First line｜BTC leads the market to a significant Rebound, and the season of altcoins may be coming.

Daily Summary: BTC Spot ETF continues to receive large inflows, legalization of encryption mining in Russia

According to Farside Investor data, the overall net inflow of BTC Spot ETF was nearly 200 million US dollars yesterday. Among them, BlackRock’s BTC saw a daily inflow of 1.57 billion US dollars, WisdomTree BTCW had its first daily inflow of 1.18 billion US dollars since the ETF was launched, and Grayscale GBTC saw a daily outflow of 182 million US dollars.

ETH ETF overall net outflow of $3 million, Grayscale ETHE outflow of $19,800 million, the outflow has significantly reduced. However, at the same time, the inflow of funds and volume of ETH ETF have also continued to decrease.

Putin signs decree to legalize Cryptocurrency Mining in Russia

According to TASS, Russian President Putin has signed a law legalizing cryptocurrency mining in Russia. Earlier, Putin discussed the introduction and use of cryptocurrencies with the government at an economic issues meeting. He pointed out that this is a promising economic sector, and Russia must ‘seize the opportunity’ to quickly establish a legal framework and regulations, develop infrastructure, and create conditions for circulation.

Wall Street expects the Fed to end its balance sheet reduction this year, but the likelihood of a sudden brake is not high.

The end of the Fed’s balance sheet contraction is in sight, but the actual end date depends on the pace of interest rate cuts and the pressure in the financing market. Policymakers have hinted at completing the reduction of US Treasury holdings before the end of the year, but many on Wall Street believe that quantitative tightening is unlikely to suddenly end. However, recent weak economic data and liquidity pressure risks have cast uncertainty on the outlook. ‘If the Fed intends to stimulate the economy, it may stop the balance sheet contraction,’ wrote Bank of America strategists Mark Cabana and Katie Craig in a report to clients on Wednesday. ‘If the Fed’s goal is to normalize monetary policy, then the balance sheet contraction can continue’.

There are increasing signs that the economic slowdown is rising faster than expected a few weeks ago, triggering a significant pump in global bond markets on Monday, with traders betting that the Fed and other Central Banks will become more aggressive in cutting interest rates. Morgan Stanley analysts wrote, “Two possible drivers may prompt the Fed to end its balance sheet reduction early, one is the exhaustion of liquidity in the money market, and the other is a recession in the US economy. But we believe that neither is likely to occur.”

Nansen Analyst: BTC is a “safe haven asset” in the context of global economic recession

Nansen’s chief analyst Aurelie Barthere said, "BTC can act as a ‘safe-haven asset’ during an economic recession, and will outperform other Tokens in the market. The inflation outlook has improved this year, but economic forecasts are still ‘lackluster’, with Central Banks around the world taking action to stimulate the economy and prevent further decline. A large amount of speculative debt in the United States will mature in 2024, coupled with a decline in bond yields, putting pressure on the financial environment. Investors turning to safer assets and declining yields are typical indicators of a recession, reflecting a lack of confidence in the sustained rise of the economy, with a 40% chance of a recession in the second half of 2024.

Market Analysis: BTCD returns to historical highs, the altseason may be approaching

Market Trend

Recently, after a period of high Sideways, BTC broke through strongly and returned to above $61,000. The BTC market dominance (BTCD) has also reached a new high in the past three years, indicating further consolidation of BTC’s dominant position in the current market. At the same time, the BTCSpotETF funds show significant inflows, with BlackRock’s daily inflow of nearly $200 million and WisdomTree’s daily inflow of nearly $120 million, further supporting the pump in BTC price.

Driven by BTC, ETH has also experienced a pump and returned to around $2,700. However, unlike BTC, the overall performance of ETH spot ETFs has been net outflows. This may reflect a lack of short-term confidence in ETH among investors or a preference for BTC when allocating funds.

In terms of AltCoins, there is a widespread pump trend, especially in the RWA (Real World Assets) zone and Memezone, which are performing ahead of the market.

