Daily Summary:
BTC spot ETF continues to receive large inflows, and Russia legalizes crypto mining
According to Farside Investor data, the overall net inflow of Bitcoin spot ETFs yesterday was nearly $200 million. Among them, BlackRock IBTC had a single-day inflow of $157 million, WisdomTree BTCW had a single-day inflow of $118 million for the first time since the launch of the ETF, and Grayscale GBTC had a single-day outflow of $182 million.
The ETH ETF had a total net outflow of $3 million, and Grayscale ETHE had an outflow of $19.8 million, and the outflow has been greatly reduced. However, at the same time, the inflow and trading volume of the ETH ETF also maintained a downward trend.
Putin signs decree legalizing cryptocurrency mining in Russia
According to TASS, Russian President Vladimir Putin has signed a law legalizing cryptocurrency mining in Russia. Earlier, Putin discussed the introduction and use of cryptocurrencies with the government at a meeting on economic issues. He pointed out that this is a promising economic field and Russia must "seize the moment" to quickly establish a legal framework and regulation, develop infrastructure, and create conditions for circulation.
Wall Street expects the Fed to end its balance sheet reduction this year, but an emergency stop is unlikely
The Fed is in sight of ending its balance sheet reduction, but the actual date depends on the pace of rate cuts and funding market pressures. Policymakers have hinted that the reduction of U.S. Treasury holdings will be completed by the end of the year, and many on Wall Street believe that quantitative tightening is unlikely to end abruptly. But recent weak economic data and the risk of liquidity pressures have cast uncertainty over the outlook. "If the Fed intends to stimulate the economy, then it may stop shrinking its balance sheet," Bank of America strategists Mark Cabana and Katie Craig wrote in a note to clients on Wednesday. "If the Fed's goal is to normalize monetary policy, then the balance sheet reduction can continue."
Growing signs that economic growth is slowing faster than expected just a few weeks ago sparked a sharp rally in global bonds on Monday as traders bet that the Federal Reserve and other central banks will become more aggressive in cutting interest rates. Morgan Stanley analysts wrote, "Two possible drivers could cause the Fed to end its balance sheet reduction early: a drying up of money market liquidity or a U.S. recession. But we think neither is likely to happen."
Nansen analyst: Bitcoin is a "safe haven asset" in the context of a global economic recession
Nansen chief analyst Aurelie Barthere said, "Bitcoin can act as a "safe haven asset" during a recession and will outperform other tokens in the crypto market. The inflation outlook has improved this year, but economic growth forecasts remain "tepid" and central banks are "taking action to stimulate the economy to avoid further declines." A large amount of speculative-grade debt in the United States will mature in 2024, coupled with falling bond yields, the financial environment is under pressure. Investors' shift to safer assets and falling yields are typical recession indicators, reflecting a lack of confidence in continued economic growth. The probability of a recession in the second half of 2024 is expected to be 40%. "
Market Analysis: BTCD Returns to Historical High, the Copycat Season May Be Coming
Market Trends
Recently, after a period of sideways trading at a high level, BTC has made a strong breakthrough and returned to above $61,000. BTC's market dominance rate (BTCD) has also returned to a new high in the past three years, indicating that BTC's dominance in the current market has been further consolidated. At the same time, BTC spot ETF funds have shown large inflows, with BlackRock receiving nearly $200 million in a single day and WisdomTree receiving nearly $120 million in a single day. These inflows have further supported the rise in BTC prices.
ETH also rose, led by BTC, and returned to around $2,700. However, unlike BTC, ETH spot ETFs showed net outflows overall. This may reflect investors' lack of short-term confidence in ETH, or that funds prefer BTC when allocating assets.
In terms of altcoins, there is a general upward trend, especially the RWA (Real World Assets) sector and the Meme sector, which are outperforming the market.
Data indicators
Today's AHR999 index is 0.74. Although it has risen from the previous level, this data still shows that the current price is a good point to buy in batches. The AHR999 index is used to evaluate the level of market prices relative to the historical average. The current index shows that the market is still in a reasonable buying range.
The Fear and Greed Index is 48, indicating that market sentiment has gradually shifted from the previous fear to neutral. The sharp rise in the market has obviously improved investor sentiment, but it has not yet reached a state of extreme greed, which means that market sentiment remains at a relatively healthy level.
Market Hotspots
Meme sector: The Meme sector is extremely active, with major public chain head Meme coins such as BRETT, WIF, PEPE, and PONKE all rising sharply. Fully circulated Meme coins are more resilient in the rebound market and lack selling pressure from the market. In comparison, they perform significantly better than VC (venture capital)-backed tokens. This phenomenon shows that market funds are more willing to flow to Meme coins with strong liquidity and less market selling pressure.
RWA sector: TOKEN, OM, ONDO and other RWA sector tokens rose collectively, showing rare capital cohesion. As one of the newer narratives in this round of market, the RWA sector has a relatively small overall market value and is expected to be a side that is easier for market funds to speculate. The rise of the RWA sector may be related to the market's expectations for the application of blockchain technology in real-world assets (such as real estate, bonds, etc.).
Macroeconomics: All three major U.S. stock indexes are in the green, and the Federal Reserve may end this round of balance sheet reduction this year
The three major U.S. stock indexes all rose by more than 1%, with the S&P 500 index up 2.30% to 5,319.31 points; the Dow Jones Industrial Average up 1.76% to 39,446.49 points; and the Nasdaq index up 2.87% to 16,660.02 points.
Among the popular U.S. stocks, Apple rose 1.66%, Microsoft rose 1.07%, Nvidia rose 6.13%, Google C rose 1.92%, Google A rose 1.94%, Amazon rose 1.86%, Meta rose 4.24%, TSMC rose 6.16%, Tesla rose 3.69%, and AMD rose 5.95%.
Since June 2022, the Federal Reserve has begun to implement quantitative tightening, or balance sheet reduction (QT), but the Fed's balance sheet reduction process has gradually slowed down since this year. Some Wall Street strategists said that although the pace of balance sheet reduction has indeed been reduced in the near future as stated by the Federal Reserve, it is unlikely that the Fed will suddenly announce the end of balance sheet reduction in a "sudden brake" manner.
Generally speaking, the Fed directly buys bonds (i.e. quantitative easing, or QE) or stops shrinking its balance sheet (i.e. stopping the process of shrinking its balance sheet), both of which mean that financial market liquidity will increase significantly. When the Fed buys bonds, it is actually exchanging the bonds in the hands of banks for cash. This cash is deposited into the banking system in the form of bank reserves, increasing the supply of funds in the banking system. This means that banks can provide more loans, thereby promoting investment and consumption. And by purchasing long-term bonds, the Fed pushes up the prices of these bonds and lowers their yields (i.e., long-term interest rates in the financial market), and lower long-term interest rates encourage businesses and consumers to borrow, stimulate economic activity, and also benefit risky assets such as the crypto market.
Summarize
The overall market performance is strong, and the rise of BTC and ETH has led to an improvement in the sentiment of the entire market. Although the ETH spot ETF showed a net outflow, the large inflow of funds into the BTC spot ETF showed investors' strong confidence in BTC. The outstanding performance of altcoins, especially RWA and Meme sectors, has also injected new vitality into the market.
Data from the AHR999 Index and the Fear and Greed Index show that the current market is still in a relatively reasonable buying range, and sentiment remains neutral to optimistic. In such a market environment, investors can consider buying in batches, especially focusing on those sectors with strong market capital cohesion and excellent performance.
In short, after a period of adjustment, the market has regained its vitality. Investors should seize the current opportunity and rationally allocate assets to obtain good market returns.
