With the German government's liquidation sell-off coming to an end and Mt.Gox compensation officially starting, this article predicts that the last wave of large sell-offs will be around the corner, but there is no need to worry too much. This article previously predicted the trend of Bitcoin in July, and it is still valid at present. With the launch of Ethereum ETF imminent, how will the Ethereum market develop?
The German government liquidated and dumped the stocks, Mt.Gox paid more than half of its compensation, and the last wave of panic is coming
The German government is more like a "big investor outside the circle". It has no special obsession or belief in Bitcoin. For such confiscated property, its value may have been an excess return, so it stepped up selling before the Mt. Gox compensation was completed. . Unlike the German government, Mt. Gox’s compensation targets are mainly retail investors. It is unlikely that all of them will be sold at once. However, as Bitcoin rises, it is expected that there will be continued selling pressure, and the most significant selling pressure is expected to be large. When some people receive Bitcoin for the first time. This is just as the author previously predicted, which is expected to occur from late July to early August; at the same time, the market is also performing the "five poverty, six absolute, and seven turnaround" previously predicted.
Most of the compensation funds of Mt.Gox have been transferred, but it will take 7-14 days for retail investors to receive them completely, which is in late July. On July 16, Nobuaki Kobayashi, the trustee of Mt.Gox, issued a notice: Following July 5, 2024, on July 16, 2024, the trustee of Mt.Gox repaid Bitcoin and Bitcoin Cash to some creditors through some designated cryptocurrency exchanges, etc. according to the plan. So far, the trustee has repaid these assets to more than 13,000 creditors. Kraken stated in the email that it has successfully received the creditors' funds from the trustee of Mt.Gox (48,641 BTC received from Mt.Gox). The platform will strive to distribute the funds as soon as possible, and it is expected that they will be deposited into the corresponding accounts in 7-14 days. The amount received by users has been determined by the trustees, and the platform will distribute it according to their instructions.
In addition to Kraken, Mt.Gox's designated compensation exchanges include Bitstamp, SBI VC Trade, Bitbank and Bitgo, and the basic compensation is expected to be completed as early as mid-to-late August. On July 5, the Mt.Gox creditor report showed that Bitbank had transferred the Bitcoin paid by Mt.Gox to creditors within a few hours without waiting for the 14-day deadline. This article expects that Bitstamp and SBI VC Trade will mainly carry most of the other Mt.Gox compensation tokens. Bitstamp said in a statement: "According to the agreement with the Mt.Gox trustee, Bitstamp has 60 days to distribute the tokens, but we will work hard to ensure that these investors are compensated as soon as possible." This article expects that this will also be completed within the next month, possibly as early as mid-to-late August.
Overall, the recent Bitcoin sell-off is essentially coming to an end, and many big Vs have begun to analyze it from different dimensions. Ki Young Ju, founder and CEO of CryptoQuant, said in a post on X: "Mt.Gox is preparing to distribute Bitcoin to creditors. The large-scale capital outflow indicates that retail investors have not yet received the funds. Unlike the German government's sale, Mt.Gox's creditors were not forced to sell, so this is not pure sell-side liquidity."
Crypto analyst Alex Krüger estimates that this could cause a maximum drop of 10% in the price of Bitcoin, even if an immediate sell-off occurs. I believe that this distribution will not end the bullish trend, as these Bitcoins are expected to react to market sentiment like the existing supply.”
Greg Cipolaro, head of research at NYDIG, said in a report: (German government, Mt.Gox and miners' selling pressure led to Bitcoin's decline) While emotions and psychology may play a leading role in the short term, our analysis shows that the impact of potential selling on prices may be exaggerated. We can reasonably assume that rational investors may find this an interesting opportunity created by irrational fear. In addition, NYDIG's data shows that listed mining companies actually increased their Bitcoin holdings in June. Although BTC sales rebounded slightly last month, they are still far below the levels of earlier this year and last year.
Ethereum ETF is just one step away from success, but huge selling pressure may cause it to suffer short-term setbacks
The Ethereum ETF is just one step away from going online, and it is likely to start trading next week. On July 16, the Wall Street Journal revealed that the U.S. Securities and Exchange Commission (SEC) told asset management companies that the spot Ethereum ETF may be launched on July 23. After the asset management company submitted the last round of filings this week, the U.S. Securities and Exchange Commission is expected to announce the effectiveness of the Ethereum ETF registration statement next Monday. Once the statement takes effect, the spot Ethereum ETF can begin trading.
Net inflows into U.S. spot Ethereum ETFs may be only 30%-35% of those into spot Bitcoin ETFs. Citi said in a research note: (Ethereum ETF) net inflows in the first six months were between $4.7 billion and $5.4 billion. In addition, inflows and Ethereum's return beta relative to inflows may be lower than the analysis suggests. While ETH may offer diversification benefits in the long term, that is not the case at the moment. Investors who may buy spot ETFs (rather than the respective tokens) may see Bitcoin and Ethereum as similar enough to allocate their allocations to both cryptocurrencies rather than viewing them as different assets. This means that Ethereum may see inflows specifically for Bitcoin ETFs rather than additional allocations. Another reason for the lower-than-expected inflows is the lack of staking services.
