Blofin Flow Insights: Summer Vacation and the Ceilings
Although Powell's statement indicates that there may be no more interest hikes, continued high interest rates will become a "liquidity ceiling" that is temporarily difficult to penetrate in the crypto market, and the hedging behaviors from market makers and traders further suppresses market volatility, making the "ceiling" thicker and thicker. Considering that Aug is the "summer vacation" of the Fed, the low volatility of BTC and ETH prices may continue throughout the summer. However, the curren
The gradual separation of correlation between BTC and ETH indicates that the overall change in the narrative of the crypto market is nearly complete. As a widely recognized "liquidity container," BTC has become one of the essential macro underlying assets, gradually approaching the status of FX and precious metals. In contrast, the narrative of ETH is turning to mega stocks. Unless there is a grander narrative and widespread application, the attractiveness of ETH for liquidity may continue to be
"Good expectations within the market" is one of the important reasons for the latest rebound in the crypto market. However, in the absence of significant improvement in liquidity conditions, especially in the case that the "crypto balance sheet reduction" has not ended, the overall sound performance of crypto assets may not be sustainable, and "sector rotation" may be the main feature of the crypto market in 2023H2. Fortunately, BTC's performance may be more robust under macro factors, regulatio
The SEC's lawsuit against Binance and Coinbase undoubtedly increases the regulatory risk of the crypto market. Still, the regulatory risk is mainly concentrated on altcoins investors, which has a limited impact on holders who only hold BTC and ETH.
However, Once the SEC lawsuit is successful, all altcoins may be recognized as securities and need to be regulated by securities standards, which means that the trading of altcoins will be more offshore and decentralized. Moreover, liquidity will be
The lack of liquidity in the crypto market became more severe in June. Continued liquidity pressure, shifting narratives in risky asset markets, and declining uncertainty levels in the crypto market are the main reasons for the "drought" in the crypto market.
In the case that spot and perps trading is difficult to bring significant income expectations, investors' preference for alternative strategies, especially those for selling volatility strategies, further depresses market volatility in the
Officials from the Federal Reserve and other central banks of multiple countries have repeatedly put pressure on the risk asset market, further squeezing the upward room of the crypto market, and the strengthening of the USD has put additional pressure on the risk asset market. In the coming months, BTC and ETH may have difficulty breaking through their previous highs, but as inflation continues to decline, the crypto market may gradually rebound at the end of the year.
"The tightening financial cycle seems to have 'already ended' to some extent, but liquidity pressure in the crypto market remains difficult to alleviate in the short term. Fortunately, in the afterwaves of the 'post-rate hike era,' Hong Kong is emerging as an important source of liquidity for the crypto market."