely tied to the concept of AI in the crypto field, the decentralized computing power network is one of the most promising vertical areas to gain real demand in the crypto space.
Meme Narrative
Meme has gradually been accepted by the mainstream crypto market, and more and more people agree: consensus is value, and existence is reasonable.
Institutional investors’ investment in meme coins has increased by over 300% this year, reaching a peak value of nearly $300 million in April, with popular choices being DOGE, SHIB, and BONK.
Binance has listed several Meme coins, including PEPE, WIF, and BOME, providing ample liquidity for Meme and sparking enthusiasm among investors.
Symbols have immense cohesion, and Meme, as a universal language, allows communities to quickly reach consensus, creating a simple and effective transmission path. In addition, many celebrities have begun to dabble in Memecoins, enhancing the spread of Meme, similar to the previous cycle of celebrities buying and holding NFT collections.
Pump has issued over 1 million Meme tokens, and the trading volume of Pump has reached $3.6 billion, with new users showing continuous growth. With the support of the issuance platform, Meme has become a very simple fundraising mechanism and listing strategy.
The Ethereum spot ETF is expected to be approved for listing as soon as July 4, boosting market sentiment and the Ethereum ecosystem. The S-1 document required for the review of the Ethereum spot ETF has been received by the SEC and is requested to be modified and submitted by June 21 (this Friday).
Rather than waiting for the arrival of the bull market, it is better to now lay out some Ethereum ecosystem projects. Sun Ge has been buying Ethereum all along, or he has got inside information on the ETF. Although Sun Ge is a bit of a cutter, there is no doubt about his ability to make money. In the near future, more attention can be paid to the Ethereum ecosystem.
At present, there are basically no good entry opportunities for retail investors in Bitcoin and Ethereum, and the focus is on laying out high-quality altcoins in the later stage, striving for an overall return of no less than 10 times this year.