In addition to the possible lack of net inflows of Ethereum ETF, Grayscale's ETHE selling pressure has also become a major constraint for Ethereum to rise sharply in the short term. At present, Grayscale's Ethereum ETF is likely to pass. Based on the previous experience of GBTC, ETHE is expected to have a large outflow in the early stage of Ethereum ETF, which will hedge the inflow of funds for Ethereum ETF. In addition, the Ethereum Foundation is also selling, and the market is also overshadowed. According to Spot On Chain's data monitoring on July 17, in the past two days, two Ethereum Foundation/ICO-related wallets deposited 3,631 ETH (worth approximately US$12.5 million) into Kraken. Among them, 2,631 ETH (worth approximately US$9.01 million) were deposited in the address starting with 0xdb3, and 1,000 ETH (worth approximately US$3.46 million) were deposited in the address starting with 0xbf5.
According to data from Deribit and Kaiko, Ethereum hedging activity is more pronounced in short-term contracts, with implied volatility determined by options contracts expiring on July 19 at a relatively high point recently relative to those expiring on July 26. According to Kaiko data, the IV for July 19 expiration rose from 53% last Saturday to 62% on Monday, exceeding the IV for July 26 expiration. This suggests that there has been an increase in demand for options or derivatives that protect against price fluctuations.
Pectra upgrade is coming, Ethereum’s best time may start from October
In March 2024, Ethereum upgraded to Dencun, which significantly reduced the L2 transaction costs. Its impact on the entire Ethereum ecosystem is huge. Ethereum's next major upgrade, Pectra, has also attracted market attention and may be more important than Dencun. According to official Ethereum news, Pectra is scheduled to be launched in the fourth quarter of 2024 or the first quarter of 2025. If the launch of the Ethereum ETF opened the door for Ethereum to enter the traditional financial market, then the upgrade of Pectra will truly begin to attract traditional financial capital into Ethereum, thereby boosting the rapid growth of Ethereum's value.
Pectra combines two previously planned upgrades: Prague (for the execution layer) and Electra (for the consensus layer). Through the merger, Pectra aims to bring multiple major improvements to Ethereum, making it more flexible and optimized than ever before.
Pectra plans to incorporate 9 standard EIPs and a meta EIP consisting of 11 additional EIPs, which include enhancements to account abstraction, validator operations, and overall network performance.
EIP-2537 — Introduces precompiles for BLS 12-381 curve operations, making BLS signature operations faster and cheaper, thereby improving accessibility and performance for Ethereum validators and reducing gas costs.
EIP-2935 — Implements saving hashes of previous blocks in special storage slots to improve the efficiency and reliability of verifying Ethereum data before stateless execution.
EIP-7002 — Allows validators to trigger exits and partial withdrawals via their Execution Layer withdrawal credentials, providing more flexible options for re-staking and staking pools.
EIP-7251 — Increases the maximum valid balance of Ethereum validators from 32 ETH to 2048 ETH, reducing the total number of validators required and simplifying the computational load of the network.
EIP-7594 — Introducing Peer Data Availability Sampling (PeerDAS) to further optimize L2 and enhance transaction processing and scalability.
EIP-7702 — Adds a new transaction type that sets the code of an EOA (Externally Owned Account) during a transaction, allowing regular wallets to be temporarily converted into smart contract wallets to improve user experience.
EIP-7692 — A meta-EIP consisting of 11 constituent EIPs that aims to enhance the EVM Object Format (EOF) to improve contract deployment and execution efficiency.
After this upgrade, regular Ethereum accounts will be more programmable, L2 will be more affordable, smart contracts will be more efficient, and validators will be more flexibly managed. This will enable the Ethereum ecosystem to meet a wider range of use cases and user needs, and is expected to give birth to truly disruptive applications, which will also enable Ethereum to drive value growth through technology.
Summarize
Overall, the German government's selling pressure has ended, Mt.Gox has paid more than half of its compensation, and the compensation funds have begun to be distributed to retail investors. The last major selling pressure is expected to come in late July. Unlike government behavior, retail investors' collective large-scale selling pressure will not continue. Therefore, this article believes that Bitcoin will continue to strengthen in a bullish pattern in the future. It is worth noting that Bitcoin has become a hot topic in the US election. Trump has clearly expressed his support, which will attract a lot of traffic to Bitcoin, thereby pushing up Bitcoin. In addition, the Federal Reserve has a dovish view on the macro level. The market expects the Federal Reserve to cut interest rates in September, which will also provide a favorable macro environment for Bitcoin.
The rise of Bitcoin is also a positive for Ethereum, but with the approval of the Ethereum ETF, Grayscale's ETHE is expected to see short-term profit-taking selling pressure. In addition, the amount of institutional funds flowing into Ethereum before October was relatively limited, which had a relatively limited impact on the rise of Ethereum. With the end of the US election and the upcoming Pectra upgrade, Ethereum's technical strength will attract more and more institutional investors, and its capital inflow will also increase significantly. Ethereum is expected to gradually explode in the fourth quarter.
