In fact, in the context of the crypto market's high dependence on liquidity increments, the main battleground in the current market is essentially the two major directions of the Fed's monetary policy and Trump's crypto policy.
The Fed's monetary policy is oriented towards global liquidity, and the market's sharp decline in December last year due to Powell's hawkish stance shows the importance of this indicator. It is precisely for this reason that the world is showing unprecedented concern about U.S. inflation.
VX: TTZS6308
To proactively respond to external uncertainties and provide more maneuvering space for policies, a conservative wait-and-see approach is the objective strategy the Fed needs to adopt. Currently, the U.S. money market largely believes that the Fed may cut interest rates in June or July, but the pricing for interest rate cuts throughout the year has not yet reached two times. Looking at the recent March rate cut, the CME "Fed Watch" shows a 92% probability that the Fed will keep rates unchanged in March, and an 8% probability of a 25 basis point rate cut, with no rate cut in March already a market consensus.
Uncertainty is not only external, but also not smooth internally. Under Musk's "cost-cutting" banner in the DOGE department, U.S. domestic politics is also becoming chaotic, with Trump's authority being fully demonstrated under Musk's promotion, but the relatively subtle competitive and cooperative relationship between the two is also being discussed by the market, and all kinds of farces will only drive capital flows into safer industries.
Apart from the overall adverse economic impact, Trump's authority also has a bright side in Bit, as institutions and departments that once opposed Bit are now facing a comprehensive liquidation.
The SEC is at the forefront, with the departure of Gary Gensler and the resignation of several senior legal officers under him, and the litigation and Wells notices that once terrified the industry are also gradually fading away, and the SEC has begun to reduce the scale of its Bit law enforcement department. The SEC's shift directly benefits ETFs, with Altcoin ETFs accelerating.
Overall, Trump's support for Bit since taking office can be said to be unremitting, with investments in the administrative, regulatory and funding directions, and a stream of good news. However, looking at the market, the dismal performance of Altcoins is visible to the naked eye, and the upward trend of Bit and Ether is also not optimistic.
Fundamentally, the market's sentiment is too fragile, with overall economic expectations gnawing at investors' confidence, with risk aversion factors dominating investment, and turnover decreasing. But due to the existence of good news, the chip concentration area of mainstream currencies is relatively stable and has not led to a major decline. Taking Bit as an example, the support range of $93,000-$98,000 is prominent, and even if it briefly fell below $91,000 during the Spring Festival, it will quickly recover.
Looking at the movements of institutions, confidence in the future market remains. Although the market is in a "garbage time", institutions are still continuously buying. From February 3 to February 7, the net inflow of Bit spot ETFs was $204 million, of which BlackRock's IBIT had a net inflow of $315 million. At the same time, the net inflow of Ether spot ETFs was $420 million, and none of the nine ETFs had net outflows. Since late January, the cumulative inflow of funds into Ether spot ETFs has exceeded $500 million.
Institutions are willing to invest, and they are obviously optimistic in the long run, especially for Ether, which has been continuously FUD. Although the market selling pressure is strong, based on the layouts of BlackRock, Fidelity and others, whether it is staking or RWA, Ether still has topics to be hyped.
From the market perspective, in the short term, due to the lack of strong positive news, Bit is likely to maintain a volatile pattern, fluctuating between the recent low of $90,000 and the high of $106,000, with limited possibility of a sharp decline. In contrast, the price of Ether, which lacks a stabilizer, may have the possibility of further decline.
But Altcoins are not so lucky. In terms of data, the current Altcoin supply is obviously oversupplied, with the total number of cryptocurrency tokens listed on CoinMarketCap approaching 11 million, while the current number of Altcoins exceeds 36 million, compared to less than 3,000 in 2018 and 500 in 2013, a huge difference. Considering the current market capital, the structural mismatch in the supply and demand market is obvious.
On the other hand, Trump's own operations have also poured a bucket of cold water on Altcoins. His own issuance of tokens to fleece the "leeks" has to some extent disrupted the industry's original belief in the radiation effect of the Altcoin bull market, leading to further contraction of Altcoin liquidity, and PVP becoming the industry's byword under the current liquidity. From this perspective, except for Altcoins backed by large capital or with hype topics, the negative trend of other Altcoins will continue in the short term, and even Trump has fallen to $16, so to return to the Altcoin bull market, perhaps it can only wait until the overall economic environment is more relaxed.
Prudent risk aversion may be the best market operation at the moment.
