Daily News | BTC Leads Market to Significant Rebound, Altcoin Season May Come

Crypto Daily Digest: BTC spot ETF continues to receive large inflows, legalizing Russian crypto mining

According to Farside Investor data, the overall net inflow of Bitcoin spot ETFs was nearly $200 million yesterday. Among them, BlackRock IBTC saw a daily inflow of $157 million, WisdomTree BTCW saw its first daily inflow of $118 million since the ETF’s launch, and Grayscale GBTC saw a daily outflow of $182 million.

The overall net outflow of ETH ETF was $3 million, while the outflow of Grayscale ETFE was $19.8 million, with a significant decrease in outflow magnitude. Meanwhile, the inflow and trading volume of ETH ETFs also maintained a decreasing trend.

Putin signs decree legalizing Russian crypto mining

According to TASS, Russian President Putin has signed a law legalizing crypto mining in Russia. Earlier, Putin discussed the introduction and use of cryptocurrency with the government at an economic conference. He pointed out that this is a promising economic field, and Russia must “seize the opportunity” to quickly establish legal frameworks and regulations, develop infrastructure, and create conditions for circulation.

Wall Street expects the Federal Reserve to end its balance sheet tightening this year, but the possibility of a sudden brake is low

The Federal Reserve is expected to end its balance sheet tightening, but the actual closing date depends on the pace of interest rate cuts and financing market pressure. Decision makers have hinted that the reduction in US Treasury holdings will be completed before the end of the year, and many on Wall Street believe that quantitative tightening is unlikely to end suddenly. But recent weak economic data and liquidity pressure risks have cast uncertainty over the outlook. “If the Federal Reserve intends to stimulate the economy, it may stop reducing its balance sheet,” Bank of America strategists Mark Cabana and Katie Craig wrote in a report to clients on Wednesday. “If the purpose of the Federal Reserve is to normalize monetary policy, then balance sheet reduction can continue.”

More and more signs indicate that economic growth is slowing down faster than expected a few weeks ago, triggering a sharp rise in global bonds on Monday. Traders are betting that the Federal Reserve and other central banks will become more aggressive in cutting interest rates. Morgan Stanley analysts wrote, “Two possible driving factors may prompt the Federal Reserve to end its balance sheet tightening earlier, one is the drying up of money market liquidity, and the other is a US economic recession. However, we believe that neither is likely to happen.”

Nansen analyst: Bitcoin is a “safe haven asset” in the context of global economic recession

According to Aurelie Barthhere, Chief Analyst at Nansen, “Bitcoin can serve as a “safe haven asset” during economic downturns and will outperform other tokens in the crypto market. The inflation outlook has improved this year, but economic growth forecasts remain lukewarm, and central banks around the world are taking action to stimulate the economy to avoid further decline. A large amount of speculative grade debt in the United States is set to mature in 2024, coupled with a decline in bond yields, putting pressure on the financial environment. Investors’ shift towards safer assets and declining returns are typical indicators of recession, reflecting a lack of confidence in sustained economic growth. The likelihood of an economic recession in the second half of 2024 is expected to be 40%.

Market Trends: BTCD returns to historical highs, Altcoin season may be coming

Mainstream Coins

Recently, BTC has broken through strongly after a period of high-level sideways trading and returned to above $61,000. The BTC dominance (BTCD) has also returned to a new high in the past three years, indicating that BTC’s dominant position in the current market has been further consolidated. At the same time, BTC spot ETF funds have shown significant inflows, with BlackRock receiving nearly $200 million in daily inflows and WisdomTree receiving nearly $120 million in daily inflows, further supporting BTC’s price increase.

ETH also saw an increase driven by BTC, returning to around $2,700. However, unlike BTC, ETH spot ETFs have shown overall net outflows. This may reflect investors’ lack of short-term confidence in ETH, or a preference for BTC when allocating assets.

In terms of Altcoins, there is a general upward trend, especially with the RWA (Real World Assets) and Meme sectors leading the market.

