Why do we say that the bull market is about to start? The recent crypto market has continued to fall sharply, causing most investors to suffer heavy losses. The market is in a panic, and many investors have begun to doubt whether the bull market is still there. My point of view is that the bull market is not only still there, so when the market plummeted a few days ago, I continued to encourage everyone to enter the market. In addition, since the major negative factors have basically been exhausted, and some major positive factors are about to come, the long-awaited comprehensive bull market in the crypto market is about to start.
Positive expectations 1: Ethereum spot ETF is about to be listed. The market currently expects that the Ethereum spot ETF will be listed and traded next week. Some institutions predict that the capital inflow brought by the spot ETF to ETH is about 30% of BTC, which is roughly equivalent to the market value ratio of ETH to BTC. The listing of ETH ETF will not only drive a sharp rise in ETH, but also drive the market of the huge Ethereum ecological token.
Positive Expectation 2: Fed cuts interest rates After Powell's speech yesterday, the market expects the probability of the first rate cut in September to reach 70%, and it is expected that there will be two rate cuts this year. This round of bull market is carried out against the background of high US dollar interest rates. There has always been a bottleneck of relatively tight liquidity, and liquidity is concentrated in a few hot tracks. It is expected that the supply of USDT will accelerate after the interest rate cut begins, becoming one of the main driving forces of the overall bull market.
Positive Expectation 3: FTX Compensation Funds Enter the Market
According to the compensation plan submitted by FTX to the court, its distributable cash property is between $14.5 billion and $16.3 billion. Creditors must vote before August 16, and the judge will decide whether to approve the plan on October 7. If the plan is approved, more than $10 billion in additional funds will flow into the crypto market in the future, becoming another major driving force for the overall bull market.
Positive Expectation 4: In May this year, the U.S. House of Representatives passed the 21st Century Financial Innovation and Technology Act with a high vote. The bill provides a clear federal regulatory framework for the crypto market and transfers the main regulatory power of the crypto market from the hostile SEC to the more friendly CFTC. This will remove many unnecessary regulatory obstacles for the healthy development of the crypto market and is conducive to the overall prosperity of the crypto industry.
One of the bad news: The Mentougou compensation shoe has dropped. The massive selling brought about by the Mentougou compensation has always been the sword of Damocles hanging over the crypto market. It has been mentioned constantly since the last bull market. Now the shoe has finally dropped. Even with the selling of the US and German governments, judging from the market's volume and price performance, it is not as terrible as imagined. At present, the German selling has basically been digested by the market.
The second negative factor is out: the high FDV bubble of VC coins disappears. A core factor that hinders the arrival of the copycat season is that the FDV of many VC-led star projects is too high, and there will be a steady stream of unlocking in the future. Retail investors can only take over at high prices if they want to participate. Retail investors would rather speculate on MEME coins than take over VC coins. After this round of decline, the high valuation bubble of VC coins has been fully squeezed, providing the necessary conditions for the future take-off of VC coins.
The third negative factor: market risks have been fully released. Futures open interest represents the market leverage level. Excessive open interest means that the market has accumulated excessive risks. At the beginning of June, the futures open interest of BTC and ETH was at a historical high, and the ETH open interest was particularly high, which shows that the market leverage was too high at that time. At present, the open interest of both has dropped to the level of the opening interest in early May, and the market risks have been fully released.
The fourth negative news: SEC's regulatory attitude has eased. In the past two years, the US SEC has tightened its supervision of the crypto market and taken law enforcement actions against a number of crypto companies, causing panic in the currency circle. However, due to the loss of the Grayscale case and the influence of the US election, its regulatory attitude has eased. Not only has it approved the BTC spot ETF, it is also expected to approve the Ethereum spot ETF in July.
