Bitcoin briefly touched $99,800 not long ago, and as it was about to hit the historic price of $100,000, it gradually retraced and once fell below $91,000. The reason behind this is nothing particularly special; investors simply began to take profits, leading to a natural price drop after larger positions exited. Bitcoin is now back to $97,000, stabilizing with a weekly increase that is almost flat.
Bitcoin has not yet reached the overbought zone of a bull market and still has the potential to rise to $100,000 to $140,000. Multiple trading indicators also show strengthening bullish momentum, while blockchain data indicates that retail activity in cryptocurrencies is sluggish, with a recent sell-off of 41,000 BTC. However, institutions continue to buy 130,000 BTC, with the only short-term correction risk coming from MicroStrategy facing short-selling, leading to a 30% drop in its stock price. Looking long-term, Bitcoin still has growth potential, but it will need to rest for a while in the short term.
It is worth noting that Ethereum has launched a counterattack, with the price reaching $3,700, a weekly increase of 11.2%, far surpassing Bitcoin. This indicates that capital has begun to flow from Bitcoin to Ethereum, as the market starts to believe that Bitcoin's potential for further gains is limited and that Ethereum may provide better returns. Consequently, funds are shifting towards Ethereum, signaling the establishment of the second phase of a bull market, with capital flowing into other cryptocurrencies.
When Ethereum rises and peaks, we expect funds to further shift towards mid and small-cap altcoins, such as SOL and ADA. This is typically a phenomenon where capital flows out in stages, but the premise is that buying interest must remain strong. Currently, the market momentum still appears quite sufficient, but holders of mainstream cryptocurrencies should be cautious about taking profits, as many have achieved returns of up to 40% in just six months, leading funds to shift into altcoins with greater growth potential.
Additionally, the recent market regulation themes are also favorable for the rise of altcoins. Last week, some fund companies began applying for altcoin ETFs, including ETFs for cryptocurrencies like XRP, ADA, and SOL to be listed on the U.S. stock market, which may be viewed by traders as the next wave of trading themes.
The easing of cryptocurrency regulation and the strategic reserve themes surrounding Bitcoin are currently brewing.
In order to maintain the growth of the entire cryptocurrency market, investors are looking forward to the next wave of positive news from the 'SEC easing regulations on altcoins', allowing cryptocurrencies other than Bitcoin and Ethereum to trade on the U.S. stock market. If this happens, the entire cryptocurrency market will no longer be limited to exchanges, but will be able to attract capital inflows from Wall Street like Bitcoin and Ethereum. It can be expected that the overall market value will experience exponential growth, and this expectation has surged with the departure of SEC Chairman Gary Gensler.
As mentioned above, Bitwise Asset Management has taken the lead in applying to the SEC for a 'Top Ten Cryptocurrency' index ETF, conceptually similar to the S&P 500 ETF, packaging and listing the top ten cryptocurrencies by market capitalization. They aim to use this approach to allow mainchain coins like SOL and ADA to enter the ETF market, equivalent to having their own spot ETF. However, this concept, as previously mentioned, still poses significant challenges and is a tactic for fund companies to test the regulatory limits.
It is still too early to expect regulatory easing, and fund companies may be somewhat overly optimistic. However, applying for an ETF comes at no significant cost and is still worth trying. After Trump took office on January 20, it took at least six months for the entire team to push regulatory reforms into place, but the community is almost certain that cryptocurrency innovations will be opened up immediately after Trump takes office, adding a considerable amount of certainty, though the scope for future imagination remains vast.
The cryptocurrency industry is gradually fulfilling investors' expectations, but it is difficult to assess to what extent this can be realized, as it depends on the new U.S. government's true views on the cryptocurrency industry. Cryptocurrency regulation is likely to be relaxed, for example, NFT and DeFi trading may reignite, laying the groundwork for the next phase of altcoin price increases.
