Bitcoin enters a period of left-hand trading, while Ethereum is the opposite.

By Wenser, Odaily Planet Daily

In the past few days, influenced by the expected sale of nearly $9 billion worth of Bitcoin by Mt.Gox, Bitcoin has reversed its upward trend and entered a downward phase, dropping to a low of below $59,000. On the other hand, Ethereum, which was originally affected by Bitcoin, rebounded in price due to the expected approval of the spot ETF. The price trends of the two reflect a significant difference, with Bitcoin moving left and Ethereum moving right. It's no wonder that the well-known crypto research institution 10X Research was mocked by market players for its "bullish on BTC, bearish on ETH" statement.

Odaily Planet Daily will conduct interviews and compile opinions from institutions, analysts, platform leaders, and crypto KOLs on the current market for readers' reference in this article.

Ethereum ETF approval is imminent, but Bitcoin can't hold on?

According to Fortune, recently, US SEC Chairman Gary Gensler, when asked about the progress of the Ethereum spot ETF approval process, said, "I don't know the specific timing, but progress is going smoothly." He explained that his team is waiting for asset managers to make "appropriate disclosures."

It can be seen that after the 19b-4 document for the Ethereum spot ETF was approved, the approval of the S-1 document is almost certain. On the other hand, as the nearly decade-long "long-standing case" of Mt.Gox is finally coming to an end, it is expected to be concluded in the form of "proportional compensation to creditors," which has also brought expectations of massive selling pressure.

According to a previous article by Odaily Planet Daily, "Ten Questions and Answers, Dispelling the Rumors and Fog of the Mt.Gox Incident," we learned that the creditor repayment scheduled for July will be "the first time Mt.Gox has repaid in the form of BTC and BCH, which means that the 141,686 BTC held by Mt.Gox (as well as a similar amount of BCH) will begin to flow into the market. These BTC account for 0.72% of the total circulating supply of Bitcoin, worth approximately $8.54 billion." In addition, the recent frequent movements of the $3 billion Bitcoin assets confiscated by the German government, combined with the recent over-the-counter transactions of early Bitcoin holders and miners, roughly estimate the recent selling pressure of Bitcoin to exceed $3 billion.

It should be noted that the net inflow of funds into the Bitcoin spot ETF, accumulated over the past six months, is currently about $14.387 billion, which is just about equal to the total value of the above-mentioned assets, so the market's panic sentiment is quite normal.

However, many industry professionals still hold different views.

The future is shrouded in mist, how do industry professionals view it?

At the time of writing, the price of Bitcoin is around $61,549, with a 24-hour increase of 0.66%; the price of Ethereum is around $3,389, with a 24-hour increase of 0.5%. For the future market, we roughly categorize the predictive views into four types: the optimistic camp, the cautiously optimistic camp, the leaning pessimistic camp, and the dip before rise camp. The following is a detailed content.

Optimistic camp: Expecting historical highs

In a recent media interview, eToro market analyst Farhan Badami stated that Bitcoin is usually considered a "forward-looking" asset and is usually priced in major market events. Therefore, he expects the price of Bitcoin to stabilize in the next few weeks and continue to rebound to historical highs in the next few months. "In the next few weeks, the price of Bitcoin may fluctuate between $60,000 and $70,000."

CryptoQuant analyst Mignolet pointed out that based on the analysis of the UTXO profit percentage during the consolidation phase last year, although the price of Bitcoin is currently in a consolidation phase, the UTXO profit percentage has significantly deviated from its low point. At this time, the whales may react to market panic (i.e., as Warren Buffett's investment adage goes, "Be greedy when others are fearful," buy Bitcoin in times of market panic), indicating a possible V-shaped rebound in the market.

