Unexplained declines are frustrating, but unexplained increases are equally concerning.
In the past two days, the crypto market has also caught a whiff of a 'bull' flavor. Not only has Bitcoin continued to rise, breaking through $118,000 and constantly refreshing its historical highs, but ETH has also been reborn, surging to break $3,000 and becoming the leader of the crypto market. Overall, the crypto market is showing a trend of rising across the board, with a total market value reaching $3.7 trillion, increasing by over 1% in 24 hours.
The market enjoys the sweet rain of rising prices but is also puzzled by the reasons for the increase. After all, no one wants to be lured into a false boom to stand guard on a high mountain. But the question seems to lie here: what is the logic behind this round of price increase?
01
Where are the favorable factors?
In fact, finding the real reason behind the price increase is as absurd as proving 'your mom is your mom.' Attribution, in essence, is an erroneous association. However, there must be a cause for every effect, which is a more habitual operational logic in the market. Nevertheless, the changes in the macro environment seem limited, and the driving force of individual events is too small. If we want to link it to causes, perhaps only a multi-factor resonance explanation would suffice.
From the often-discussed macro environment, the outlook is mixed; uncertainty still exists. Countries around the world are still competing over tariffs, and the United States has gradually published tariff-related documents, leaving many nations anxious. However, as tariffs have become a commonly used tool, the global market has developed a sense of familiarity with it; even though the stick is still being waved, it no longer incites panic like it did on Liberation Day. On the other hand, looking back at the United States, according to data released by the U.S. Labor Department on the 3rd, the U.S. non-farm sector added 147,000 jobs in June, with an unemployment rate of 4.1%, down by 0.1 percentage points month-on-month. The employment data is significantly better than market expectations, further reducing the likelihood of an interest rate cut by the Federal Reserve. The latest CME 'FedWatch' data shows a 95.3% probability that the Federal Reserve will keep interest rates unchanged in July.
Fortunately, although the probability of interest rate cuts has recently decreased, the medium to long-term probability of interest rate cuts continues to rise. Besides Trump's recent criticisms on social media, Waller, a prominent candidate for the next Federal Reserve Chair, clearly stated that the Federal Reserve should discuss interest rate cuts at the July meeting. San Francisco Federal Reserve Bank President Daly also expressed support for two rate cuts within the year. Although a more unified opinion on rate cuts has not yet formed, the division of consensus among committee members clearly reflects that this process is accelerating.
From within the industry, the overall trend of previous favorable conditions continues. From the regulatory perspective, major legislative proposals have made corresponding progress; the Stablecoin Genius Act is just a step away from reaching the president, while the (U.S. Digital Asset Market Clarity Bill) has also started its Senate process. The approval of altcoin ETFs also sees a glimmer of hope. Although the current SEC has not successfully approved any altcoin ETF, according to crypto journalist Eleanor Terrett, the SEC is collaborating with various trading platforms to develop universal listing standards for cryptocurrency ETFs, which is still in the early stages. If the cryptocurrency meets the standards, the issuer can bypass the 19b-4 process and directly submit the S-1 document, allowing the trading platform to launch it after 75 days. This method can save a lot of paperwork and time for both issuers and the SEC.
A new regulatory cycle has opened, giving rise to strong institutional demand. First, the existing Bitcoin and Ethereum ETFs continue to see inflows, indicating a positive attitude from institutions. On July 9, Bitcoin spot ETF saw a net inflow of $218 million, and Ethereum spot ETF saw a net inflow of $211 million, with both recording net inflows for 5 consecutive days and 4 consecutive days, respectively. Secondly, in recent months, the trend of listed companies adopting 'crypto treasury' has been explosive, with companies from the hotel industry like Metaplanet and Murano, and from the cultural and medical industry like Semler Scientific and DDC, even manufacturers and tech companies starting to lay out their strategies, emulating Strategy to build unique cryptocurrency reserve strategies. The reserve scope has expanded from Bitcoin to Ethereum and continues to spread to more extensive cryptocurrencies like BNB, SOL, and XRP, driven by real cash from convertible bonds to stimulate growth in the crypto market. Keyrock statistics show that the group of companies led by Strategy currently holds 725,000 Bitcoins, of which Strategy holds 597,000, accounting for approximately 3.6% of Bitcoin's total supply.
From the perspective of external events, foreseeable interest rate cuts, a regulatory open cycle, and a frenzy of institutional buying have jointly pushed the fundamentals in a positive direction. However, from a data perspective, the reasons for the price increase are more intriguing. Although both BTC and ETH have broken new highs, the increase is not accompanied by a significant rise in trading volume, which remains quite average. On the other hand, the data regarding exchange inventories continues to decline, especially with a noticeable acceleration in the past week during the price increase. Correspondingly, the number of long-term holders is increasing. ARK Invest's latest (Bitcoin Monthly Report) points out that the total amount of Bitcoin held by long-term holders has reached 74% of the total supply, marking a new high for the past 15 years.
