The recent market performance has confused many people, especially when the price did not rise but fell when the $ETH spot ETF was about to pass. For this phenomenon, we need to analyze it from multiple angles:
Macroeconomic factors
Two data released by the University of Michigan last Friday, including one-year inflation expectations, are very important for the market. The Federal Reserve pays close attention to inflation data because it directly affects interest rate policy. Changes in market expectations of interest rates will affect investors' risk appetite. If inflation expectations are higher than expected, the market may believe that the Federal Reserve needs to maintain high interest rates for a longer period of time, which is unfavorable for risky assets (including cryptocurrencies).
The impact of Nvidia's financial report
As a leader in the field of AI, Nvidia's financial report performance has an important impact on market confidence. Nvidia's financial report released early Thursday morning played a key role in the trend of US stocks. If Nvidia's performance is not as expected, it may hit the market's confidence in technology stocks and the overall market, thereby affecting the inflow of funds into the cryptocurrency market. The performance of US stocks usually affects the cryptocurrency market because there is a certain linkage effect between the two.
The impact of $ETH spot ETF
Although the passage of the $ETH spot ETF is good for $ETH itself, its impact may be digested by market expectations. In addition, the S-1/S-3 of the $ETH spot ETF has not yet been fully approved, and hot money has not really flowed into the market. This means that although there is good news, the actual capital inflow and market liquidity have not changed significantly. Other ecosystems related to $ETH will not be immediately affected by the increase in liquidity, so the change in overall market sentiment has limited impact on the price of $ETH.
Market sentiment and technical aspects
The cryptocurrency market is highly volatile, and emotional trading and technical pullbacks are also common phenomena. After the good news is realized, investors may choose to take profits (i.e. Sell the News), resulting in a short-term price correction. At the same time, as a market vane, the price fluctuations of $BTC often drive the price changes of other cryptocurrencies. Therefore, the decline of $BTC will also have a negative impact on other cryptocurrencies such as $ETH.
Summary
From macroeconomic data, corporate financial reports to specific events in the cryptocurrency market, these factors constitute an "influence chain".Whether it is the U.S. stock market or the currency market, the top level of the game is the Federal Reserve's interest rate cut expectations, followed by the financial performance of key companies, and finally the news about specific cryptocurrencies. The current market performance shows that macroeconomic data is still the most important influencing factor. Only when the macroeconomic environment is stable or improving, the cryptocurrency market is likely to see a more significant rise.
I hope this can answer your doubts about recent market performance, and also reminds everyone to consider various influencing factors when investing.
