Daily Summary:

  • Market volatility is decreasing, and it may enter a quiet period

According to Farside Investor data, US Bitcoin spot ETFs had a net inflow of $11 million yesterday. Among them, Fidelity FBTC had a net inflow of $16.2 million, Bitwise's BITB had a net inflow of $6.2 million, Grayscale GBTC had a net outflow of $25 million, and Grayscale BTC had a net inflow of $13.7 million.

Yesterday, the U.S. Ethereum spot ETF had a net outflow of $39.2 million. Among them, BlackRock ETHA had a net inflow of $800,000, Fidelity FETH had a net inflow of $2.5 million, and Grayscale ETHE had a net outflow of $42.5 million.

MakerDAO has passed the proposal to reduce the size of WBTC collateral

Previously, MakerDAO launched a proposal to "reduce the size of WBTC collateral" on August 12, which has been used and implemented. The proposal will reduce the amount of WBTC loans by at least $1.25 billion.

BA Labs, a crypto risk analysis and assessment agency, said that given the upcoming change in WBTC custody, WBTC collateral integration faces higher potential risks on Maker and SparkLend. If Bitgo or other relevant parties cannot convincingly prove the security of maintaining the existing WBTC collateral integration, BA Labs will consider further adjusting parameters to protect the protocol until WBTC collateral on Maker and SparkLend is completely removed.

36.78 million BLUR unlocked today

Today is the monthly unlocking time for BLUR. 36.78 million BLUR (US$5.64 million) were unlocked and transferred from the Blur unlocking contract to the 0x0A0 multi-signature address 5 hours ago. The 0x0A0 multi-signature address also conducted a small deposit test to the CEX deposit address. These BLUR will be transferred to CEX as before.

With the implementation of PPI and CPI, market volatility expectations have dropped significantly.

Macro researcher Adam posted on social media that as PPI and CPI have been implemented one after another, the market’s expectations for volatility have dropped significantly, which has in turn pushed the IVs of each major term down significantly. The short-term IV fell by over 20% this week, while the mid- to long-term also saw a decline of about 5%.

This decline in the implied volatility IV in the options market is relatively rare. Sellers, mainly institutions, can make up for a lot of profits in this round of decline to make up for the hedging losses caused by the huge volatility in the past month. Now that the term structure has returned to a stable structure of far high and near low, the market may be quiet for a while.

Market analysis: The market fluctuates and falls, and BTC is close to the bottom-picking range

Market Trends

BTC showed a trend of fluctuating downward. Yesterday, the inflow of funds into BTC spot ETF was only $11 million, which failed to provide obvious support to the market. This shows that investors are taking a wait-and-see attitude towards the current market environment, and it is expected that the volatile downward trend of BTC will continue.

ETH also performed poorly. Data showed that ETH spot ETF funds outflow reached $39 million, further exacerbating the downward pressure on the market. ETH's downward trend was consistent with BTC, and the market lacked effective support.

Altcoins: The altcoin market generally suffered a sharp decline, and the overall market lacked hot spots and positive driving factors. Investor sentiment was low, and investment interest in altcoins was significantly weakened.

Data indicators

AHR999 Index: Today's AHR999 Index is 0.63, gradually approaching the historical bottom-picking range. This index shows that the market may be approaching a more ideal buying point.

Fear and Greed Index: The Fear and Greed Index is currently 27, indicating that market sentiment is still in a state of fear. The depressed market sentiment is expected to last for some time, and investors generally wait for the emergence of new market hotspots and narratives to rekindle trading enthusiasm.

Market Hotspots

WBTC trust crisis: Recently, WBTC (Wrapped Bitcoin) has been managed by a company with Sun Yuchen's background, which has caused widespread controversy in the community. As the largest pledge lending platform for WBTC, MakerDAO has passed the proposal to "reduce the size of WBTC collateral", with a cumulative reduction of US$1.25 billion. Currently, the total issuance of WBTC exceeds 150,000, with a total value of over US$8.8 billion.

This series of events has triggered a crisis of confidence in WBTC, which is difficult to resolve in a short period of time. This crisis of confidence may create a potential selling pressure problem in the market, further exacerbating market volatility.

Macroeconomics: The three major U.S. stock indexes closed higher, and a rate cut in September is almost certain

The three major U.S. stock indexes all rose by more than 1%, with the S&P 500 up 1.61% to 5,543.22 points, the Dow Jones up 1.39% to 40,563.06 points, and the Nasdaq up 2.34% to 17,594.50 points. The benchmark 10-year Treasury yield was 3.92%, and the 2-year Treasury yield, which is most sensitive to the Fed's policy rate, was 4.08%.

Among the popular U.S. stocks, Apple rose 1.35%, Microsoft rose 1.00%, Nvidia rose 4.05%, Google C rose 0.70%, Google A rose 0.58%, Amazon rose 4.40%, Meta rose 2.01%, TSMC rose 2.35%, Tesla rose 6.34%, and AMD rose 4.70%.

According to CME's "Fed Watch": The probability of the Fed cutting interest rates by 25 basis points in September is 74%, and the probability of cutting interest rates by 50 basis points is 26%. With the September interest rate cut almost a foregone conclusion, the focus of the Fed's September meeting is expected to be the scale of the interest rate cut. What worries the Fed is whether to cut interest rates cautiously by 25 basis points or by 50 basis points. A few days ago, a disappointing employment data made the market worry that the US labor market is deteriorating and the US economy will fall into recession.

Some analysts pointed out that the labor market must deteriorate significantly before the Fed can cut interest rates by 50 basis points. Brian Ross, senior investment strategist at UBS Global Wealth Management, said that the inflation data is enough for the Fed to start cutting interest rates in September, but it does not give them a reason to cut interest rates significantly. The answer to this question may depend on the next non-farm data.

Summarize

Overall, the current cryptocurrency market is facing great downward pressure. The volatile downward trend of BTC and ETH is difficult to reverse in the short term, and the altcoin market also lacks effective hot spots and support. Both the AHR999 Index and the Fear and Greed Index show that market sentiment is low, and investors generally take a wait-and-see attitude.

The trust crisis of WBTC has further increased market uncertainty and may have a negative impact on overall market sentiment. In the short term, the cryptocurrency market may continue to fluctuate and fall, and investors need to remain cautious and pay close attention to market dynamics and potential risk factors.

In this market environment, investors are advised to remain patient and wait for the emergence of new market hotspots and positive signals so as to operate at the right time.