Written by: Terry, Plain Language Blockchain
In the past two months, although there have been constant hot events such as memes and Airdrops of top projects, the market has been in a rather bizarre depressed atmosphere - the howling of bears seems to be faintly audible, and the footsteps of bulls are elusive, and the market collapse and restart seem to be only a moment away.
This article aims to explore and sort out some hidden fermentation events in the market in the past two months, while looking forward to the positive factors that may be overlooked in the future, and looking forward to the main storyline that may take on the main responsibility in the second half of the year.
01 BTC spot ETF inflow turns from negative to positive
The market always likes to overestimate the short-term effects of new things and underestimate their long-term influence. For the Bitcoin spot ETF, which has been launched for nearly half a year, there is a signal worth paying attention to recently:
According to SoSoValue data, Bitcoin spot ETF has seen a new wave of capital inflows since mid-May, which lasted for nearly a month. On June 4, it reached the second highest value in history of US$886 million (second only to US$1.05 billion on March 12).
Although there has been a continuous decline since the beginning of this week, the overall situation has been significantly reversed compared to April and May. As of the time of writing (June 21), the total net asset value of Bitcoin spot ETFs is US$56.24 billion, the ETF net asset ratio (market value to the total market value of Bitcoin) is 4.39%, and the historical cumulative net inflow has reached US$14.67 billion.
02 Crypto Regulatory Wheel Turns & Ethereum Spot ETF Accelerates Suddenly
The wind starts from the tip of the green reed. Against the backdrop of the 2024 election year, the macro environment has clearly improved recently, both at the regulatory and funding levels, brewing a new round of bullish catalysts (recommended reading "Trump and Biden compete to "win over Bitcoin", is the US crypto regulation about to take a big turn?").
First, on May 22, the 21st Century Financial Innovation and Technology Act (FIT21 Act) was passed by the House of Representatives with an overwhelming majority of 279 votes to 136. Then on May 24, the U.S. Securities and Exchange Commission (SEC) officially approved the 19b-4 forms for eight Ethereum spot ETFs.
This means that the stance of US regulators has shifted from tough to soft, especially the expected Ethereum ETF has been greatly advanced through the node, and it seems to be just one step away from the final launch. Interestingly, although the attitude change and approval speed of the US regulators this time are much faster than expected, looking back afterwards, it seems that there are some clues:
At least as early as around $3,000, whales such as Justin Sun began to accumulate ETH chips and firmly go long on the ETH/BTC exchange rate, which seems to indicate that some individuals/institutions with a keen sense of smell have been making early arrangements.
Most directly, ETH's performance in the secondary market has also swept away its previous decline and started to gradually strengthen. The most obvious change is the ETH/BTC exchange rate. It should be noted that since October last year, ETH has been falling compared to BTC, and the ETH/BTC exchange rate has fallen from above 0.064 to below 0.045.
Since mid-May, the ETH/BTC exchange rate ratio has begun to break out of the downward trend. In the past month, it has successively broken through the 0.05 and 0.055 levels, reaching a recent high of 0.058, and is generally strong.
03 Traditional Web2 players accelerate their deployment of Web3
On June 6, Robinhood officially announced that it would acquire the cryptocurrency trading platform Bitstamp for $200 million, thereby expanding outside the United States. The two parties have reached an acquisition agreement, but it needs to be approved by regulators. Compared with the acquisition price of $400 million by NXMH, a subsidiary of South Korean company NXC in 2018, it is half lower, which is considered a big bargain.
As we all know, Robinhood is one of the most commonly used stock and crypto CEXs by US users, with 11 million monthly active users. It is even more popular than Coinbase in the field of crypto trading: Robinhood's transaction-based revenue in the first quarter of this year increased by 59% year-on-year to US$329 million, of which cryptocurrency revenue was US$126 million, a year-on-year increase of 232%, which is a very strong performance.
