As semiconductors start to ebb, will capital flow back into the crypto market?

Let me share a few bullish news items for the crypto space. Worth a look!

1. South Korea's stock market crash

Today, the South Korean stock market crashed by 8 points. SK Hynix crashed by 14 points, and Samsung crashed by 10 points. SK Hynix and Samsung currently account for half of the total market cap of Korean stocks. The main reason, I think, is that they had risen too much, so a pullback is normal. It doesn't necessarily mean semiconductors are collapsing; the timing may not be here yet.

But this signal indicates that some people have already withdrawn from semiconductors, because a drop means someone is selling, converting stocks into cash. Moreover, many semiconductor stocks in the US market also started to fall yesterday. Therefore, the current cooling of semiconductor enthusiasm is a big positive for the crypto market.

Because as mentioned before, this wave of Bitcoin's decline is mainly due to ETF outflows. AI and semiconductors have been surging, causing retail investors to sell Bitcoin ETFs to chase semiconductors. If semiconductors decline here, it may stop the ETF outflows. Although Bitcoin ETFs are still experiencing outflows, the extent may decrease going forward.

Of course, I don't think this wave of semiconductors is over yet; I believe it's just a temporary pullback. Because there are no earnings reports in June, and the stimulus from earnings won't come until the end of July. Moreover, there are no favorable macroeconomic policies.

2. Meta sells idle computing power

When this news came out, it was actually explosive. Previously, everyone thought AI computing power was insufficient, leading to a frenzy of building AI data centers. But Meta of the MAG7 has started building a cloud business. Earlier, we said that Meta is the only one among the MAG7 that doesn't have a "shovel-selling" business, so I said at the time that MAG7 is the most dangerous in the AI arms race.

But now it has realized that spending money like this is unsustainable, so it has to build its own cloud business and also start selling shovels.

This indicates two points:

First, Meta's spending on the AI arms race may indeed be a bit too much and unsustainable.

Second, all these AI data centers currently built are indeed not fully utilized and are idle.

So, can the orders for these shovel-selling companies continue? A turning point may have already appeared. This is also the news that has the biggest impact on the semiconductor sector. Currently, companies like CoreWeave, NBIS, MU, etc., have all dropped over ten points. The market is worried that the order growth rate for "shovel-selling" companies like servers, HBM, GPUs may start to slow down.

But still, as mentioned above, when the earnings reports come out at the end of July, I estimate they will likely be good, and then there will be another rally. However, it should be about the end, because semiconductors have been rising for two years. I estimate they will peak around the end of this year. At the semiconductor peak, funds will definitely flow back into crypto, which has fallen significantly. The crypto market is small, so even a little capital inflow is enough to pump it.

3. MicroStrategy launches digital credit capital framework

The gist is that it will sell a certain amount of Bitcoin to reserve cash for the issuance of STRK dividends, selling about $1.2 billion. Then STRK dividends will be increased to 12%, and there will also be a buyback of MSTR stock, because MSTR's net value is already lower than its assets (MSTR market cap is lower than the value of its Bitcoin reserves).

Looking at the results over the past two days, MSTR has risen nearly 20%, and STRK has recovered from 75 to 88 now. It is likely to return to Saylor's target of around 100.

Because MSTR's stock price rise is beneficial for future financing, and STRK's recovery provides market confidence. Moreover, Bitcoin has been quite resilient recently. Yesterday, US stocks fell 0.6%, but Bitcoin managed to rise 2% against the trend, and it has returned to the key level of $60,000. All these are good signals.

Plus, it has been falling for 9 months. According to cycle theorists, the time is about right. Many people have been waiting a long time and should be getting impatient. Additionally, although new lows have been broken over the past two days, the rebounds have come back up. It may need to grind a bit lower, and while the possibility of further decline cannot be ruled out, there are currently slight signs of stabilization. So currently, the crypto market may be about to welcome a brief good period.

So be patient and wait; the dawn may be just ahead!