Jonathan de Wet, Chief Investment Officer of ZeroCap, stated that although the entire cryptocurrency market is "still continuing to decline," he expects that as the Mt.Gox creditors repay their debts, the price of Bitcoin will fall to a "key support level" of $57,000 in the coming weeks. "Considering the performance of other assets in the market, the key support levels for BTC and ETH are $63,000 and $3,400, respectively, and they are still clearly within the price range of the past few months." Therefore, although the repayment of Mt. Gox creditors may bring further selling pressure on Bitcoin and other cryptocurrencies in the next week, he remains optimistic about the long-term prospects. "In the medium to long term, we are constructive because the ETH ETF is expected to be launched with a loose tendency by the end of 2024, and then achieve actual looseness in 2025."

Cautiously optimistic camp: Waiting for recent key data and Q4 key points

Recently, Matrixport stated that data from multiple Bitcoin ETF issuers, including asset management companies, investment advisors, pension funds, and sovereign wealth funds, show that institutional investors are buying Bitcoin spot ETFs. However, since mid-March, the inflow of funds has been almost zero, and in the past ten days, there has been an outflow of $1.2 billion. The entry speed of institutional investors may be slower than expected.

Sam Callahan, Senior Analyst at Swan Bitcoin, stated in a communication email with the media, "The impact of Mt. Gox's distribution of Bitcoin on the price of Bitcoin may be exaggerated. Creditors who want to sell Bitcoin have experienced more than 10 years, during which time they have had enough time to sell their bankruptcy claims to more determined long-term investors. In addition, most creditors may continue to hold Bitcoin because their cost of holding a single Bitcoin is less than $700."

This view is held by many.

Alex Thorn, Director of Research at Galaxy, previously stated, "It can be reasonably assumed that most of the BTC received from creditors will be distributed to LPs in physical form, rather than sold."

On May 28, 25,000 BTC from Mt.Gox began to be transferred, which Alex viewed as the beginning of the distribution of compensation to creditors. In addition, he expects that most of the BTC assets will be held, but for BCH, there may be a massive selling pressure in the short term.

Chinese crypto KOL Phyrex told Odaily Planet Daily that in terms of the short-term overall market situation, it is difficult to predict the price, but based on key data indicators, the core PCE on Friday and non-farm data next Friday, if they meet market expectations, BTC and ETH may have some upward potential. The approval of the Ethereum spot ETF on July 2 and the opening of trading the next day are also important factors that may drive investor sentiment. Currently, the market is mainly influenced by the monetary policy of the Federal Reserve, with expectations of interest rate cuts dominating.

Regarding the ETH spot ETF, he believes that a "Sell The News" situation is bound to occur, but based on the trend after the approval of the BTC spot ETF, this may not be the best choice, after all, "investors who sold BTC due to 'Sell The News' have made at least a 40% profit." In addition, he believes that the US election will be a stimulus for the risk market; he usually adopts a dollar-cost averaging strategy for investment operations.

Brokerage firm Bernstein pointed out in a recent research report that once the Ethereum spot ETF is approved for trading, its demand source may be similar to that of the Bitcoin ETF, but on a smaller scale. Analysts Gautam Chhugani and Mahika Sapra emphasized in the report that due to the lack of Ethereum staking function, the conversion volume of the Ethereum spot ETF is not expected to be excessive. However, they expect that basic trading will gradually attract buyers, thereby maintaining healthy liquidity in the ETF market.

In addition, despite the recent pullback in the cryptocurrency market, the report emphasizes that "the structural adoption cycle of cryptocurrencies remains intact."

Leaning Pessimistic Camp: Poor Liquidity Performance and Capital Market Performance

The latest weekly report from the cryptocurrency trading platform Bitfinex shows that last week, the US spot Bitcoin ETF saw outflows of over $100 million on each trading day, with a total outflow of $544.1 million. Analysts at the trading platform stated that the outflow of funds is a result of weak ETF investors reacting to short-term negative news and the unwinding of basis/funding arbitrage due to negative funding rates. One of the signs of the unwinding of basis/funding arbitrage is the significant decrease in open interest in Bitcoin futures contracts on the Chicago Mercantile Exchange (CME) and other trading platforms. The decrease in open interest coincides with the negative funding rates at several exchanges over the past week, as well as with the net outflows from the ETF, indicating a significant reduction in funding arbitrage trades related to ETF fund flows.

