Recently, meme coins represented by PEPE and NOT have performed strongly, repeatedly hitting record highs. However, the performance of institutional coins is relatively poor, and even ETH's performance is not satisfactory, and it is generally "weak". At present, the market can be divided into three major modules: BTC and ETH, the two major index coins, altcoins invested by institutions, and meme coins. The market originally expected that altcoins would rise after the approval of the Ethereum ETF, but the rebound only lasted a few days, and funds flowed back to meme coins.
Why? Market funds are insufficient to drive the market up again. Now that stablecoins and ETF funds have not continued to flow in, the market can only fluctuate, and the existing funds are grouped together in meme coins.
From the perspective of capital flow, the market capitalization of BTC and ETH is too large, and only large institutions can influence their prices. The participation of small funds has little impact on the market. The prices of these two are mainly dependent on changes in the macro-financial environment. At present, ETF funds only have one target, BTC, to choose from. Most altcoins are incubated by VC institutions. As the lock-up period ends, institutions often sell their chips during a rebound. For hot money in the market, meme coins have become the only choice. Although everyone knows that meme coins have no actual value, capital always needs to hype hot spots to keep the market active.
Since mid-April, the inflow of funds into ETFs and stablecoins has stopped increasing on a large scale. The current market liquidity mainly relies on the stock of funds. The rise and fall are completely caused by the disturbance caused by the "exhaustion" of liquidity. There are actually no obvious positive or negative factors. The current market is mainly a game of emotions. It is expected that the next few months will continue to show a pattern of "more rises, more falls, more falls, more rises" until the macro-financial environment changes. This change node is likely to be during the US election, and the decision-making power lies with the Federal Reserve.
A striking feature of this US election is that cryptocurrency has become an important bargaining chip in the political and financial game between the two parties. It seems that without supporting cryptocurrencies, it will be difficult to gain support from the younger generation of voters. Trump strongly praised cryptocurrencies in his speech and even expressed his hope to become the first Bitcoin president of the United States. Not to be outdone, the Biden team suddenly pushed for the adoption of the Ethereum ETF (the market speculates that this is related to political reasons). The U.S. election will be held in November. I think that before the election, the U.S. stock market is unlikely to have major problems, and the Federal Reserve’s monetary policy will not be significantly adjusted. Everything is focused on stability. Therefore, the Federal Reserve has recently maintained a stance of no action and has not specified the timing of interest rate cuts to avoid triggering significant market fluctuations.
In this context, large funds will also remain cautious, and without a large inflow of funds from ETFs and stablecoins, it will be difficult for Bitcoin and Ethereum to rise sharply. Existing funds will not pay attention to the institutional coins that continue to be unbanned, and continuing to hype meme coins will become a helpless choice.
The next big market will be either triggered by a large-scale release of funds in the macro-financial environment or driven by major ecological changes in the crypto industry itself. Among them, the Fed's large-scale release of funds is more likely to trigger the market. Trump even asked a cryptocurrency consultant "whether Bitcoin can help solve the US's $35 trillion debt." In the end, large-scale release of funds may be the only solution. After the large-scale release of funds, in addition to US stocks, a reservoir is needed - the crypto market, to carry the flood of US dollar liquidity.
