Original author: Wenser

Original source: Odaily Planet Daily

In the past few days, affected by the expected sale of nearly $9 billion in Bitcoin by Mt.Gox, Bitcoin reversed its upward trend and entered a downward phase, falling below $59,000 at one point; on the other hand, Ethereum, which was originally affected by Bitcoin, rebounded due to the expectation that the spot ETF would be approved. The price trends of the two are quite different, with "Bitcoin to the left and Ethereum to the right". It is no wonder that the well-known crypto research institution 10X Research was ridiculed by market players for its "bullish BTC and bearish ETH" remarks.

This article interviews and organizes the important views in the current market. Speakers include institutions, analysts, platform leaders and crypto KOLs for readers' reference.

Ethereum ETF is about to be approved, but Bitcoin can’t hold on?

According to Fortune, recently, U.S. SEC Chairman Gary Gensler said in response to an inquiry about the approval process of the Ethereum spot ETF: "I don't know the specific time, but it is progressing smoothly." He explained that his team is waiting for asset managers to make "appropriate disclosures."

It can be seen that after the approval of the 19b-4 document of the Ethereum spot ETF, the approval of the S-1 document is almost a foregone conclusion; but on the other hand, as the "old and strange case" of Mt.Gox that has lasted for more than ten years is finally coming to an end and is about to end in the form of "proportional compensation to creditors", it has also brought about expectations of massive selling pressure.

According to the previous article "Mt.Gox token repayment starts in July, these things need to be known in advance", we can learn that the creditor compensation to be carried out in July is "Mt.Gox's first repayment in the form of BTC and BCH, which means that the 141,686 BTC held by Mt.Gox (and a basically the same amount of BCH) will begin to flow into the market. These BTC account for 0.72% of the total supply of Bitcoin in circulation, with a value of approximately US$8.54 billion." In addition, the US$3 billion in Bitcoin assets confiscated by the German government have also been moving frequently recently. Combined with the recent over-the-counter transactions between early Bitcoin holders and miners and listed mining companies, the recent selling volume of Bitcoin is roughly estimated to be over US$3 billion.

You should know that after nearly half a year of accumulation, the total net inflow of funds into the Bitcoin spot ETF is currently about US$14.387 billion, which is just equal to the total assets mentioned above, so it is normal for the market to panic.

But many industry insiders still hold different views.

The market outlook is shrouded in mystery. What do industry insiders think?

As of writing, the price of Bitcoin is around $61,549, with a 24-hour increase of 0.66%; the price of Ethereum is around $3,389, with a 24-hour increase of 0.5%. For the future market, we roughly divide the forecast views into 4 categories: positive optimism, cautious optimism, pessimism, and first fall and then rise. The following are the details.

Positive Optimists: Historical highs are still worth looking forward to

In a recent media interview, eToro market analyst Farhan Badami said that Bitcoin is often seen as a "forward-looking" asset and is often priced in major market events, so he expects Bitcoin prices to stabilize in the coming weeks and continue to rebound to all-time highs in the coming months. "In the next few weeks, Bitcoin prices may fluctuate between $60,000 and $70,000."

CryptoQuant analyst Mignolet pointed out that according to the analysis of the UTXO profitability percentage during the consolidation phase last year, although the current Bitcoin price is in a consolidation phase, the UTXO profitability percentage is clearly off the low point. At this time, whales who hoard coins may respond to market panic (that is, as Buffett's investment saying goes: "I am greedy when others are fearful", buying Bitcoin during market panic), indicating that the market may experience a V-shaped rebound.

Jonathan de Wet, chief investment officer at digital asset trading firm ZeroCap, said that while the overall cryptocurrency market "continues to fall," he expects the price of Bitcoin to fall to "key support" of $57,000 in the coming weeks as Mt. Gox creditors pay off their debts. "BTC and ETH have actually performed surprisingly well given the rest of the market, with key support at $63,000 and $3,400, respectively, and remain clearly within the price ranges of the past few months." So, while Bitcoin and other cryptocurrencies may fall further in the coming week due to selling pressure from Mt. Gox creditors paying off their debts, he remains optimistic about the long-term outlook. "In the medium to long term, we are constructive as the ETH ETF is expected to have an easing bias when it launches in late 2024, followed by actual easing in 2025."

