This article will summarize some fermenting events in the market over the past two months and highlight potential positive factors that may be overlooked, providing a glimpse into the main storyline that may dominate the second half of the year.
(Previous Background:
Learning from “Bear Market Investment”: Identifying the Best Opportunities and Utilizing the Added Value of Bull Markets)
(Supplemental Background:
Bank of Japan may sell $450 billion worth of US bonds! Arthur Hayes: Will accelerate the next round of crypto bull market)
Table of Contents:
BTC Spot ETF Inflows Turn Positive
Shift in Crypto Regulation & Acceleration of Ethereum Spot ETF
Web2 Players Accelerate Deployment in Web3
Return of Large-scale Payment/Financial Institutions
Conclusion
In the past two months, although there have been ongoing hot events such as memes and top project airdrops, the market has been in a paradoxical and subdued atmosphere – the sound of bears seems faintly audible, while the footsteps of bulls are elusive, with market crashes and restarts seemingly happening in an instant.
The purpose of this article is to dig out and summarize some fermenting events that have been hidden in the market over the past two months, as well as to look ahead at potential positive factors that may be overlooked, giving everyone a glimpse into the main storyline that may dominate the second half of the year.
The market always tends to overestimate the short-term effects of new things and underestimate their long-term impact. For the Bitcoin spot ETF, which has been launched for nearly half a year, there is a signal worth noting recently:
According to SoSoValue data, the Bitcoin spot ETF has been experiencing a new wave of capital inflows since mid-May, lasting for nearly a month. June 4th even reached a historical second-highest value of $886 million (second only to March 12th’s $1.05 billion).
Although there has been a continuous decline since last week, the overall situation has clearly reversed compared to April-May.
As of June 21st, the net asset value of the Bitcoin spot ETF was $55.55 billion, with an ETF net asset ratio (market value compared to the total market value of Bitcoin) of 4.39%, and a historical cumulative net inflow of $14.56 billion.
With the background of the 2024 election year, both the regulatory and capital aspects have shown positive macro trends recently, brewing a new round of bullish catalysts (recommended reading: “Trump and Biden Compete to Embrace Bitcoin, Is US Crypto Regulation Shifting Gears?”).
First, on May 22nd, the “Financial Innovation and Technology Act of the 21st Century” (FIT21 Act) was passed by a vote of 279 to 136 in the House of Representatives, and the U.S. Securities and Exchange Commission (SEC) formally approved the 19b-4 form for 8 Ethereum spot ETFs on May 24th.
This means that the stance of U.S. regulatory agencies has shifted from being tough to softened. Especially, the expected approval of the Ethereum ETF has been significantly advanced, and it seems to be just a step away from the final launch. Interestingly, although the change in attitude and approval speed of U.S. regulatory agencies this time have far exceeded expectations, in retrospect, there seems to be some signs:
At least as early as when Ethereum was around $3,000, whales such as Justin Sun had begun accumulating ETH chips and firmly bullish on the ETH/BTC exchange rate, which seems to indicate that individuals/institutions with keen senses had already made early preparations.
Most directly, the performance of ETH in the secondary market has also swept away its previous weakness and started to gradually strengthen. The most obvious change is the ETH/BTC exchange rate. Since October last year, ETH has been declining compared to BTC, and the ETH/BTC rate has fallen from above 0.064 to below 0.045.
Since mid-May, the ETH/BTC exchange rate has started to break the downward trend, surpassing the 0.05 and 0.055 levels in the past month, reaching a recent high of 0.058, showing overall strength.
On June 6th, Robinhood announced the acquisition of cryptocurrency exchange Bitstamp for $200 million, expanding its presence outside the United States and reaching an acquisition agreement with Bitstamp, with regulatory approval still pending – compared to the $400 million acquisition price by NXMH, a subsidiary of Korean company NXC in 2018, it is considered a steal.
As known, Robinhood is one of the most popular stock and cryptocurrency CEX platforms in the United States, with 11 million monthly active users. Its popularity in the cryptocurrency trading field is even higher than Coinbase. In the first quarter of this year, Robinhood’s transaction-based revenue increased by 59% year-on-year to $329 million, with cryptocurrency revenue reaching $126 million, a 232% year-on-year increase, showing strong performance.
Established in 2011, Bitstamp is one of the longest-running cryptocurrency CEX platforms globally and is considered one of the more compliant CEX platforms. It operates in Luxembourg, the UK, Slovenia, Singapore, and the United States, and has valid licenses and registrations in over 50 countries/regions worldwide. This can provide assistance to Robinhood’s expansion into other regions for cryptocurrency business.
This is almost a perfect complementary relationship – Robinhood’s current focus is mainly on the United States, while competitors Kraken and eToro have stronger businesses in Europe. Therefore, although Bitstamp has only 4 million users, the majority are in Europe, making it a significant leap for Robinhood’s expansion into Europe.
It is worth noting that just a month ago, Robinhood received a Wells notice from the U.S. Securities and Exchange Commission (SEC) staff, which involved topics such as the listing, custody, and operation of RHC’s cryptocurrency assets. Therefore, the acquisition of Bitstamp will expand Robinhood’s global layout and counter the strong regulatory impact of the U.S. SEC, ensuring that it always stays at the table.
Furthermore, Fortune magazine predicts that this transaction will not only add around 4 million new cryptocurrency customers to Robinhood but also enable it to provide a wider range of cryptocurrency products to institutional clients:
From the current 15 tokens available in the U.S. market and over 30 in Europe, expanding to over 85 included in Bitstamp. Additionally, Bitstamp’s diversified services such as collateral, stablecoins, trading, custody, and prime brokerage will help Robinhood attract more institutional clients and potentially accelerate its expansion in the European market.
In addition, Binance recently allowed Mastercard users to purchase cryptocurrencies on its platform, and Binance’s Visa card has also resumed usage on the trading platform. It is worth mentioning that MetaMask also partnered with Mastercard for the testing of the first blockchain payment card back in March. Marketing materials indicate that the MetaMask/Mastercard payment card issued by Baanx will be the “first truly decentralized Web3 payment solution,” allowing users to use cryptocurrencies for daily consumption wherever bank cards are accepted.
This undoubtedly greatly solves the cognition and entry barriers for incremental users, moving towards a seamless deposit and withdrawal experience (instant conversion of fiat and stablecoins), and abstracting the user experience for easier use (account abstraction, approaching the payment experience of Web2). Especially by bridging the gap between cryptocurrency and offline consumption scenes, it is conducive to anchoring cryptocurrency assets to a broader asset pool.
Overall, in this environment of fluctuating market conditions, there are still quite a few positive factors slowly fermenting. As long as we observe carefully, we can still see confidence.
Although the sound of bears seems faintly audible, and the footsteps of bulls are elusive, in this background, the only thing we can do is to remain cautiously optimistic, observe and actively participate, which may be the only thing we can do in the current market atmosphere.
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