Original | Odaily Planet Daily (@OdailyChina)
Author: Azuma (@azuma_eth)
Bitcoin has once again been on a roller coaster ride.
OKX market data shows that around 21:00 last night, BTC once again broke through 70,000 USDT after more than a month, and once rose to 70,050 USDT. However, just as the market was speculating whether this would be a sign of BTC reaching a new high, BTC suffered a rapid and substantial correction. As of 10:00 today, BTC once fell below 66,000 USDT, temporarily reporting 66,175.1 USDT, a 24-hour drop of 3.51%.
The situation of ETH is slightly different. Perhaps due to the favorable landing of ETFs and Grayscale outflows, ETH's rise before BTC broke through 70,000 USDT was not ideal, but perhaps the market is looking forward to a potential inflow/outflow turning point, and ETH's pullback this time is not too obvious. As of 10:00, ETH is temporarily reported at 3299.2 USDT, still recording a slight increase of 0.67% in 24 hours.
The trend of the altcoin market is relatively noteworthy. Unlike the previous practice of “altcoins remain unchanged when BTC rises and collapse when BTC falls”, altcoins generally did not experience a large correction during this sharp correction of BTC. The 24-hour decline of most currencies was smaller than that of BTC. Some altcoins such as PEPE, AAVE, and LDO even temporarily recorded positive values.
Alternative data shows that although the Fear and Greed Index is still in the "greed" state today, the value has dropped from 74 to 67, and the decline will be significant.
In terms of derivatives data, Coinglass data shows that in the past 24 hours, the entire network has liquidated $197 million, most of which are long orders, amounting to $140 million. In terms of currency, BTC liquidated $87.1446 million and ETH liquidated $51.5846 million.
BTC: A pullback is expected, institutions and miners are still optimistic
First, let’s look at the BTC market. Benefiting from the positive sentiment at the Nashville Bitcoin Conference, especially the release of unexpected friendly messages by a number of politicians represented by Trump, BTC has maintained a relatively strong performance last week (especially in the second half of the week).
Based on this background, as the conference comes to a close, the market also has certain expectations for a potential pullback in BTC.
Bitfinex Alpha released a report yesterday stating that the implied volatility of the Bitcoin options market had soared during the Nashville conference, but the implied volatility has declined recently, which means that there may be a small consolidation in the short term.
However, around 7:30 this morning, a small test transfer (0.02 BTC) appeared again from the Mt.Gox address. Considering that Mt.Gox had always made substantial large transfers after similar operations, this also exacerbated the panic in the market, causing the pullback to be further amplified. The low point of today's pullback occurred around 8:15, shortly after the news appeared.
However, judging from the ETF inflow/outflow situation, institutions are still optimistic about BTC for the time being. Trader T monitoring shows that the US Bitcoin spot ETF had a net inflow of US$123.1 million yesterday, which means that in the past half month (only counting trading days), there was only one day of net outflow in the ETF market, and the other more than ten trading days maintained positive inflows.
In addition, EMC Labs, an investment research institution, also mentioned that the recovery of the computing power market data showed the optimism of the miners. On July 20, the Bitcoin network computing power hit a record high of 724 EH/s, and the 7-day average computing power was also close to the historical high. The recovery of computing power indicates that miners, an important community member, are firmly optimistic about the future market, and it has also become an effective support for BTC to hit a record high in the future market.
ETH: Waiting for the turning point
Unlike the situation with BTC, ETH's recent trend will be largely affected by the Ethereum spot ETF that has just opened for trading.
Although the eight major ETFs including BlackRock ETHA, Fidelity FETH, Bitwise ETHW, and Grayscale Mini ETH have always maintained a positive net inflow, due to the massive outflow of Grayscale ETHE, ETH, whose liquidity is not as good as BTC, has received hundreds of millions of dollars in net selling pressure in just a few days.
Data from Farside Investors showed that Ethereum spot ETFs had a total outflow of US$156.5 million yesterday, and a total outflow of US$498.3 million in the past five trading days - of which Grayscale has had an outflow of US$1.723 billion, and several other ETFs have had a total inflow of US$1.225 billion.
However, one thing that is slightly optimistic is that Grayscale ETHE has seen an outflow of 19.7% in the past 5 days. If it is assumed that the final outflow share is 50%, it is estimated that it will take another 17 days to achieve. But before that, as the outflow scale of ETHE decreases, the outflow data of other ETFs should be able to offset it.
On the whole, the outflow rate of ETHE is much faster than that of GBTC. If ETH can replicate the trend of BTC of "first fall and then rise" after the launch of the ETF, it is expected that the turning point of ETH will appear earlier than that of BTC at that time.
Altcoins: Is the bull market coming back?
Prior to this, Odaily Planet Daily had published many analytical articles on market liquidity and the trend of altcoins: "Data Extraction: ETFs are Delaying the Real Bull Market", "Times Have Changed, the Altcoin Season Will Be Absent in This Cycle", and "Is There Any Hope for Altcoins?".
Overall, except for a few sectors such as meme and AI, and a few projects such as SOL that took over the ETF expectations, the performance of most altcoins in this round of market cycle can be described as "disaster". There are three main reasons why altcoins performed so poorly:
First, the approval of ETFs has led to changes in the market's liquidity transmission model. In the past, the entry path for incremental funds was generally "stablecoins - BTC, ETH - altcoins", but now incremental funds from traditional markets are more inclined to directly invest in BTC through ETFs, which also leads to the inability to continue to transmit funds, resulting in a lack of liquidity in the altcoin market.
Second, the continuous massive unlocking of "VC tokens" has brought about continuous selling pressure, resulting in a market structure of "oversupply" - if you look closely at the circulation changes of some altcoins, you will find that although the prices of some tokens continue to fall, the circulating market value continues to set new highs.
Third, new projects that opened at sky-high prices are constantly sucking the remaining liquidity in the market. io.net, ZKsync, LayerZero, Blast... a large number of popular projects that have been hyped for a long time have been launched one after another, and the FDV is generally at the level of billions of US dollars, which has further aggravated the lack of liquidity in the altcoin market.
However, even in this situation, some top investors are optimistic about the future market of altcoins.
Rich Rosenblum, co-CEO and co-founder of cryptocurrency market maker GSR, wrote on the X platform yesterday that altcoins will make a comeback and will return strongly, which is his most confident time.
Considering that the convention of “altcoins remain unchanged when BTC rises, and collapse when BTC falls” has been broken, let us continue to pay attention to whether Rich (what a great name...)'s prediction can come true.
Latent variables: macroeconomics
It should be noted that many macro events this week may have potential impact on the future market.
At 11:00 am Beijing time on Wednesday (July 31), the Bank of Japan will announce its interest rate decision and outlook report;
At 2:00 a.m. on Thursday (August 1), the Federal Reserve will announce its interest rate decision, and half an hour later Powell will hold a monetary policy press conference;
At 19:00 that evening, the Bank of England will announce its interest rate decision, meeting minutes and monetary policy report.
Adam, a macro researcher at Greeks.live, also said that although market expectations are relatively consistent, any news that exceeds market expectations will be a bombshell.
