Bitcoin recently touched $99,800, and as it approached the historic price of $100,000, it gradually pulled back, briefly falling below $91,000. The reason behind this is not particularly special; investors began to take profits, and with significant positions exiting, the price naturally dropped. Bitcoin is now back at $97,000, consolidating, with a weekly increase that is almost flat.
Bitcoin has not yet reached the overheated area of a bull market and still has the potential to rise to $100,000 to $140,000. Multiple trading indicators also show that bullish momentum is increasing. Blockchain data indicates that retail activity in cryptocurrencies is sluggish, with a recent sell-off of 41,000 BTC, while institutions continue to buy 130,000 BTC. The only short-term correction risk comes from MicroStrategy facing a short squeeze, with its stock price dropping by 30%. Looking at the long term, Bitcoin still has room for growth, but it will need a rest period in the short term.
It is worth noting that Ethereum has started a counterattack, with prices reaching $3,700, a weekly increase of 11.2%, far exceeding Bitcoin. This indicates that funds have begun to overflow from Bitcoin into Ethereum, and the market is starting to believe that Bitcoin's upside potential is limited while Ethereum will offer better returns, leading to capital flowing into Ethereum. This signal establishes the second phase of the bull market, with funds overflowing into other cryptocurrencies.
After Ethereum peaks, we expect funds to further flow into mid- and small-cap altcoins, such as SOL and ADA. This is typically a phenomenon where capital overflows in phases, but the premise is that buying interest must remain strong. Currently, the market still appears to have sufficient strength, but mainstream cryptocurrency holders should be cautious about taking profits, as many have achieved returns as high as 40% in just six months, with funds subsequently shifting to altcoins with greater upside potential.
Additionally, recent market regulatory themes are also beneficial for altcoins. Last week, a fund company started applying for an altcoin ETF, including ETFs for cryptocurrencies like XRP, ADA, and SOL, which may be viewed by traders as the next trading theme.
Easing cryptocurrency regulation and the topic of Bitcoin as a strategic reserve are currently in the works.
In order to maintain the growth of the entire cryptocurrency market, investors are looking forward to the next wave of good news from "SEC easing regulations on altcoins," allowing cryptocurrencies beyond Bitcoin and Ethereum to be traded on U.S. stock markets. If this happens, the entire cryptocurrency market will no longer be limited to exchanges, but will be able to attract capital inflows like Bitcoin and Ethereum do on Wall Street. It can be expected that the overall market value will experience significant growth, and such expectations have surged with the resignation of SEC Chairman Gary Gensler.
As mentioned above, Bitwise Asset Management has taken the lead in applying to the SEC for a "top 10 cryptocurrencies" index ETF, conceptually similar to the S&P 500 ETF, which includes the top 10 cryptocurrencies by market cap in its fund portfolio for trading. This approach aims to enable mainnet coins like SOL and ADA to enter the ETF market, effectively giving them their own spot ETF. However, this concept is still quite challenging, as previously mentioned, and represents a strategy for fund companies to test the regulatory limits.
It is still too early to expect regulatory easing; fund companies may be overly optimistic. However, applying for an ETF carries no significant cost and is still worth a try. Since January 20, when Trump took office, it will take at least half a year for the entire team to start pushing for regulatory reforms. Nonetheless, the community sentiment suggests that crypto innovation will be opened up almost immediately after Trump’s inauguration, adding considerable certainty, but the potential for future developments remains vast.
The cryptocurrency industry is gradually fulfilling investors' expectations, but it is difficult to assess to what extent this can be achieved, as it depends on the new U.S. government's true views on the cryptocurrency industry. Cryptocurrency regulation is likely to be relaxed, for example, NFT and DeFi trading may see a resurgence, laying the groundwork for the next round of altcoin gains.