After the release of non-agricultural data in early August, the mainstream currency market experienced a sharp drop in price. Subsequently, the market has repeatedly experienced a trend of rising and falling, and the implied volatility has gradually declined from the highest level on August 5, and the overall market has shown a wide range of fluctuations. The current market urgently needs the guidance of a new round of economic data to promote the development of the next stage of the market.
The market generally expects the Fed to announce a rate cut at its meeting on September 19. However, the new non-farm payrolls data to be released on September 6 will be key. If the data is strong, it will significantly reduce the probability of the Fed cutting interest rates in mid-September.
In addition, the PPI and CPI data to be released on September 11 and September 12 will also be closely watched. If these inflation indicators do not show a significant decline, it will also reduce the possibility of the Fed cutting interest rates. Therefore, it is necessary to pay close attention to the upcoming economic data to determine future market trends.
There are about 19 days until the next Federal Reserve interest rate meeting (2024.09.19)
In the past week, both BTC and ETH hit a high point and then fell back to a concentrated trading area.
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In the past week, the trading volume of BTC and ETH was the largest when they plummeted at 8.27; the open interest of BTC and ETH did not change significantly.
In the past week, the historical volatility of BTC and ETH was highest when it fell to 8.27; the implied volatility of BTC fell while ETH rose.
The average annualized return on BTC fees in the past week was 0.3%, and contract leverage sentiment remained low.
No major data was released in the past week, and we are waiting for the release of non-farm data on 09.06.
BTC is about to face its most challenging month. Historically, September has had negative returns, and this year has added additional pressures, including expectations for the US tech industry after Nvidia's earnings forecast, the Federal Reserve's policy decisions, and the upcoming US election. Many events will have a significant impact on BTC's price trend.
BTC spot ETFs have seen outflows for four consecutive days, especially BlackRock's IBIT, which saw its first outflow of $13.5 million since May. The lower-than-expected US PCE data increases the likelihood of a rate cut by the Federal Reserve in the fourth quarter. If the non-farm payrolls data next week is weaker than expected, it will confirm the reason for the US to cut interest rates since September, with the current probability of a rate cut of 33.0% (25 basis points) and 67% (50 basis points). Given the limited impact of recent macro news on the crypto market, Bitcoin may continue to fluctuate in the range of $58,000 to $65,000 in the short term, and the market is waiting for positive catalysts to break out of this range.
When will the funds return to the market?
The financial market is playing a "price-performance game". When a certain sector becomes expensive, funds will naturally go to speculate on the next undervalued sector.
After the hype of AI in the US stock market has ended, besides blockchain, what other sector is as imaginative as AI, including potential returns that can be compared with AI? I think it is a very natural process for funds to spread from AI to blockchain.
I think the process of capital transfer should start in the second half of 2024. Looking at the US stock cycle alone, basically after two years of speculation, capital will flee. Now Nvidia has been hyped for about 600 to 700 days, and AI has not been very fresh since its inception.
There is a basis for existing funds to support the rise, but we still have to wait for clear signals, and the above logic needs further verification.
At present, the sentiment is relatively optimistic in terms of liquidity expectations. On the one hand, Powell is expected to be dovish. On the other hand, the global macro liquidity level index of various countries combined has exceeded the high point in March 22. However, it is still at a low level.
But I think it doesn’t matter, it can still bring a relatively good expectation. And the expectation of improved liquidity will enter the cryptocurrency market faster.
There are indeed many different points in this round of bull market. Many people feel that they cannot make money. The root cause is that the growth level of crypto asset prices cannot match the overall liquidity. To put it bluntly, the price of Bitcoin has risen, but there is no money in the market. Previously, the global liquidity level was high, Bitcoin rose sharply, and VC coins sucked blood, which led to the current situation.
The bad side is that many sectors have not grown, and the altcoin season with thousands of coins rising together is gone. The good side is that market expectations are more advanced, and many sectors will be one step ahead of the market. They will not wait for the price of Bitcoin to go up before trading, but will follow the rise of Bitcoin, and some strong sectors will emerge. In a market with insufficient funds, sector rotation will also be particularly obvious.
How to find an actionable section? I think it should at least meet the following characteristics:
The ceiling is high enough and the bubble can capture investors' imagination.
There is a value difference compared to the current price.
It is best to have fundamentals. Some innovative tracks can be without fundamentals. The financial and capital markets themselves encourage innovation and have added value and rewards for innovation.
Whether the sector assets are scarce, if an exchange lists a lot of coins from a certain sector, the funds will definitely be divided and diverted during the subsequent speculation.
I am more optimistic about two sectors, one is the Bitcoin ecosystem, and the other is the real cash inflow, fundamentals, and tokens are unlocked, and the circulation is almost distributed. Now the concepts and trends in the market are not hyped up, so we can only return to the basics and land projects with fundamentals and good revenue, such as AAVE.
