Good evening everyone. I haven't shared a post for a long time. Today I'm going to complain.

The simultaneous strengthening of the “Trump deal” and the “rate cut deal” has made risky assets such as digital currencies popular.

On July 17, Bitcoin once stood at 66,000 US dollars. As of 16:00 Beijing time, it was reported at 65,302 US dollars, with a daily increase of 1.06%; Ethereum was reported at 3,488 US dollars, with a daily increase of 0.53%, and once stood at 3,500 US dollars during the session.

Driven by Bitcoin and Ethereum, digital currency ETFs rose across the board. As of the afternoon close of July 17, Boshi Bitcoin ETF rose 3.96% to HK$50.94; Huaxia Bitcoin ETF rose 3.76% to HK$8.15; Harvest Bitcoin ETF rose 3.87% to HK$8.19. In addition, Boshi Ethereum ETF, Huaxia Ethereum ETF, and Harvest Ethereum ETF also rose 3.27%, 3.21%, and 3.38% respectively.

Cryptocurrency ETFs have rebounded 20%

In the long run, the digital currency ETF has started a strong rebound since July 8.

Taking the six newly listed digital currency spot ETFs this year as an example, the Ethereum ETF has a slight advantage in rebounding. Wind data shows that from July 8 to July 17, Huaxia Ethereum ETF rebounded 21.04% from its low point, while Bosera Ethereum ETF and Harvest Ethereum ETF rebounded 21.03% and 20.9% respectively.

The rise of Bitcoin ETFs was also very strong. Bosera Bitcoin ETF, Harvest Bitcoin ETF and Hua Xia Bitcoin ETF rebounded by 20.03%, 19.82% and 18.89% from their lows respectively.

Public data shows that the above six digital currency spot ETFs are from three institutions, namely Hua Xia Hong Kong, Bosera International, and Harvest International, and were listed on April 30 this year. However, they once suffered a pullback of more than 20% in June, and only stabilized and rebounded recently.

In addition to the above-mentioned digital currency spot ETFs, there are also two products on the market, namely, Southern Bitcoin ETF and Southern Ethereum ETF, which are under the Southern Asset Management subsidiary Southern East Investment, and mainly invest in Bitcoin and Ethereum futures of CME Group. From July 8 to July 17, the two funds rebounded by 18.58% and 22.25% respectively.

The Trump trade and the rate cut trade both gained strength

The recent strong rise in digital currencies is largely due to the simultaneous strengthening of the "Trump deal" and the "rate cut deal."

Martin Leinweber, director of digital asset research and strategy at Market Vector, pointed out that Trump’s rising approval rating has made risky assets such as Bitcoin popular, which is also called the "Trump trade" by traders.

In particular, the latest 2024 party platform released by the Republican Party of the United States on Monday proposed a number of policy measures that are favorable to cryptocurrencies, including that Republicans will end the Democratic Party’s suppression of cryptocurrencies, defend the right to mine Bitcoin, and ensure that Americans have the right to self-custody their digital assets and trade them without surveillance and control.

Unlike the current Biden administration's strict regulation of cryptocurrencies such as Bitcoin, which has even been in a state of suppression, Trump has released his support for cryptocurrencies to the market. Katie Biber, chief legal officer of cryptocurrency investment company Paradigm, even said that the inclusion of cryptocurrencies in the Republican Party's platform is a historic breakthrough.

In the past two years, the U.S. Securities and Exchange Commission (SEC) has filed lawsuits against cryptocurrency trading platforms such as FTX, Binance, and Coindesk, and issued fines of more than $5 billion. In addition, the SEC also claimed that the vast majority of cryptocurrency issuers are unregulated and violate federal securities laws.

In addition to Trump's support for digital currency, the market's expectations of a rate cut by the Federal Reserve have also fueled the strength of Bitcoin.

Recently, Fed Chairman Powell has repeatedly "let go of his dovish stance", saying that recent inflation data has boosted confidence and that there is no need to wait until inflation drops to 2% before cutting interest rates. Morgan Stanley released a research report saying that the stickiness of U.S. inflation has disappeared. As recent data proves that the U.S. core personal consumption expenditure (PCE) inflation rate remains at 2% or lower, the view supporting higher equilibrium inflation has disappeared, and it is expected that the Fed will cut interest rates seven times in the next year.

According to the CME Fed Watch tool, traders predict that the Federal Reserve has a 100% chance of cutting interest rates in September, a 93.3% probability of a 25 basis point cut to the 5.00%-5.25% range in September, and a 6.7% chance of a 50 basis point cut.

The precious metals research team of Guosheng Securities believes that as the global U.S. dollar credit system is damaged and the intrinsic value of the U.S. dollar credit currency weakens, Bitcoin, as an investment product with a limited overall quantity and included in the trading system of CME, may avoid the inflationary effect brought about by the over-issuance of U.S. dollar credit currency in overseas markets and exhibit anti-inflation properties similar to "currency".

Funds flow into digital currency ETFs. As digital currencies rebound, investor interest increases, and various funds continue to increase their holdings through ETFs.

Wind data shows that since July, the fund shares of Hua Xia Bitcoin ETF and Bosera Bitcoin ETF have increased by 31.8 million and 10.2 million shares respectively, and the fund shares of Harvest Ethereum ETF, Hua Xia Ethereum ETF and Bosera Ethereum ETF have also increased by 500,000 shares, 500,000 shares and 200,000 shares respectively, with a total net inflow of more than 700 million yuan.

In addition, according to SoSoValue data, from July 3 to July 10, the net inflow of US Bitcoin spot ETFs was US$781 million, up 251.8% from the previous week, reflecting investors' continued interest in Bitcoin spot ETFs. Shengli Securities believes that this phenomenon may be affected by factors such as the increasing recognition of Bitcoin as a safe-haven asset and the optimistic potential for future appreciation. Overall, the increase in capital inflows shows that the market's confidence in Bitcoin has increased, which has positive significance for the stability of Bitcoin prices and future growth.

BlackRock CEO Larry Fink also recently changed his skeptical stance on Bitcoin, calling it "digital gold" and optimistic about its value in investment portfolios.

On July 15 (Monday, Eastern Time), Larry Fink pointed out in an interview with the media that political uncertainty in the United States and soaring government debt are a major reason for investors to hold Bitcoin. He emphasized: "When you are worried about the high deficits in some countries leading to currency depreciation and increased inflation, Bitcoin is undoubtedly an investment tool worth considering." He further stated, "I firmly believe that Bitcoin has an indispensable position in the investment portfolio, it is like 'digital gold'."

BlackRock is an important player in the cryptocurrency field. Since its launch in January this year, the company's iShares Bitcoin Trust has attracted more than $18 billion in funds, becoming the industry's largest Bitcoin ETF. In addition, the company has also submitted an application to launch an Ethereum ETF, planning to further expand the cryptocurrency investment field.

Keep an eye on it. The bulls are coming slowly but it’s worth waiting for! 🌹