1️⃣Market reaction after Bitcoin ETF approval
After the Bitcoin ETF was approved, the market reaction was not as crazy as expected. Although the volatility of Bitcoin decreased and the market's ability to carry it increased, it did not trigger the expected bull market.
The reason behind this is that Bitcoin, as a pure asset, lacks a complete ecological support. Bitcoin's secondary market expectations are out of touch with the construction of the primary market. In the short term, Bitcoin's market-enhancing effect cannot be extended to the primary market, especially the impact on the mainstream Ethereum ecosystem is even weaker.
2️⃣ Different impacts of Ethereum ETF approval
In contrast, the passage of an Ethereum ETF will bring more positive effects:
● ETH’s deflationary effect: The growth of Ethereum’s price will increase the activity of the primary market. The low gas fee advantage of Layer2 solutions will be more prominent, promoting the development of the Layer2 market.
●Reduction in circulation: The reduction in Ethereum’s circulation will intensify competition in the Restaking and AVS interest-earning sectors, driving their value growth.
● Investment in incremental funds: Ethereum is in the hands of incremental funds and will be used to invest in and support compliant leading DeFi projects.
The combined effect of these factors makes it more likely that the Ethereum ETF will drive the arrival of the "alt season".
3️⃣ The value of altcoins increases
Altcoins mainly refer to mainstream coins that have VC support and team building but are not highly valued by the market. The passage of Ethereum ETF will attract mainstream funds to the Ethereum ecosystem and drive the continued growth of these value coins. This may break the curse that value coins are not as good as Meme coins.
4️⃣ Impact of the compliance environment
The Financial Innovation and Technology Act of the 21st Century (FIT21) passed by the United States has a profound impact on the market:
●CFTC’s regulatory powers are expanded: The regulation of digital virtual assets under the “commodity” attribute will be more flexible and free, providing long-term policy stability.
● Compliance becomes the main theme: Compliant projects will find solutions to KYC, anti-money laundering and other issues, and directly benefit from ETF gains. Non-compliant projects will be cracked down on more vigorously and gradually become a niche market.
●Increased government intervention: The U.S. government may intervene in key areas such as stablecoins, exchanges, digital asset custodians and payment platforms by issuing licenses and other means.
5️⃣ Future market forecast
●Short term: The secondary Crypto market will be polarized into two levels. Some behind-the-scenes manipulators will increase speculation before the introduction of regulatory bills, resulting in high volatility of Meme coins and some mainstream coins, and altcoins will dance wildly.
●Medium term: Some leading DeFi, stablecoins and exchanges will strengthen their compliance efforts. Value targets with good compliance orientation will have good market performance, and non-compliant projects will gradually lose their value support.
● Long term: The political color of the Crypto market will gradually cater to the preferences of the web2 market. Although this may disappoint some fundamentalists, the benefits and pressures brought by the policy will jointly promote the development of the market.
The Web3 ecosystem will be differentiated, and the product stratification trend will be obvious. Some complex technologies and protocol supervision are difficult to control, but the market will choose the most mainstream development route.
🅿️Summary
Everyone has a different vision for the development of Crypto. In my opinion, the market will usher in a longer "copycat" season. The bull market is just in time, but the process will not be so smooth.
In general, the Crypto market under political guidance will no longer blindly pursue decentralization, but by eliminating the dross, mainstream value coins will also have the opportunity to stand out.
