Driven by the potential gains of Bitcoin spot ETFs, BTC quickly rose to around $30,000, and then experienced three weeks of volatility, failing to break through previous highs many times. We believe that the market will not end until the ETF receives an official response, and Bitcoin will fluctuate and rise. Ripple's victory in the lawsuit boosted market sentiment, and popular altcoins will also usher in performance opportunities. At the same time, we are optimistic about the long-term positive impact of RWA on the crypto market. It is worth noting that macro and regulatory risks may still make a comeback and cause greater disturbances to the market. We remain cautiously optimistic about the market outlook.
1. Spot ETFs are good news to start a small bull market, and there is still one month left
In the overall correction in June, USDT's anchor breaking confirmed BTC's short-term bottom, and the chips were changed hands during the decline, laying the foundation for a new round of rise. Old Wall Street institutions such as BlackRock applied for Bitcoin spot ETFs, driving the market to rise rapidly. BTC returned to its previous high and is expected to fluctuate upward next month. After Ripple won the lawsuit, XRP rose by more than 100%, and the market risk appetite rebounded sharply. Popular altcoins will usher in performance opportunities.
1. USDT FUD marks a short-term bottom, and the chips have changed hands
Since June, BTC has started a short-term downward trend, and Tether FUD reappeared in mid-June, USDT slightly decoupled, and the USDC/USDT trading pair rose to 1.0042. Last year, USDT broke its anchor twice, once after the Luna crash and once after the FTX thunderstorm, both of which were short-term bottom signals. USDT's unpegging occurred on June 15. BTC fell back to the important support level of $25,000 and then rose. The chips changed from weak cards to strong cards. The turnover at the bottom makes the chip structure more stable. It is quite limited, usually stopping at around $30,000.
2. Bitcoin ETF has potential benefits, and there is still one month left in the market
BlackRock, Investco and other US asset management giants have submitted applications for Bitcoin spot ETFs, driving a strong rise in Bitcoin. The issuance of spot ETFs can provide traditional investors with a more compliant and convenient investment channel, and is expected to bring hundreds of millions of dollars in incremental funds to the cryptocurrency market. Looking back at the bull market in the second half of 21, the market rose due to expectations for Bitcoin futures ETFs, and peaked and fell after the Bitcoin futures ETF was approved. Therefore, before the spot ETF was approved, smart money intervened and restarted the Mavericks.
This time, the old Wall Street institutions applied for Bitcoin ETF together. It seems that some institutions have obtained the tacit approval of the regulatory authorities. In terms of time, the SEC will make a decision on the ARK Bitcoin spot ETF on August 13 at the latest, which also means that we may have about a month of hot market period. During this period, smart money is willing to buy every pullback of Bitcoin, so it is difficult for Bitcoin to fall sharply, and it will continue to rise after experiencing shocks.
3. XRP surges, popular copycats will have performance opportunities
On July 13, the U.S. District Court ruled on the Ripple case, believing that XRP is not a security token. U.S. exchanges such as Gemini and Coinbase followed suit and relisted XRP. XRP rose rapidly, with a single-day increase of more than 100%, and market sentiment turned optimistic. Although there is still room for delay in the Ripple lawsuit, it has already demonstrated the regulatory attitude, which is of great significance for altcoins that may be identified as securities. We are optimistic about the subsequent performance of altcoins.
XRP’s market cap is already in the tens of billions of dollars, but the magnitude and speed of its rise is extremely impressive, reflecting that the market is in a state of “hearts are rising”. Despite the market’s pullback on Friday night, bulls still have the upper hand as strong altcoins have largely recovered their losses over the weekend. Many altcoins are still at relatively low levels and will perform well once a new narrative emerges. As market risk appetite returns, popular altcoins have a good chance of outperforming the market as long as BTC remains volatile.
2. Compliance narrative is in the ascendant, and RWA is expected to bring incremental funds
Under the influence of the compliance narrative, RWA has gradually gained market attention. We believe that RWA may be a strategic opportunity that is expected to bring tens of billions of dollars of capital inflows into the crypto market and become an important driving force for the next bull market.
1. DeFi yields decline in the bear market, and funds continue to flow out
After entering the bear market, the yield of DeFi has dropped significantly. The APY of USDC on mainstream lending platforms is less than 3%, and the Fed's sharp interest rate hike has caused the risk-free interest rate to rise to more than 5%, and a large amount of funds have left the market. The total market value of stablecoins has continued to decline for a year, from US$184.5 billion in April 2022 to the current US$124.5 billion, with about US$60 billion exiting the market.
Funds that are still on the market have been looking for new places to go, and staking ETH has become a popular choice. LSD-Fi based on ETH can provide about 5% of the coin base income, which can be said to be the risk-free income of Crypto-Native. The current TVL has reached 45 billion US dollars. But in a bear market, staking ETH requires taking the risk of falling prices, and hedging requires higher costs. Therefore, LSD-Fi cannot fully meet the needs of low-risk investors. The market urgently needs an investment product with relatively low risk and relatively high returns to retain market funds.
2. RWA projects based on US debt can bring incremental funds to the market
The emergence of RWA is expected to change the dilemma of continuous capital outflow in the cryptocurrency market. RWA brings real benefits to the crypto world by tokenizing real-world assets (such as financial assets such as bonds and stocks). Currently, the yield on short-term U.S. bonds exceeds 5%. If DeFi users can be provided with U.S. bond exposure, that is, a U.S. bond investment channel can be provided to global investors, this asset alone is expected to bring in tens of billions of dollars in capital inflows.
From another perspective, USDT and USDC are the largest RWA projects with a total market value of nearly $110 billion, but the profits generated by their US dollar reserves are not fed back to the market. RWA projects that provide US debt have actually taken away the cake of US dollar stablecoin operators such as Tether and Circle. By charging lower fees, most of the profits are fed back to the market, bringing incremental funds to the market.
3. Existing RWA projects have made some progress, but there is still a long way to go
Many projects in the industry are developing towards the RWA field. For example, MakerDao introduced US debt as collateral and distributed interest to DAI holders. The founder of Compound also started a business, hoping to tokenize US Treasury bonds and bring tangible benefits to DeFi users. Benefiting from the development of the RWA field, $MKR and $COMP have performed very well recently.
Of course, we must also see that the current RWA project is still immature, and it is difficult for DeFi users to successfully obtain a U.S. Treasury interest rate of up to 5%. RWA assets still have a long way to go to achieve the goal of being safe, efficient, and easy to obtain. MakerDao's Treasury bond exposure exceeds US$1 billion, but there are also problems such as compliance risks, high costs, and insufficient investment efficiency. It is still very difficult to further expand the scale in a short period of time. Compliance, channels, chaining, costs, promotion, etc. all require solid investment from the team, and the RWA project still has a long way to go.
But on the other hand, this also means that the existing RWA projects are still far from the ceiling and there is still huge room for growth. When more and more RWA projects are successfully running, RWA-Fi will also become an investment direction similar to LSD-Fi. MKR and COMP are similar to LDO and RPL, and they first emerged in the early stages of RWA development. As the scale of RWA continues to expand, upper-level DeFi projects based on RWA assets will also appear in the future, which will become Alpha investment opportunities for RWA in the mid-to-late stages. We believe that RWA has long-term strategic significance and will become an important driving force for the next bull market.