BTC hits new highs as ETH surges, and U.S. stocks like COIN also see significant gains.
Written by: 1912212.eth, Foresight News
The cryptocurrency market has recently experienced a significant rebound, with BTC even briefly breaking through $123,000 to set a new historical high, and Ethereum achieving four consecutive weekly gains, successfully surpassing $3,600. Market participation sentiment has significantly recovered, with the total market capitalization soaring to a historical high of $3.8 trillion. Meanwhile, the intersection of the cryptocurrency market and the U.S. stock market is also experiencing a notable rebound.
Coinbase Global (COIN) shares hit a high of $415.96 this week, now just a stone's throw away from its historic high of $429, while three months ago, its stock price was as low as $142. As the largest cryptocurrency exchange in the world, Coinbase's revenue for 2024 has doubled to $6.6 billion. Although there was a noticeable decline in Q1 this year, the earnings in the cryptocurrency market showed a recovery in Q2, and its revenue performance may also rebound.
U.S. stocks and cryptocurrency exchange Robinhood also reached their historical high of $106.64, having increased more than threefold from the low of $30 in April this year.
Strategy (MSTR), as a 'shadow stock' of Bitcoin, has seen its stock price reach $442, with its market value now rising to $126.8 billion, setting a new historical high. In March of this year, its bottom was only $231, a nearly 1-fold increase. Strategy is now among the top 100 publicly listed companies in the U.S. by market value, whereas five years ago, the company was valued at less than $2 billion. As of July 13, Strategy holds 601,550 BTC, with a total value of about $72 billion and an average cost of $66,384. MSTR's stock price has risen accordingly.
Other mining stocks like Marathon Digital (MARA) and Riot Platforms (RIOT) have also seen increases of 5%-10% this week due to the new highs in Bitcoin. Tesla (TSLA), while not a pure cryptocurrency stock, has also seen its stock price indirectly boosted by its Bitcoin reserves (about 10,000 coins), cumulatively rising about 20% by 2025.
The U.S. stock market related to cryptocurrencies is also surging. Besides the significant rise in the cryptocurrency market, what favorable factors are brewing behind the scenes?
Trump will allow pension funds to invest in cryptocurrencies and gold.
According to a report from the Financial Times, Trump is preparing to open cryptocurrencies, gold, and private equity to the $9 trillion U.S. retirement market, a move that will stimulate a fundamental change in how Americans manage their savings. According to three insiders, Trump is expected to sign an executive order as early as this week to allow alternative investments beyond traditional stocks and bonds in 401k retirement plans. These investments will cover a wide range of asset classes, from digital assets to metals, as well as funds focused on corporate acquisitions, private lending, and infrastructure deals.
The motivation behind this shift is to stimulate economic growth and innovation. The Trump administration believes that traditional retirement investment returns are low (averaging 5-7% annually), while assets like cryptocurrencies have performed strongly over the past decade. The biggest benefit of this policy is the influx of funds and market legitimization. Even a 1-2% allocation of the $9 trillion retirement market to cryptocurrencies could bring in hundreds of billions of new funds. Additionally, the policy will accelerate institutional adoption and mainstreaming of cryptocurrencies. Retirement funds are long-term holders, and their entry will reduce market volatility and provide more stable liquidity.
This will directly boost the prices of mainstream cryptocurrencies like Bitcoin, Ethereum, and XRP. Historical data shows that similar events involving institutional fund inflows (such as the approval of a Bitcoin ETF) have previously led to BTC prices rising over 30% in the short term. This influx of funds will amplify the bull market effect, pushing Bitcoin prices up and stimulating the return of altcoin season.
Expectations for Fed rate cuts in the second half of the year
This was reflected in the latest economic forecast released by the Fed in June. At that time, predictions showed that among the 19 officials attending the meeting, 10 expected at least two rate cuts by the end of this year, while 7 believed there would be no cuts until 2025, reflecting differing internal judgments on the inflation outlook.
(Fed's June SEP dot plot)
This divergence directly affects the market's policy expectations. Data from Polymarket shows that current market bets on a 50 basis point rate cut this year are only 35%, while the probability of no rate cut has risen to 18%, reflecting a growing pessimism in the market regarding rate cuts.
Despite recent hawkish statements from several officials, investors have not completely abandoned hopes for interest rate cuts. The market sees a slightly higher than 50% chance that the Federal Reserve will decide to cut rates at the September policy meeting. According to CME's 'FedWatch' data, the probability of a 25 basis point cut in July is 4.7%, while the probability of maintaining the current rate is 95.3%. The chance of the Fed keeping rates unchanged until September is 33.9%, with a cumulative probability of a 25 basis point cut at 63.1% and a cumulative probability of a 50 basis point cut at 3%.
Fed's Daly stated that two rate cuts this year is a reasonable expectation. Trump has also continued to express dissatisfaction with Powell on social media, applying pressure for rate cuts.
As the expectation for Fed interest rate cuts approaches certainty, risk assets will be preparing for a larger wave of increases.