Cautious optimists: Waiting for recent key data and key nodes in the fourth quarter

Recently, Matrixport published an article stating that data from several Bitcoin ETEF issuers showed that institutional investors including asset management companies, investment advisors, pension funds and sovereign wealth funds are buying Bitcoin spot ETFs. However, since mid-March, capital inflows have been almost zero, and with $1.2 billion in capital outflows seen in the past ten days, the entry of institutional investors may be slower than expected.

Sam Callahan, senior analyst at Swan Bitcoin, said in an email to the media, "The impact of Mt. Gox's distribution of Bitcoin on Bitcoin prices may be exaggerated. Creditors who want to sell Bitcoin have gone through more than 10 years. During this period, they have enough time to sell their bankruptcy claims to more determined long-term investors. In addition, most creditors are likely to continue to hold Bitcoin because their holding cost of a single Bitcoin is less than $700."

There are many people who hold this view.

Alex Thorn, head of research at Galaxy, previously said: "It is reasonable to assume that most of the BTC received by funds that receive claims from creditors will be distributed to LPs in kind rather than sold." On May 28, 25,000 BTC from Mt.Gox began to be transferred, which was regarded by Alex as the beginning of compensation distribution to creditors. In addition, he expects that most BTC assets will be held, but for BCH, there may be a massive selling pressure in the short term.

Phyrex, a Chinese crypto KOL, said that in terms of the short-term market situation, it is difficult to predict the price, but from the perspective of key data indicators, if the core PCE on Friday and the non-agricultural data on Friday next week can meet market expectations, BTC and ETH may have room for growth. The passing of the Ethereum spot ETF on July 2 and the opening of trading the next day are also important factors that may drive investor sentiment. At present, the market is mainly affected by the Federal Reserve's monetary policy, with the expectation of interest rate cuts accounting for the majority.

Regarding the ETH spot ETF, he believes that the situation of "Sell The News" will definitely occur, but based on the future trend of the BTC spot ETF, this may not be the best choice. After all, "investors who sold BTC due to Sell The News have lost at least 40% of their profits so far." In addition, he believes that the US election will be a stimulus to the risk market; he usually adopts a fixed investment strategy for investment operations.

Brokerage firm Bernstein pointed out in a recent research report that once Ethereum spot ETFs are approved for trading, their demand sources may be similar to those of Bitcoin ETFs, but on a smaller scale. Analysts Gautam Chhugani and Mahika Sapra emphasized in the report that due to the lack of Ethereum staking functions, the conversion volume of Ethereum spot ETFs is not expected to be excessive. However, they expect that basic transactions will gradually attract buyers, thereby maintaining healthy liquidity in the ETF market.

Furthermore, despite the recent pullback in the cryptocurrency market, the report emphasizes that “the structural adoption cycle of cryptocurrency remains intact.”

Pessimistic: Liquidity and capital market performance are poor

The latest weekly report from cryptocurrency trading platform Bitfinex shows that the outflow of funds from the US spot Bitcoin ETF exceeded $100 million per trading day last week, with a total outflow of $544.1 million. Analysts at the trading platform said that the outflow of funds was a combined result of weak ETF investors responding to short-term negative news and the closing of basis/capital arbitrage positions caused by negative financing rates. One of the signs of the unwinding of basis/capital arbitrage is the sharp drop in open interest in Bitcoin futures on the Chicago Mercantile Exchange (CME) and other trading platforms. The reduction in holdings coincides with the negative financing rates on multiple exchanges in the past week, and also coincides with the net outflow of ETFs, indicating a significant reduction in financing arbitrage transactions related to ETF fund flows.

