Bitcoin recently touched $99,800 and was close to the historic price point of $100,000, but then gradually pulled back, briefly falling below $91,000. The reasons behind this are not particularly special; it is merely that investors began to take profits, causing the price to drop naturally after a significant portion exited. Bitcoin is now back to $97,000 and is consolidating, with weekly gains almost flat.
Bitcoin has not yet reached an overheated area of the bull market and still has the potential to rise to $100,000 to $140,000. Multiple trading indicators also show that bullish momentum is strengthening, while blockchain data indicates that retail activity in cryptocurrencies is sluggish, with a recent sell-off of 41,000 BTC. However, institutions continue to buy 130,000 BTC, with the only short-term correction risk coming from MicroStrategy facing short selling, leading to a 30% drop in stock price. From a long-term perspective, Bitcoin still has room for growth, but it will need to take a break for a while in the short term.
It is worth noting that Ethereum has launched a counterattack, with the price reaching $3,700 and a weekly increase of 11.2%, far exceeding Bitcoin. This indicates that funds have begun to overflow from Bitcoin to Ethereum, and the market is starting to believe that the upside potential for Bitcoin is limited while Ethereum may offer better returns. Consequently, funds are flowing into Ethereum, establishing the second phase of the bull market, with capital spilling over to other cryptocurrencies.
When Ethereum rises and hits a peak, we expect funds to further flow into small and medium-sized altcoins, such as SOL and ADA. This is usually a typical phenomenon of phased capital overflow, but the premise is that buying sentiment must remain strong. At present, the market strength still appears quite sufficient, but holders of mainstream cryptocurrencies should be cautious about taking profits. Many people have achieved returns of up to 40% in just six months, and funds are expected to flow into altcoins with greater upside potential.
Additionally, recent market regulatory themes are also favorable for altcoin gains. Last week, a fund company began applying for an altcoin ETF, including ETFs for cryptocurrencies like XRP, ADA, and SOL to be listed on US stocks, which may be seen by traders as the next wave of trading themes.
The easing of crypto regulation and the strategic reserve theme of Bitcoin are currently brewing.
To maintain the growth of the entire crypto market, investors are looking forward to the next wave of good news from "SEC regulation easing for altcoins," allowing cryptocurrencies other than Bitcoin and Ethereum to also trade on US stock exchanges. If this happens, the entire cryptocurrency market will no longer be restricted to exchanges but will be able to attract capital inflow from Wall Street like Bitcoin and Ethereum. It is expected that the overall market capitalization will see significant growth, and this expectation has risen with the departure of SEC Chairman Gary Gensler.
As mentioned above, the Bitwise fund company has taken the lead in applying to the SEC for a "Top Ten Cryptocurrency" index ETF, conceptually similar to the S&P 500 ETF, incorporating the top 10 cryptocurrencies by market capitalization into a fund portfolio for trading. This aims to pave the way for main chain coins like SOL and ADA to enter the ETF market, equivalent to them having their own spot ETF. However, this concept remains quite challenging, as previously mentioned, and is a tactic for fund companies to test the bottom line of regulatory agencies.
It is still too early to expect regulatory easing; fund companies are inevitably a bit overly optimistic. However, applying for an ETF has no significant cost and is still worth trying. From January 20, when Trump took office until the entire team is in place to push for regulatory reform, it will take at least half a year. However, the community sentiment is that the moment Trump takes office, cryptocurrency innovation will be opened up, adding a lot of certainty, but there is still a vast space for future imagination.
The crypto industry is gradually fulfilling investors' expectations, but it is difficult to assess how far this can be realized as it depends on the new US government's true view of the cryptocurrency industry. Cryptocurrency regulation is likely to be relaxed, for example, NFT and DeFi trading may make a comeback, laying the groundwork for the next phase of altcoin gains.