Data Metrics

Today’s AHR999 index is 0.74, although it has pumped compared to before, this data still indicates that the current price is a better point for buying in batches. The AHR999 index is used to evaluate the relative high and low of market prices to historical average levels. The current index shows that the market is still in a reasonable buying range.

The Fear and Greed Index is 48, indicating that market sentiment has gradually shifted from fear to neutrality. The significant pump in the market has clearly improved investor sentiment, but it has not reached an extremely greedy state, which means that market sentiment is still at a relatively healthy level.

Market Hotspots

1. Memezone: Memezone is showing unusually active performance, with major meme coins on various public chains such as BRETT, WIF, PEPE, and PONKE experiencing significant pump. The resilience of fully circulating meme coins in the rebound market is stronger, lacking selling pressure from the market. In contrast, it is significantly outperforming tokens supported by VC (venture capital). This phenomenon indicates that market funds are more willing to flow into meme coins with strong liquidity and relatively low market selling pressure.
2. RWAzone: TOKEN, OM, and other RWAzoneTokens collectively pump, showing rare capital cohesion. As one of the relatively novel narratives in this round of market, RWAzone’s overall Market Cap is relatively small, and it is expected to be a more easily speculative side of the market funds. The pump of RWAzone may be related to the market’s expectations for the application of blockchain technology to real-world assets (such as real estate, bonds, etc.).

Macroeconomics: The three major US stock indexes are all up, and the Fed may end this round of balance sheet reduction by the end of this year.

The three major US stock indexes all rose by more than 1%, with the S&P 500 rising 2.30% to 5,319.31 points; the Dow Jones Industrial Average rose 1.76% to 39,446.49 points; and the Nasdaq Composite Index rose 2.87% to 16,660.02 points.

Among the popular US stocks, Apple rose by 1.66%, Microsoft rose by 1.07%, Nvidia rose by 6.13%, Google C rose by 1.92%, Google A rose by 1.94%, Amazon rose by 1.86%, Meta rose by 4.24%, TSMC rose by 6.16%, Tesla rose by 3.69%, AMD rose by 5.95%.

Starting from June 2022, the Federal Reserve began to implement quantitative tightening (QT), but the pace of balance sheet reduction has gradually slowed down this year. Some Wall Street strategists say that although the pace of balance sheet reduction has indeed been reduced recently as stated by the Federal Reserve, the possibility of a ‘sudden brake’ announcement to end the balance sheet reduction is unlikely.

Generally, when the Federal Reserve directly buys bonds (quantitative easing, or QE for short) or stops shrinking its balance sheet (i.e. stops the process of reducing assets and liabilities), both mean that the liquidity of the financial markets will increase significantly. When the Federal Reserve buys bonds, it is essentially exchanging the bonds held by banks for cash. This cash is deposited into the banking system in the form of bank reserves, increasing the money supply within the banking system. This means that banks can provide more loans, thereby promoting investment and consumption. And by purchasing long-term bonds, the Federal Reserve has pushed up the prices of these bonds, dropping their yields (i.e. the long-term interest rate in the financial markets), and lower long-term interest rates encourage borrowing by businesses and consumers, stimulating economic activity, as well as providing favorable information for the market and other risk assets.

Summary

The current market is showing strong overall performance, with the pump of BTC and ETH improving market sentiment. Despite the net outflow of ETH spot ETF, the large influx of funds into BTC spot ETF shows investors’ strong confidence in BTC. AltCoin, especially the outstanding performance of RWA and Memezone, has also injected new vitality into the market.

According to the data of the AHR999 Index and Fear & Greed Index, the current market is still in a relatively reasonable buying range, and the sentiment remains neutral to slightly optimistic. In such a market environment, investors can consider buying in batches, especially following those zones with strong market capital aggregation and excellent performance.

In short, after a period of adjustment, the market has regained vitality, and investors should seize the current opportunity to allocate assets reasonably to achieve decent market returns.

Author: Icing This article represents the author’s opinion and does not constitute any trading advice. This content is original and the copyright belongs to Gate.io. If you need to reprint it, please indicate the author and source, otherwise legal responsibilities will be pursued.