Recently, some traders from overseas institutions have said that Bitcoin may face greater pressure in September and October, and there may be a sharp drop. They believe that this may be the last big drop before the next big bull market cycle begins.

From the perspective of trading games, the capital market usually undergoes a wash before entering a bull market to clear out unsteady positions and leveraged funds, which can lay the foundation for the subsequent bull market.

There are some negative factors in the market, such as liquidity tightening caused by high interest rates and lack of new capital inflows. The market needs capital to drive it up. Without a large amount of capital flowing into the market, it is unlikely that a bull market will occur in a market with a stock or even a reduction in stock volume.

However, before the bull market comes, there are often many institutions and investors trying to buy at the bottom. Especially in the derivatives market, the main long and short institutions may allocate a large amount of leveraged funds to form a balance between the two sides. But this balance will always be broken one day, and the market may experience violent fluctuations and risks.

In addition, it is generally known that Bitcoin will be halved next year, the interest rate hike cycle may be coming to an end, it is expected that Bitcoin spot ETF may be approved, and the US encryption bill is expected to be introduced. However, these events cannot be realized and implemented in the short term

Therefore, the current market is actually more favorable to short-term funds, so it is very likely that a sudden event will be used to hunt long-term funds. In this case, I always think that Bitcoin may fall to $25,000 or even lower, and in extreme cases it may fall to $20,000.

Which stage narratives are worth paying attention to?

ETF Deadline and Grayscale

Grayscale is in an ongoing lawsuit with the U.S. Securities and Exchange Commission (SEC) regarding the conversion of its existing GBTC Trust into a spot Bitcoin exchange-traded fund (ETF). While many had been expecting a decision this week, Grayscale could be required to reapply for up to 240 days before a final decision is made.

However, as you can see below, Grayscale is expanding their ETF team. What does this mean? Most likely they are trying to send a message that they are serious about switching to ETFs, not that they have some kind of inside information about the outcome of the case.

Frax expands to RWA

After unpegging from USDC earlier this year ($FRAX has a strong collateral relationship with USDC), the vision for FraxV3 is already in the works

The profits from these operations will be passed on to token holders through so-called “Fraxbonds” (FXB). Fraxbonds allow people to buy future $FRAX at a discount (i.e. $FRAX for $0.9 per $FRAX after two years)

Off-chain Labs appears to be buying back ARB

1.72 million ARB were purchased on Binance at $0.98 per token ($1.7 million total) and sent to an address labeled Offchain labs (the company behind Arbitrum). This is close to the lowest price $ARB has traded since it went public earlier this year.

CMS Holdings Accumulates DYDX

CMS was an early investor in dYdX and has further traded the token over the past two years. They recently purchased $519,000 DYDX ($1 million total value) on Binance at $1.94 per token. The average purchase price (excluding private sales) on CEX transactions was $1.88 and the average sell price was $2.78. Currently, CMS holds $3.05 million DYDX (worth $5.98 million)

Real World Asset (RWA) Mining

Maker's Spark protocol offers a 5% APY on the Dai Savings Rate (DSR). This yield comes from the income generated by DAI as collateral for RWAs like US Treasuries. However, a current proposal on Aave proposes to add a liquid token of the DAI Savings Rate (sDAI) as collateral for the lending market. As shown below, looping 8 times (deposit sDAI on Aave, borrow the native $GHO stablecoin, convert it to sDAI and repeat) would result in an APY of 11.29%!

This may be launched in the next few weeks, and the annualized rate of return does not take into account gas fees.