The overall cryptocurrency market conditions remained stable over the past week, and the industry and trading markets did not see any major structural problems. However, investors were attracted by the AI ​​craze and profit-taking, causing the price of Bitcoin to slowly fall from US$66,000 to US$63,000, while Ethereum fell below US$3,500. Both cryptocurrencies fell by about 5% this week.

The U.S. Securities and Exchange Commission (SEC) stopped its investigation into whether Ethereum is a security last week, preparing to pave the way for the listing of Ethereum spot ETFs. On Friday, Fidelity also submitted documents to the SEC to apply for the first batch of Ethereum spot ETF seed funds. The company has purchased 1,250 ETH worth about $4.7 million to prepare for the issuance of Ethereum ETFs. In addition, Bitwise's registration status also indicates that they have completed the fundraising of $2.5 million in seed funds. Soon after, BlackRock also showed that it had completed the fundraising process of $10 million.

Among these fund company applicants, Franklin Templeton revealed that the management fee of the Ethereum ETF fund is about 0.19%, which is roughly the same as the price of the company's Bitcoin ETF; the management fee rate of VanEck's ETF is 0.20%. It is expected that the management fees of other fund companies will also be similar to the current Bitcoin ETF products, and the prices of the two will be similar and more reasonable. It is expected that these competitors will also directly reduce the price to the lowest level to attract funds and avoid the interference of GBTC's continuous outflow of funds. The Ethereum ETF will be cleaner than Bitcoin.

From our observation, the main force of the current net outflow of funds comes from the Bitcoin spot ETF. In the past four trading days, the net outflow of funds reached US$440 million, of which GBTC outflow amounted to approximately US$150 million, and the remaining US$290 million came from Fidelity's FBTC, Bitwise's BITB and Ark Fund ARKB, which means that this is not an ordinary GBTC net outflow of funds, but an overall gradual withdrawal of funds.

The good news has been exhausted, and it will take time to recover

Although there are two major positive factors, namely the listing of Ethereum spot ETF and the Fed's interest rate cut, the market is facing considerable challenges in the short term and it is difficult for cryptocurrency prices to rise. There are two main reasons for this. The first is that after the Bitcoin halving, mining income has dropped sharply, and mining farms must sell the mined Bitcoins in exchange for cash to upgrade 3-nanometer advanced mining machines to increase computing power, which has led to a slight increase in market selling pressure.

The second reason is that the rate of return on AI stocks is more attractive to speculators than cryptocurrencies. Almost all funds from around the world, including the Middle East, China and emerging countries, have gone to buy AI stocks, and other non-AI related stocks have also been ignored. Many speculative funds have also withdrawn from the cryptocurrency market and switched to AI stocks such as Nvidia. It remains to be seen whether AI will continue to be popular. If not, after the Ethereum ETF is issued and the Fed cuts interest rates, funds will return to the cryptocurrency market.

The meme coin craze also cooled down after the sharp drop in GME's stock price. The GME stock price is currently only $24, a sharp drop from the previous high of $64. The momentum of meme coins in the cryptocurrency market is gone forever. The meme coin market appeared to be quite weak last week.

Apart from ordinary cryptocurrency investments, politically related crypto tokens may be the highlight of the second half of the year. Many companies have begun to choose sides in this year's US election. As the election situation begins to heat up, crypto tokens that are betting against each other have begun to appear, and related debates are also unfolding. Just like the last election, there were cryptocurrency futures betting against each other. This year's situation may be even crazier, which may arouse the enthusiasm of speculators in the short term.

In the short term, AI's momentum is still very strong, and it is an indisputable fact that funds have been snatched away. I still set the reasonable price of Bitcoin at US$70,000, but the speed of price recovery must be lowered. After the Ethereum spot ETF comes out, the direct beneficiary will also be Ethereum, so in terms of layout, a larger proportion of Ethereum will be allocated in the short term. At present, the probability of the fund's approval is very high, but the market still needs more time to react to the increase, and the probability of a surge in the short term is not high.

The cryptocurrency market and other small and medium-sized tokens are in a downward trend. Bitcoin dropped to $63,000 today and lacks overall upward momentum.

It is worth noting that the current market demand from large investors is weak, and the liquidity of stablecoins is also decreasing. According to on-chain data, the purchasing demand of large whales shows a current monthly growth of 4.8%. Although it is slightly higher than last month's 2.4%, when the Bitcoin ETF was listed in the first quarter of this year, it was as high as 6% to 10%. In comparison, the momentum is obviously insufficient.

In addition, the growth rate of stablecoin liquidity related to price increases continues to decline. USDT's 60-day market capitalization growth rate dropped from US$12.6 billion at the end of April to the current US$3.7 billion. Finally, Coinbase premium continues to be below zero, showing that US investors The demand for Bitcoin and Ethereum is not as significant as the previous ETF listings, but the market is still in a bullish situation, but there is insufficient trading momentum, and short-term prices may fall further.

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