Bitstamp, founded in 2011, is the world's longest-running crypto CEX and is also considered one of the most compliant CEXs. It not only has operations in Luxembourg, the United Kingdom, Slovenia, Singapore and the United States, but also has valid licenses and registrations in more than 50 countries/regions around the world, which can help Robinhood enter other regions to conduct crypto business.
This is almost a perfect complementary relationship - Robinhood's current market is mainly focused on the United States, while competitors Kraken and eToro have stronger businesses in Europe than it, so although Bitstamp's 4 million users are not many, almost most of them are in Europe, which is a huge leap for Robinhood's European expansion.
It is worth noting that just one month ago, Robinhood received a Wells notice from the staff of the U.S. Securities and Exchange Commission (SEC) regarding topics such as RHC’s crypto asset listing, custody and platform operations (RHC activities). Therefore, the acquisition of Bitstamp will expand Robinhood’s global layout, thereby hedging the strong regulatory influence of the U.S. SEC and ensuring that it never leaves the table.
In addition, Fortune magazine predicts that in addition to adding about 4 million new crypto customers to Robinhood, the deal will also enable Robinhood to offer a wider range of cryptocurrency products to more institutional customers:
Expanding from the 15 tokens currently offered in the U.S. market and more than 30 in Europe to more than 85 included in Bitstamp, Bitstamp’s diversified services (such as staking, stablecoins, trading, custody and prime brokerage) will also help Robinhood attract more institutional clients and potentially accelerate its expansion in the European market.
04 The macro environment blows the horn of easing
Although the U.S. CPI, PPI, non-farm data and other data have exceeded expectations many times in the past six months, and Federal Reserve officials have begun to "take a tough stance", causing the market to begin to continuously adjust its expectations for interest rate cuts, at least for now, inflation is basically coming to an end, and everyone remains cautiously optimistic about the Fed's interest rate cuts in the second half of the year.
John Williams, a permanent voting member of the FOMC, the third-ranking official of the Federal Reserve and president of the New York Federal Reserve, emphasized on Tuesday that any decision on the timing or extent of rate cuts this year will depend on upcoming economic data. At the same time, Federal Reserve officials lowered their expectations for planned rate cuts this year, with the median official predicting only one rate cut.
However, the Canadian and European central banks, which are regarded as the vanguards of the Federal Reserve, took the lead in blowing the horn of change and rushed to cut interest rates:
On June 5, the Bank of Canada cut its interest rate from 5% to 4.75%, the first cut in four years;
On June 6, the ECB cut interest rates from 4% to 3.75%, the first cut in five years;
In any case, the global interest rate cut trend has further accelerated, and favorable factors at the macro level are indeed accumulating.
05 Large payment/financial institutions return
In addition, BN recently allowed Mastercard users to purchase crypto assets on BN again, and BN-branded Visa cards have also been resumed on the trading platform. BN stated that withdrawal services using Mastercard will be resumed later.
As early as March, MetaMask also reached a cooperation with Mastercard to conduct the first blockchain payment card test. Marketing materials show that the MetaMask/Mastercard payment card issued by Baanx will be the "first truly decentralized Web3 payment solution", allowing users to use cryptocurrencies for daily consumption anywhere bank cards are accepted.
This will undoubtedly greatly solve the problems of incremental users' cognition and entry barriers, and move towards seamless deposits and withdrawals (instant exchange of fiat currency and stablecoins), abstract user experience for user convenience (account abstraction, close to Web2 payment experience), etc., especially opening up the link between cryptocurrencies and off-chain consumption scenarios, which is conducive to the anchoring of crypto assets with a wider asset pool.
06 Summary
Overall, in this market environment where things are both cold and warm, there are still quite a lot of positive factors slowly fermenting, and as long as you observe carefully, you can still see confidence.
Although the howling of bears seems faintly audible and the footsteps of bulls seem to be close yet far away, in this context, remaining cautiously optimistic, observing at all times and actively participating may be the only thing that can be done in the current market atmosphere.
