Original title: "Disagreement is at its most serious moment, find the best choice"
Original author: Zixi.eth, SevenUp DAO
We recently made a macro-oriented document. Recently, in the blockchain industry, it is time to decide the overall primary and secondary investment direction, similar to the end of December 22. At present, all tokens except BTC and Solana have performed relatively averagely, and the market reaction is cold, thinking that the bull market may be over. But we are still optimistic about the market in the second half of this year and next year. In this market with the most serious divergence between long and short, whether it is primary or secondary, as long as you make the right direction, it is the most profitable time.
Therefore, I will first put forward our core views on the market and give some opinions on the four mainstream tokens.
TL;DR
1. Whether it is the interest rate cut in September, the SEC's regulatory policy, or Trump's support for crypto, from the perspective of the US economy and politics, it is a big boon to the crypto market.
2. Analogous to the past two cycles, the current bull market is Stage 1, that is, Bitcoin leads the rise, Bitcoin market share increases, and the market share of Shansai coins drops sharply. This period may continue for a few months. Next year will be the bull market Stage 2 led by Shansai coins. (See Figure)
3. Holding BTC in the past six months is still the best choice, but you can consider replacing it with ETH or Solana in the second half of this year. Since the ETF was approved, the ETF has increased its holdings by 303,000 BTC in six months, holding a total of 950,000 BTC, accounting for 4.5% of all BTC. In addition, for BTOEcosystem, in the past six months, we believe that the only correct idea is to focus on developing how to provide BTC Holder trustless financial management and liberate the liquidity of large investors, which can be seen in the data of SolvProtocol.
4. ETH is very suitable for building a position in the second half of this year. After ETH starts trading on Nasdaq on July 23 this year, it will repeat the process of Grayscale selling BTC at the beginning of this year. The selling process may last for half a month to one month until the market can take over Grayscale's selling. Once this critical point is reached, it is a very good time to build a position. We recommend paying attention to the BTC/ETH exchange rate in the second half of this year. Once Grayscale's net outflow ends, it is time to build a position (the logic refers to the process of Grayscale's BTC net outflow ending in February this year and BTC rising 20%-30% in one month).
5. We are still optimistic about Solana in the long term. There are hot products every quarter. Those who have goods should still hold them firmly and not sell them. Those who don’t have goods can consider building positions at low prices. Their 2C ecological construction capabilities are really strong. FTXLiquidation solved it perfectly in the first half of this year. The cost price is 80, and the current price is 170-180. Now it has begun to unlock. It is the most correct decision we made in the second-level OTC in the first half of the year. In addition, SolanaETF has also been submitted, and it is expected to make progress next year. The SEC also cancelled the judgment that Solana is a security. After the DePIN hit at the end of last year, Solanaecosystem launched another hit this year, Pump.fun (one-stop meme coin + casino), with a daily income of one million US dollars and a revenue of 80 million US dollars in half a year.
6. We are bullish on Ton in the short to medium term, but we need to observe in the long term. At the current price, I am still very cautious about OTC, but you can consider buying it directly. We have the opportunity to make money with Ton, but our chances are relatively small with Tonecosystem.
1. The money in the cryptocurrency world comes from the capital pool of the financial market
Under macroeconomic regulation, such as when interest rates are cut and money is printed in large quantities, these funds will naturally flow to the trading market. Since 2020, the crypto market has begun to be highly positively correlated with the US stock market. Since the beginning of 2021, when the crypto industry grew into a trillion-dollar track, it has been closely related to macroeconomic interest rates. In the 17-20 cycle, it was not related to interest rates because the volume was too small. The amount of hot money in the market can be measured by the amount of stablecoins minted. At the end of 2021, the number of stablecoins in the entire market reached an ATH of 162 billion US dollars. Even after half a year of rising offensive, the stable amount is still only 150 billion US dollars.
2. The annual rate of US CPI in June was 3.0%, far below the market expectation of 3.1%, and fell sharply to the lowest level since June last year.
The annual rate of the US unadjusted CPI in June was 3.0%, far below the market expectation of 3.1%, and fell sharply to the lowest level since June last year. The monthly rate of the seasonally adjusted CPI in June was -0.1%, the first negative value since May 2020. The market is betting on the possibility of a rate cut in September, which has reached 90%+. According to CICC's macroeconomic materials, this round of rate cuts is mainly to return interest rates to a neutral level. Macro analysts believe that the reasonable US Treasury bond interest rate is 4%, corresponding to a rate cut of 100-125bps. The time for this round of benchmarking should be 2019.
3. After the shooting, Trump’s chances of being elected president have reached 60%+ on Polymarket
Trump's monetary policy in his second term is still to pursue a substantial interest rate cut and balance sheet expansion, which will lead to an increase in inflation, which is usually a major positive for the crypto market and the U.S. stock market. In addition, Trump opposes the new energy industry and advocates boosting the traditional energy industry. Mining is currently a major consumer of traditional energy, which is why he is very concerned about Bitcoin production capacity - he wants all future bitcoin to be minted in the U.S.
Trump was rather contemptuous of crypto in 2019 and had little understanding of the industry. In December 2022, he issued his own NFT card. In 2024, he began to hold crypto, with assets exceeding 10m, including $3.5m of TRUMP (meme), $3m of ETH, and some meme coins. At the Bitcoin Conference in Nashville, Trump had a very wonderful speech (odaily.news/post/5197170). How much of the content can be cashed out is still a matter of opinion.