It must be recognized that not all ETF fund outflows can be interpreted as spot sales. Since the short-term trend of crypto assets is still weak, the market sentiment is still bearish.

Lin, the head of Asia-Pacific business at Deribit, told Odaily Planet Daily that he is not very optimistic about the overall market performance at the moment: Ethereum was supposed to benefit from the ETF, but it may not be listed for trading until August due to the overall market situation. Bitcoin is mainly benchmarked against US tech stocks, focusing on macroeconomic indicators and the direction of the Federal Reserve. Overall, the summer market is generally average, with only short-term trading opportunities at the moment. He recommends non-short-term players to hold major cryptocurrency spot positions and observe, while clearing out altcoins as much as possible. The price performance of Ethereum mainly depends on overall market liquidity, future liquidity expectations (especially interest rate cut expectations), progress of the spot ETF, and whether there are clear positive news (such as traditional leading institutions or celebrities buying the ETF, such as Apple, Microsoft buying spot ETF). In addition, the market consensus is that the Federal Reserve may cut interest rates in the fourth quarter of this year, and the speculation in the third quarter about this expectation, combined with the timing of the US election results, will be a major key point.

In terms of investment operations, Lin believes that the market is still in a slow bull cycle, so when the price falls below key technical indicators and starts to stabilize, he generally sells put options to build positions or as income; and if the price surges close to a new high, he can also sell some call options for income. BTC and ETH are currently very good income-generating assets. $60,000 and $3,000 are round number confidence indicators for BTC and ETH. The specific altcoins he is focusing on include SOL and WLD. The strategy is to focus more on altcoins when market indicators are good, and not focus on altcoins when the market is weak.

Dip Before Rise Camp: After Digesting Selling Pressure, the Market Can Take Off Again

AICoin, a crypto research institution, stated in a post that Bitcoin is currently severely oversold; after experiencing fluctuations, KOLs suggest that fans buy on dips, and the greed and fear index is close to its lowest level, which is usually associated with price lows. There are many reasons for the selling of Bitcoin: the distribution of Bitcoin by Mt.Gox (estimated value of $9 billion, starting in July), the sale of confiscated Bitcoin by the German government ($3 billion), $20-30 billion in Bitcoin sold by miners, $14 billion in ETF sales, and $12 billion in Bitcoin sold by OG wallets. Assuming a total of $16-18 billion, which is similar to the inflow of Bitcoin ETFs so far this year. Previous internal trading signals provided multiple sell signals for Bitcoin.

Although many claim that the recent decline is due to fud from Mt.Gox (and other factors mentioned above), a structural factor may lead to a deeper decline before rebounding from a lower level.

Summary: Bitcoin Price Endures Selling Pressure, Ethereum Affected by Spot ETF Expectations

Looking at the above views, it is clear that industry professionals are generally still in a cautiously optimistic stage, but the price of Bitcoin has already endured the inevitable selling pressure from Mt.Gox creditors' compensation, even though the event is still a long way from conclusion, the fermentation of market sentiment has already begun and is directly reflected in the price. Ethereum, on the other hand, is currently in a period of price stability due to the expectations of the spot ETF, but if the progress of the spot ETF does not meet market expectations, it may turn "good news into bad news."

Furthermore, regarding the factors that have caused the current complex market situation, Matt Hougan, Chief Investment Officer of Bitwise, previously stated that the artificial anticipation of future investment demand by the Bitcoin spot ETF has significantly advanced, resulting in a frustrating year of Bitcoin investment over the past year, with the main culprit being Grayscale's GBTC, which, due to premium trading by hedge funds, has advanced hundreds of billions of dollars of future demand, and as a result, Bitcoin must attract hundreds of billions of dollars of new demand to maintain the status quo.

From this perspective, it is difficult to judge whether the approval of the Bitcoin spot ETF is good or bad, as we mentioned in the previous article "Data Extraction: ETF is Delaying the Real Bull Market."

As for the future market trends in the next one to two months, it may still remain in the current state—"Bitcoin to the left, Ethereum to the right."

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