In our previous article (July 28), we listed the top 10 narratives worth paying attention to in 2024. In this issue, let’s take a brief look at several factors that may affect the trend of Bitcoin.
1. BTC balance on exchanges
In addition to the reduction in the number of bitcoins mined due to the new round of halving in April this year, it can also be seen from the current data on the balance of bitcoin wallets on exchanges that the number of bitcoins on exchanges is steadily decreasing over time. From a medium- to long-term perspective, continued scarcity will drive up the price of bitcoin, as shown in the figure below.
2. Spot Bitcoin ETF
Since the Bitcoin ETF was officially approved in January this year, the overall data shows that the inflow of funds into the Bitcoin ETF is still relatively strong. The approval of the ETF also provides a new strong and sustained demand, which will have a long-term impact. The rules of the game in the crypto market seem to be changing, but this change is just the beginning.
3. Other influencing factors
The first is this year's US election.
Putting aside political issues, let’s only consider the impact of the US election on the crypto market. From the current situation, it seems that many people think that Trump is more likely to win. Judging from his attitude towards cryptocurrencies in recent times and his speech at the Bitcoin2024 conference two days ago, his re-election may boost the market, including cryptocurrencies. As shown in the figure below.
But for me personally, I don’t really care who will be the president of the United States, after all, I don’t have the right to vote. Judging from the currently popular Trump and Harris, Trump’s attitude towards cryptocurrencies may indeed promote the hype and innovation of cryptocurrencies in the short term, because he should not impose too many and too strict regulatory measures in real time, but it will also lead to market volatility. Harris may impose some new restrictions on cryptocurrencies, such as stricter regulatory measures, which may limit some hype and innovation in the crypto market, but from a longer-term perspective, the continued implementation of various regulations is conducive to the long-term development of cryptocurrencies (regulatory issues are an issue that needs to be faced sooner or later, such as the stablecoin bill and other issues).
The second is the global liquidity cycle
The US interest rate cut not only affects the global available capital pool (liquidity), but also affects the economic policies of other countries such as the European Union and a major Asian country. According to the data from The Global Liquidity Cycle, after the global liquidity hit the bottom in December 2022, the next peak will theoretically reach its peak again around September 2025. As shown in the figure below.
The third is the expectation of the Fed’s interest rate cut
Currently, many analysts have high expectations that the Federal Reserve will start cutting interest rates in September this year. Based on the data, it is possible that the US will start a "soft landing" this year, as shown in the figure below.
Since there is an FOMC meeting in the United States this Wednesday (July 31st), the market will basically be volatile in the next few days.
The market expects the Fed to keep interest rates unchanged this time, but may send some signals of a rate cut in September. However, from the current situation, this expectation seems to be more of a result of the huge pressure from various media, economists, analysts and the market, hoping that the Fed will announce a rate cut in September.
Because before the September FOMC meeting, the US still has two CPI (Consumer Expectation Index) and two NFP (Non-Farm Employment Data) data to be released, it is hard to say whether Powell will cater to the market speculation. There are only two possibilities:
- If it caters to the market's hype, the market may continue to fluctuate or usher in a small new wave of increases.
- If Powell continues to say some old sayings and clichés such as "When we make sure that inflation falls back to 2%, we will cut interest rates. To do this, we must remain dependent on the data. We need to see the data that will be released in the next two months." Then the market may see new and greater fluctuations due to investors' disappointment.
4. Several hot issues that people are paying attention to recently
In addition to the five major influencing factors mentioned above, many people may also continue to pay attention to the latest actions of the three major Bitcoin holders, Mt Gox, the US government, and FTX, because they may continue to bring certain selling pressure to the market.
On Mt Gox:
According to on-chain data monitoring, at 7:31 am today (July 30), the wallet address of Mt Gox 12Rgp transferred 0.02 BTC (about 1,350 USD) to the address starting with 1Adb and 0.0001 BTC to the address starting with bc1q. This operation may be a test for transfer. As of now, there are more than 80,000 BTC left in the Mt Gox address, with a value of 5.35 billion USD. As shown in the figure below.
From the US government:
Also today (July 30), according to on-chain data monitoring, the wallet address marked as the US government (bitcoins seized by Silk Road) bc1qje has transferred about 29,800 bitcoins (worth about $2 billion) to two new addresses bc1qla and bc1qng. As of now, the US government still holds nearly 183,000 bitcoins. As shown in the figure below.
As the news spread, the price of Bitcoin also dropped from $70,000 to the current $66,000 in just a few minutes, as shown in the figure below.
FTX compensation:
According to relevant information, the liquidator of FTX Digital Markets Ltd. has recently started the next stage of the liquidation process. FTX.com customers need to choose whether to participate in the official liquidation procedure in the Bahamas (i.e., the Bahamas process) or the Chapter 11 case in the United States (i.e., the U.S. process), and must make a choice before 4:00 am on August 17. As shown in the figure below.
