Crypto Assets Market Trends and Outlook

Economic Environment and Policy Trends

Recently, the U.S. Department of Commerce announced that the Personal Consumption Expenditures (PCE) index for June increased by 2.5% year-on-year, hitting a new low in five months, indicating a relief in inflationary pressures. This data has a positive impact on the market, further enhancing investors' expectations for a possible interest rate cut by the Federal Reserve this year. According to predictions from data platforms, there is a 90% likelihood that the Federal Reserve will maintain interest rates at its meeting on July 31, and an 88% probability of a rate cut at the September meeting.

Crypto Assets ETF Development

The Bitcoin spot ETF performed flat last week, with significant net inflows recorded only on the first day, while the net inflows and outflows in the following days were both under one hundred million dollars. Market attention seems to have shifted to the listing and trading of the Ethereum spot ETF.

The Ethereum spot ETF officially started trading in the United States on July 23. In addition to a net inflow on the first day of trading, it experienced net outflows for the following three days, averaging over one hundred million dollars in outflows each day. Notably, an ETH product from a well-known asset management company has shown a net outflow every day, while other issuers recorded net inflows. The price of ETH has fallen from a peak of $3,541 on the 23rd, dipping to a low of $3,090 mid-week. Currently, the price trend of ETH is similar to that of Bitcoin's spot ETF after its listing, both showing a downward trend.

Political Trends and Crypto Assets

Current U.S. President Biden announced that he will not run for re-election and will support the Vice President as the Democratic presidential candidate for 2024. Although the Vice President has not publicly stated her views on the Crypto Assets industry, it is reported that her advisory team has consulted industry insiders on issues related to Crypto Assets, which may suggest that she supports the development of the Crypto Assets field more than the current president.

The mayor of the second largest city in a certain state stated that the city's retirement fund is updating its documents with regulators, planning to allocate a certain percentage of the fund to a Bitcoin ETF, following the example of another state's retirement fund's 2% Bitcoin ETF allocation.

Presidential Candidates' Attitudes Towards Crypto Assets

A U.S. presidential candidate attended a Bitcoin conference and delivered a speech, outlining three key points: upon election, he will immediately replace the current SEC chairman, commit not to sell the government's Bitcoin holdings and use them as a strategic reserve asset, and establish a Bitcoin and Crypto Assets Presidential Advisory Committee to develop transparent regulatory frameworks to promote the growth of the entire encryption industry.

At the same time, a senator who has long supported the development of Crypto Assets attended the meeting, revealing that she is promoting a legislative proposal requiring the U.S. Treasury to purchase 1 million coins of Bitcoin within 5 years as a national reserve to counter the effects of the depreciation of the dollar.

Another independent candidate stated that if elected president, he would sign an executive order requiring the United States to purchase 550 coins of Bitcoin daily to establish a strategic reserve of 4 million coins of Bitcoin and instruct the tax department to issue guidelines designating transactions between Bitcoin and dollars as tax-exempt.

Market Analysis

The price of Bitcoin is currently affected by the resistance of the trendline extending from early June to the end of July. At a recent Bitcoin conference, influenced by expectations that a U.S. presidential candidate might make positive comments, the price of Bitcoin briefly reached $69,000, closing at $67,900. The short-term support level is in the range of $63,800 to $65,400.

Historical data shows that July is usually a month where Bitcoin has more positive returns than negative returns. On July 1st of this year, Bitcoin opened at $62,800 and has currently recorded about a 7% return. As long as the price at the end of the month is higher than the opening price, July will still maintain a positive return.

However, historical data also shows that August and September often have more negative returns than positive returns, and investors should be wary of potential market corrections.

Outlook

With the listing of the Ethereum spot ETF and the statements of U.S. presidential candidates on Crypto Assets, Crypto Assets have officially entered the mainstream view of the U.S. financial sector. In the next six months, the U.S. presidential election and expectations for interest rate cuts by the Federal Reserve will become key factors influencing Bitcoin prices. In addition to paying attention to the dynamics of the crypto market, investors must also closely monitor changes in the U.S. macroeconomic, political, and regulatory environment.