Given this, it is important to recognize that not all ETF outflows can be interpreted as spot sales. As crypto assets remain weak in the short term, market sentiment remains bearish.

Lin, head of Asia-Pacific business at Deribit, said that at this stage, he is not optimistic about the performance of the market: Ethereum originally had the benefit of ETF, but it was dragged down by the overall market and may not be officially listed for trading until August. Bitcoin is mainly benchmarked against US technology stocks, focusing on macroeconomic indicators and the Fed's trends. Overall, the summer market is generally average, and there are basically only short-term opportunities in trading. It is recommended that non-short-term players can hold large-currency spot and wait and see, and try to clear the positions of copycats. The price performance of Ethereum mainly depends on the overall market liquidity, future liquidity expectations (especially the expectation of interest rate cuts), the progress of spot ETFs, and whether there is clear news (such as traditional leading institutions or celebrities buying ETFs, such as Apple and Microsoft buying spot ETFs). In addition, the market consensus is that the Federal Reserve may cut interest rates in the fourth quarter of this year. The hype about this expectation in the third quarter, combined with the time when the results of the US election are released, will be a key node.

Specifically in terms of investment operations, Lin believes that the market is still in a slow bull cycle, so when the price falls below the key technical indicators and starts to stop falling, he will generally sell put options to build a position or collect interest; and if the price soars close to a new high, he can also operate on the right side and sell some call options to collect interest. BTC and ETH are both good interest-bearing assets at the moment. $60,000 and $3,000 are integer confidence indicators for BTC and ETH. The main focus of altcoins at present include SOL and WLD. The strategy is to pay more attention to altcoins when market indicators are good; when the market is weak, ignore altcoins.

Fall first, then rise: The market can take off again only after digesting the selling pressure

Crypto research agency 10X Research published an article stating that Bitcoin is currently severely oversold; after some altcoins experienced fluctuations, KOLs advised fans to buy on dips, and the greed and fear index is close to the lowest level, which is usually associated with price lows. There are many reasons for the Bitcoin sell-off: Mt.Gox's Bitcoin distribution (estimated value of $9 billion, starting in July), the German government's sale of confiscated Bitcoin ($3 billion), Bitcoin miners selling $2-3 billion, ETFs selling $1.4 billion, Bitcoin OG wallets selling $1.2 billion, etc. Assuming a total of $16-18 billion - similar to the Bitcoin ETF inflows so far this year. Previously, internal trading signals provided multiple signals to sell Bitcoin.

While many claim that the recent drop is due to the Mt. Gox fud (along with the other factors mentioned above), certain structural factors may lead to a deeper drop before a possible rebound from lower levels.

Summary: Bitcoin price is under the test of selling pressure, Ethereum is affected by the expectation of spot ETF

Looking at the above views, we can clearly see that the industry is still cautiously optimistic, but the price of Bitcoin is doomed to fail due to the selling pressure of Mt.Gox creditors. Although it will take a long time for this event to take place, the fermentation of market sentiment has already begun and is directly reflected in the price. Ethereum has temporarily entered a price stabilization period due to the expected impact of the spot ETF, but if the subsequent update progress of the spot ETF is not as good as market expectations, it may turn "good news into bad news".

In addition, regarding the factors that have caused the current complex market situation, Bitwise Chief Investment Officer Matt Hougan previously wrote that Bitcoin investment in the past year has been frustrating because the Bitcoin spot ETF artificially brought forward future investment demand significantly. The culprit is Grayscale's GBTC. Affected by hedge fund premium trading, GBTC brought forward tens of billions of dollars in future demand. As a result, Bitcoin must attract tens of billions of dollars in new demand to maintain the status quo.

From this perspective, it is difficult to comment on whether the approval of the Bitcoin spot ETF is good or bad. We have also mentioned this in our previous article "Data Extraction: ETF is Delaying the Real Bull Market".

As for the market trend in the next one to two months, it may remain in its current state - "Bitcoin goes left, Ethereum goes right."