According to previously disclosed court documents, in addition to the $2.2 billion in cash received by SBF and other executives when FTX went bankrupt, it also held various crypto assets such as SOL, BTC, and ETH, as shown in the figure below.
Someone has done a statistics, FTX is expected to repay $16 billion to creditors, and in terms of specific compensation, FTX will distribute cash (it is said that most of the crypto assets previously held have been converted into cash through various channels, so there will be enough cash for compensation in the future, but I haven't found this specific data yet). And if the users who receive the compensation consider reinvesting in cryptocurrencies, then from a certain perspective, it may also cause some funds to flow back into the market. There are two key dates for FTX's compensation: August 17 (trustee vote) and October 7 (court approval deadline).
5. Summary
Regardless of the influencing factors in the short term and the various news, if we are optimistic, we estimate that it is still possible for the price of Bitcoin to return to the range of 71,000-73,000 before September. Of course, the price is just a guess, not an investment suggestion. I occasionally write about this kind of price prediction in the article just because some friends like to read it, but I personally never make operations based on so-called predictions in the execution of investment. I only choose to take a long-term approach to do things with a high probability.
In the long run, no matter which stage of the cycle you are currently in, you should hold BTC and ETH. This is the most important thing to do since you are already in this field. Of course, if you have enough patience, you can also adopt the DCA strategy to insist on monthly fixed investment in the bear market, and then sell in batches after the bull market reaches the target point. This most basic strategy is also one of the investment strategies that Hualihuawai has been advocating in the past few years. It is no exaggeration to say that this is also one of the investment paths that ordinary people are least likely to make mistakes and are easiest to operate after entering this field.
As for Altcoin, my suggestion is that before you decide to invest in Altcoin, it is best to hold ETH first, and then consider some altcoin projects with long-term value. For example, AAVE is a leading project in the lending field, can be combined with the RWA narrative, most of the supply has been unlocked, the team has been maintaining construction, and the data on protocol revenue and active users are also good. Another example is Pendle, YT and PT is a good innovative way to play, although there are continuous unlocking, but if you query through the TokenUnlocks tool, you will find that the unlocked part is mainly for liquidity incentives (Liquidity Incentives), it is said that the V3 version will be released before the end of this year, and the data on protocol revenue and monthly activity also look good. And so on.
But it should be noted here that AAVE and Pendle mentioned above are just random examples to tell you some basic points to consider from a medium- to long-term perspective. In other words, you should at least extend your horizon to, for example, 6-12 months to consider these issues.
If you are just a short-termist, or even a get-rich-quickist, then any so-called valuable project will not make you rich quickly, and perhaps only MemeCoin is suitable for you to take a short-term gamble. But now MemeCoin seems to be not only about brainpower (buy strategy + sell strategy), but also about physical strength (some people can stay up late to look at various X platform information to find potential opportunities), speed and technology (some people, in addition to using trading robots for sniping, will even develop special monitoring tools to monitor new contracts + new pools + Smart Money + social data on the chain, etc.).
Two days ago (July 28), I saw some friends in the group discussing a MemeCoin called NEIRO. It seemed that the discussion about this coin in some communities was also very hot that day. Then I took the time to search for this NEIRO. The coin soared 1,250 times in six hours on the day it was launched. For example, a wallet address bought 183 SOL at the opening. If calculated based on the selling price of NEIRO at the high point of $0.1 at that time, the trader made a profit of about $3.2 million that day.
This speed is really not something that ordinary people can grasp, unless there is a big boss who is good at "staying up late" to guide you, but the problem is that people who can make money by "staying up late" must be busy making money, right? Why would they help you make money? The big bosses who can really get rich in the short term are all busy making money. They can't easily reveal the "wealth code" to you while they are making money. Moreover, when some KOLs reveal it to you, many of them are also hoping that you will come in to take over. Anyway, I can't do this kind of staying up late by myself, haha.
It’s always the same old saying, no matter whether it’s Bitcoin/Ethereum, Altcoin, or various MemeCoins, for ordinary people, just do what you can do, that is, do things with high probability within the scope of your own cognition + physical strength, grasp the cyclical laws and remain patient, then stick to it and you will definitely gain something.
This is the end of our sharing of this issue. This is also the 493rd article updated by Hualihuawai. For more historical article reviews, please check the annual article summary in Hualihuawai Notion notes.
Disclaimer: The above content is only a personal point of view and analysis, and is only used for learning records and communication, and does not constitute any investment advice. The encryption field is a high-risk market. In addition to various forms of hacker attacks, fraud and pig-killing schemes, many projects also have the risk of zeroing out at any time. Please look at it rationally, improve risk prevention awareness, establish a correct investment concept, and do not touch it if you don’t understand it.