In addition, we can look at the recent attitudes of the SEC, which are generally optimistic.
4. The market value of stablecoins reached the lowest circulating market value of this cycle on October 2, 2023, which is 121.1 billion US dollars.
Now it has recovered to 155.8 billion US dollars, a year-on-year increase of 28%, which means that 34.7 billion US dollars have actually flowed into the market. The inflow of only 34.7 billion US dollars has led to:
BTC has grown from $545 billion to $1.2 trillion today, an increase of 120% (not only due to the inflow of stablecoins, but also due to the large amount of buying from ETFs.)
ETH performed the weakest, increasing from 208 billion to 390 billion U.S. dollars, an increase of 87%.
Altcoins performed second, growing from $235.6 billion to $490.1 billion, a 108% increase (new projects were launched, so the growth here is somewhat exaggerated)
5. The performance of the above tokens is in line with the reservoir model we talked about before, and the liquidity is gradually decreasing. The reason why Ethereum has not performed as well as Bitcoin in the past six months is that:
1. From the perspective of the new narrative, apart from staking (Lido) + restaking (Eigenlayer) + LRT this year, Ethereum has not had any substantial innovation in infra and business models, but has been constantly repeating the same thing.
2. Ethereum's technical expectations are gradually coming to an end. In the ETH/BTC growth phase from 2021 to 2022, everyone was optimistic about Ethereum because with the continuous growth of users, Ethereum Gas was extremely expensive (GWEI was usually above 70 at the beginning of 21-22, a transfer tx was 2-3u, and an NFT interaction was at least 50-100u). Therefore, everyone started to do op/zkL2. After two or three years, although L2 has shared a large part of the interaction pressure for the main network, the massadoption that everyone hoped for at the time did not appear. On the contrary, doing L2 is no longer a technical issue, which caused the L2, which was highly valued in 22/23, to fall continuously after the issuance of the coin.
3. BTC has passed the ETF and has buying from Nasdaq, while ETH had not passed the ETF six months ago.
4. Liquidity is still insufficient and is far from reaching the stage of liquidity overflow.
6. Regarding BTC (and its ecosystem), although the macro outlook is positive in the long term, you can consider exchanging it for ETH/Solana in the second half of this year:
1. From the perspective of the six-month timeline, the inflow of BTC ETF is still quite healthy. ETF holds about 950,000 BTC, with an increase of 303,000 BTC in six months, and ETF holders account for 4.5% of the total BTC.
2. Trump pays close attention to BTC. This can be seen from Trump's attitude towards mining, energy, interest rate cuts and regulation at the Nashville Conference.
3. The impact of interest rate cuts on BTC should be the greatest, and funds will flow into BTC first.
4. BTC Ecosystem has stalled slightly, but Trustless has provided BTO Holders with U-based/Sansai coin-based financial management, which is in urgent need. Ecological projects are all clinging to Babylon. If Babylon can cooperate with traditional ETFs and bring BTcSecuritysharing to other POS chains to provide security services, it will be a great benefit to Babylon ecological projects.
7. For ETH (and its ecosystem), the short-term outlook is bearish, and the ecosystem innovation is stagnant, but the medium- and long-term macro outlook is optimistic.
1. The SEC believes that ETH is a commodity rather than a security, but STETH is a security, which is not a good thing for StakingFi related projects (such as Lido).
2. If Grayscale repeats the process of selling BTC in the early stage, the growth of ETH in the first half of the month will most likely not be good. Grayscale sold 600,000 BTC to only 300,000 BTC in half a year, selling 18 billion US dollars at an average price of 60,000. Grayscale still has 7.4 billion US dollars of Ethereum in hand, and it needs to wait for the market to digest it.
3. All the (asset) innovations of Ethereum in this round are based on Eigenlayer. The staking ratio of Ethereum in the past four years has reached 28.21%, and the restaking ratio in half a year has reached 4.8%. Eigenlayer is all asset innovation, which is a typical self-congratulatory type.
4. Appchain-type RAAS is still built on Ethereum, and the infra has been very well done. Ethereum’s appchain may be a hot product in the future.
8. Solana is promising in the long term, with explosive products every quarter
FTXLiquidation has been successfully resolved and has started linear release in July. The average daily selling pressure in the market is between 3.6 million and 4 million US dollars (180-190 price).
Solana ETF has already submitted an application and it is expected that the ETF may be approved in 2025.
The 2C ecosystem is getting better and better, and the user experience is very smooth. It once surpassed Ethereum to become the largest on-chain casino. Pumpfun has become the most successful application product in the past six months (pump.fun/board), with a cumulative revenue of 80 million US dollars and a daily profit of one million US dollars.
9. Ton is bullish in the short and medium term, but it is limited by the liquidity of chips and whether the ecosystem is sustainable, so it needs to be observed in the long term.
1. Following our previous point about Ton, Ton has the opportunity to grow, but the Ton ecosystem may not have the opportunity. The Ton ecosystem can be seen as a wilder and less regulated WeChat applet ecosystem. Most of the games currently developed are brainless games, tap 2earn, etc., and most of the users are airdrop hunters. Limited by the product game model, the actual on-chain interaction conversion of web2 users does not exceed 10%. Although there are phenomenal game products, they are not sustainable. After one day of airdrop distribution, the project is basically over.
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