From this perspective, the reason for the price increase seems quite simple—there are fewer sellers. Buyers are gradually increasing, but those willing to sell are decreasing, and some sellers even tend to hoard coins, leading to price increases without a corresponding rise in volume. The turnover rate data also illustrates this point, as the 24-hour Bitcoin turnover rate has reached a new high for the past 7 days, but it is only 3.51, indicating limited trading activity. However, from a positive standpoint, low activity and concentrated holdings may indicate stronger performance. From a support perspective, the current Bitcoin holding range has further increased, reaching $104,000 to $108,000. Glassnode's report expresses a similar view, stating that the current rebound in Bitcoin's price is primarily driven by leveraged funds, with insufficient spot demand. The core reason is that various investors are strongly accumulating, continuously tightening supply, leading to reduced market volatility and making the market unusually sensitive to any demand shocks.
02
Is the stock market driving the crypto market?
It is worth emphasizing that the correlation between the crypto market and U.S. stocks is becoming tighter. As shown in the figure below, Bitcoin's market value shows a high positive correlation with U.S. stocks. From the data, in the past two days, both the Nasdaq and S&P 500 indexes reached new highs, coinciding closely with the moment Bitcoin achieved new highs. Furthermore, referring individual stocks to BTC, Nvidia reached a market value of $4 trillion on July 9, reflecting a consistent trend between the crypto and stock markets. This also seems to indicate that risk markets, including crypto assets, are ushering in a new round of easing.
An interesting phenomenon is that while Bitcoin continues to reach new highs, the market's attention is increasingly shifting towards Ethereum's price performance. The reason lies in the fact that Bitcoin has risen to such heights that it has created a divide in price, making it hard for retail investors to reach. In contrast, Ethereum's ecological spillover effect is stronger, and many altcoins take it as a benchmark. Currently, many altcoins have fallen over 80% from their previous peaks, which naturally raises expectations for Ethereum. At present, influenced by staking and RWA and other favorable factors, and from the BTC/ETH exchange rate perspective, ETH is still in an undervalued range. Today, ETH has returned to $3,000, which is also traceable.
Interestingly, the current altcoin market seems to have also appeared in the stock market. With the rise of the crypto market, companies holding tokens have been performing well. As of today, the token-holding stocks have collectively risen, with SOL's 'MSTR' Upexi up over 3.2%, and Ethereum's 'MSTR' SharpLink Gaming up over 8%. Looking at companies that hold tokens, many of their main businesses are relatively mediocre, relying solely on the premium of token net worth, becoming another manifestation of 'altcoins.'
On the other hand, compared to the previous passive observation, this wave of crypto price increases has had significant effects on both A-shares and Hong Kong stocks. The stablecoin concept is thriving in the U.S., and naturally, A-shares and Hong Kong stocks will not miss this hotspot. Since June, the stablecoin concept sector has been exceptionally active, with notable increases in stocks such as Jida Zhengyuan, Huafeng Super Fiber, New Wisdom Software, Sifang Jingchuang, and Hengbao Co., Ltd. The stock of Puxing Energy surged over 280% in a day due to news of a 'subscription for A-series preferred shares issued by HashKey Holdings,' closing with a 141% increase, reflecting the market's enthusiasm for stablecoins and digital currencies. Just yesterday, the Shanghai Municipal State-owned Assets Supervision and Administration Commission held a study meeting focusing on the development trends and response strategies of cryptocurrencies and stablecoins. The commission's secretary and director, He Qing, pointed out the need to adhere to innovation-driven approaches, maintain sensitivity to emerging technologies, and strengthen research and exploration of digital currencies. It can be foreseen that the attention of local governments in China may provide more room for speculation and narrative around the stablecoin concept.
03
Are there still controversies in the future market?
Returning to the topic, whether it's hype or speculation, under the combined effects of macroeconomic recovery, favorable regulations, parallel stock markets, and institutional demand, the crypto market is objectively showing an upward trend. The subsequent direction of the market has also become a hot topic of discussion.
The vast majority of institutions and traders hold a very positive view, especially regarding Ethereum. Today, LDCapital founder Jack Yi posted on social media, stating that Ethereum's breakthrough of $3,000 marks the official start of the crypto industry's bull market. He emphasized that since $1,450, he has repeatedly published research reports, strongly encouraging investors not to short.
Bitwise CIO Matt Hougan stated that the rise in Bitcoin's price is mainly due to relentless demand meeting limited supply, along with significant purchases by companies and ETFs. Additionally, he expects Bitcoin to exceed $200,000 by the end of the year, with institutional and corporate funds accelerating to drive prices significantly higher.
Trader Eugene also expressed in his personal community, 'In history, Ethereum has only broken through $2,800 three times, and each time after the breakthrough, the price quickly surged to around $4,000. History does not simply repeat, but often has similar rhymes. I will continue to hold my long positions, preparing for a crazy journey.' Trader AguilaTrades was more direct, increasing his Bitcoin long position on Hyperliquid to 3,000 BTC.
Of course, in the face of the impending bull market, retail investors, who have been educated countless times, are showing a very cautious attitude. Some even express concerns that such a sudden and high-intensity rise may suggest a short squeeze. From Coinglass's funding rate data, it appears that mainstream exchanges maintain a benchmark rate of around 0.01%, indicating that the market has not yet reached a universally bullish sentiment.
Being cautious in today's market is definitely a good thing, but from the perspective of internal and external mechanisms overlapping, the probability of crypto assets entering a new cycle in the second half of the year is significantly increasing. The long-anticipated bull market may be around the corner, but whether everyone's assets will return as they did in the last bull market still remains a big question mark.
