The market is undergoing subtle changes. The U.S. stock market continues to rise, and the crypto stocks are also following suit, but the altcoins I hold keep declining. This round of bull market was initially driven by institutional funds, and everyone believed that once the price of Bitcoin reached a certain height, funds would naturally flow into the altcoin market. However, just as this critical point was about to arrive, the rules of the market game suddenly changed.
Funds that cannot keep up with Bitcoin's surge are starting to change strategies, turning to chase crypto stocks instead. Last night, Circle's stock price surged by 34%, and Coin rose by 16%, with the bull market dividends that should belong to altcoins flowing into the stock market. As various micro-strategy imitations spring up like mushrooms, the remaining funds in the market are being rapidly locked in, making the prospects for native altcoins even dimmer. Now, any altcoin project with ambitions is seeking cooperation with traditional market institutions, either imitating Sun Yuchen's shell listing or collaborating with listed companies to launch reserve plans. After all, resources in the traditional market are limited; pioneers can share the pie, while latecomers may not even get a drop. And those old altcoins that take no action may gradually trend towards zero as the market fluctuates. This round of altcoin market is exceptionally difficult and may become the final settlement of previous altcoin bull markets, marking the official entry of the market into a new era of stock-coin linkage.
At the macro level, the Federal Reserve's FOMC meeting last night to keep interest rates unchanged was in line with expectations. The dot plot indicates that there may be two rate cuts this year, but the number of officials expecting no rate cuts has increased to seven, and the expectation for rate cuts next year has also been lowered to one. Powell continues to emphasize the uncertainty of policy, suggesting that the current economic situation is suitable for a wait-and-see approach. Trump, as usual, criticized Powell as a 'fool,' advocating for an aggressive rate cut of 200-250 basis points, but Powell is unlikely to compromise. The market generally expects Powell to end his term with a hawkish stance, but there may be a turnaround next year — the next chairman nominated by Trump is likely to be a super dove, who may immediately implement significant rate cuts upon taking office. In short, the expectations for a bull market brought by rate cuts will be postponed until next year.
The situation in the Middle East remains tense. Iran issued a strong statement last night saying it would let the world witness a 'historic event,' which frightened the market. The so-called 'historic event' turned out to be the launch of long-range missiles, disappointing those who were expecting a nuclear explosion. Reports indicate that Iran is seeking to negotiate with the United States, but Trump directly rejected the offer, mocking Iran's military strength as weak. Currently, Israel's military operations are hindered at the Fordow nuclear facility — this facility, located 90 meters underground, requires U.S. GBU-57 bunker buster bombs and B-2 bombers to destroy. Israel is negotiating military support with the U.S., and it remains to be seen whether Trump will choose to provide weapons or directly persuade Khamenei to surrender. Considering the situation of this 86-year-old leader, the likelihood of surrender is low. The ideal scenario would be for Israel to carry out a precise decapitation strike, allowing pro-American factions in Iran to take power; the worst-case scenario would be for the U.S. to directly deploy troops to destroy nuclear facilities, leading to a ground war, which would have a lasting impact on the market.
Returning to the market itself, Bitcoin's trend has stabilized. The FOMC meeting last night and the situation in the Middle East had limited impact on it, with volatility significantly narrowing. Institutional funds continue to flow in, with nearly $400 million net bought last night, coupled with listed companies continuously increasing their holdings, providing strong support for Bitcoin's price. In contrast, Ethereum's performance is weak; although there is also some capital inflow, the ETH/BTC exchange rate continues to hover at a low level. Due to the passage of the stablecoin bill, off-market funds prefer the stablecoin sector, which is also the reason for Circle's stock price surge. Yesterday, the market cap of the on-chain stablecoin USDP briefly surged to 150 million but plummeted to over 300,000 today; this rollercoaster market exactly indicates that the market focus is concentrated in the stablecoin field. It is reported that several institutions are in talks with Paxos to seek stablecoin issuance services.
For retail investors, there are two paths to participate in the stablecoin market: first, to allocate Bitcoin, as Bitcoin's deflationary property will make it a digital gold in the context of large-scale issuance of stablecoins; second, to invest in leading on-chain infrastructure and RWA sectors, which are direct beneficiaries of the stablecoin ecosystem. It is essential to be cautious of various algorithmic stablecoin projects, as under the tightening regulatory environment, these 'wild paths' are likely to be the first to be rectified.
