Ethereum spot ETF was officially traded for only two days before the market began to fall sharply. Interestingly, Ethereum had risen due to good news some time ago, but the bad news after the good news was exhausted made it fall much more than BTC and SOL. ETH fell below $3,200, with a 24-hour drop of more than 8%. Ethereum ecological tokens experienced a significant drop. Bitcoin once fell below $64,000, a drop of 3%, and SOL fell by 2%. In the past hour, the entire network had a liquidation of $113 million, of which long orders were liquidated for $108 million and short orders were liquidated for $4.2254 million.
After Mt. Gox repaid its creditors, the trading volume of BTC spot trading pairs on the Kraken platform and the platform inflow/outflow did not show any abnormalities outside the range. The decline of BTC may be caused by market sentiment rather than real selling.
Since the sell-off in Mentougou did not happen, what negative macro factors are affecting capital flows?
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The plunge in US stocks dragged down global risk assets
Tesla and Google's financial reports were weaker than expected, triggering investors' pessimism about the AI bubble, dragging the Nasdaq and S&P 500 to close down 3.64% and 2.31% respectively, marking the biggest single-day drop in a year and a half since the end of 2022, and leading to a collapse of U.S. stock indices across the board, with the Dow Jones Industrial Average falling 500 points, the small-cap index falling 2.1%, the chip index falling 5.4%, and the Chinese concept stock index falling nearly 2%.
The total market value of technology giants has shrunk by nearly $1.75 trillion from its peak ten days ago. Tesla closed down 12.33%, the largest single-day drop since September 2020. Nvidia fell 6.8%, Meta fell more than 5.6%, Google fell 5.04%, the largest drop in half a year since the end of January, Microsoft fell about 3.6%, Amazon fell about 3%, and Apple fell about 2.9%.
As risk assets such as U.S. stocks performed disappointingly, risk aversion among global investors intensified. Crypto assets with high liquidity were inevitably affected, leading to capital outflows and declines.
Rate cuts are imminent, but data is still needed
Crypto risk assets are significantly affected by the Fed’s interest rate. When the Fed officially announces a rate cut, funds will continue to flow out to find more profitable assets, thereby driving up the prices of stocks and crypto assets.
The market generally estimates that the interest rate cut may be as early as September, rather than earlier.
The inflation trend and strong employment data in the first half of this year have made the Fed pay more attention to inflation risks, and the market's expectations for interest rate cuts have been repeatedly dashed. Entering the second half of the year, with the fading of secondary inflation risks and the rise in the unemployment rate (4.1%), the Fed's risk management stance has gradually tilted toward "growth risks."
Even if we want to start cutting interest rates in September, there are still several processes to go through, and the economic data released before the meeting must also be in line with the Fed officials' predictions, namely the weakening of inflation, employment and growth, in order to provide data support for the interest rate cut.
Therefore, there is still great uncertainty about the Fed's immediate interest rate cut.
Harris's stance on crypto is ambiguous
Biden announced in a speech today that he would withdraw from the 2024 presidential election and would focus on completing his presidential duties during his term. Harris has officially become a strong opponent of Trump.
Although participants in the prediction market Polymarket predict that Trump has a 62% chance of winning the election and Harris has a 36% chance, a recent Reuters poll shows Harris leading Trump by a narrow margin (44%) over 42%.
Harris was also confirmed by Bitcoin Magazine CEO that she would not attend the upcoming Bitcoin 2024 conference to give a speech. In addition, compared with the many crypto views of "King of Understanding", looking at Harris' past dynamics, she has never commented on the crypto industry so far, nor has she taken an official position on cryptocurrencies. Financial disclosure data shows that neither Harris nor her husband has ever been involved in the crypto field.
The only indirect connection is that during the 2020 election, Harris hired Montoya, the former chief technology officer of the NBA Kings. Montoya once made the Kings the first team in the world to accept Bitcoin and also launched NFT. Montoya is currently an assistant to the White House president, responsible for travel arrangements, etc., so it is unlikely that his policies will be affected.
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