Data Indicators

Today’s AHR999 index is 0.74, although it has increased compared to before, this data still indicates that the current price is a good point for buying in batches. The AHR999 index is used to uate the relative level of market prices to historical averages, and the current index shows that the market is still within a reasonable buying range.

The Fear and Greed Index is 48, indicating that market sentiment is gradually shifting from fear to neutrality. The significant rise in the market has significantly improved investor sentiment, but it has not yet reached a state of extreme greed, which means that market sentiment remains at a relatively healthy level.

Market Hotspots:

Meme sector: The Meme sector has shown exceptional activity, with major public chain leaders such as BRETT, WIF, PEPE, PONKE, and others experiencing significant increases in Meme coins. The fully circulated Meme coin has stronger resilience in the rebound market and lacks selling pressure from the market. In comparison, it performs significantly better than tokens supported by VC (venture capital). This phenomenon indicates that market funds are more willing to flow towards Meme coins with strong liquidity and less market selling pressure.

RWA sector: Tokens in RWA sectors such as TOKEN, OM, and ONDO have collectively risen, demonstrating rare financial cohesion. As one of the more innovative narratives in this round of market trends, the RWA sector has a relatively small overall market value and is expected to be a relatively easy area for market funds to speculate on. The rise of RWA sector may be related to market expectations for the application of blockchain technology in real-world assets such as real estate, bonds, etc.

Macroeconomics: All three major US stock indices are trending red, and the Federal Reserve may end this round of quantitative tightening this year

The three major US stock indices all rose over 1%, with the S&P 500 index rising 2.30% to 5319.31 points; The Dow Jones Industrial Average rose 1.76% to 39,446.49 points; The Nasdaq index rose 2.87% to 16,660.02 points.

Among the popular US stocks, Apple rose 1.66%, Microsoft rose 1.07%, Nvidia rose 6.13%, Google C rose 1.92%, Google A rose 1.94%, Amazon rose 1.86%, Meta rose 4.24%, TSMC rose 6.16%, Tesla rose 3.69%, and AMD rose 5.95%.

Since June 2022, the Federal Reserve has implemented a quantitative tightening policy, known as quantitative tightening (QT), but the process of the Fed’s balance sheet tightening has gradually slowed down since this year. Some Wall Street strategists have stated that although the pace of balance sheet reduction has indeed been reduced in recent times as stated by the Federal Reserve, the possibility of a sudden announcement of the end of balance sheet reduction through a “sudden brake” is unlikely.

Generally speaking, the Federal Reserve’s direct purchase of bonds (known as quantitative easing, abbreviated as QE) or cessation of balance sheet tightening (known as stopping the process of reducing the balance sheet) both indicate a significant increase in financial market liquidity. When the Federal Reserve purchases bonds, it is actually exchanging the bonds held by banks for cash. These cash are deposited into the banking in the form of bank reserves, increasing the supply of funds within the banking . This means that banks can provide more loans, thereby promoting investment and consumption. And by purchasing long-term bonds, the Federal Reserve has pushed up the prices of these bonds, lowering their yields (i.e. the long-term interest rates in financial markets), while lower long-term interest rates encourage businesses and consumers to borrow, stimulate economic activity, and also benefit risk assets such as the crypto market.

Conclusion

The overall performance of the current market is strong, and the rise of BTC and ETH has driven an improvement in the overall market sentiment. Despite the net outflow of ETH spot ETFs, the large influx of funds into BTC spot ETFs demonstrates investors’ strong confidence in BTC. The outstanding performance of Altcoins, especially RWA and Meme sectors, has injected new vitality into the market.

The data from AHR999 Index and Fear & Greed Index show that the current market is still in a relatively reasonable buying range, and the sentiment remains in a neutral to optimistic state. In such a market environment, investors can consider buying in batches, especially focusing on sectors with strong market fund cohesion and excellent performance.

In short, after a period of adjustment, the market has regained vitality, and investors should seize the current opportunity to allocate assets reasonably in order to obtain good market returns.