Original | Odaily Planet Daily

Author | How is the husband

Editor | Qin Xiaofeng

Recently, the market has surged, with Bitcoin once breaking through the $35,000 mark, and news about Bitcoin spot ETFs flooding the market. However, the sudden surge in the market has also led to FOMO sentiment.

On the evening of October 24th, the OKX Chinese community and Odaily Planet Daily co-hosted a Twitter Space event to discuss the issues related to Bitcoin spot ETF and the future market trends with several well-known industry KOLs. The guest lineup is as follows: Benson, Partner of OKX Ventures; Macro Analyst Phyrex; Independent Researcher Jason Chen Jian; Trading Desk Moderator Benson Sun; CoFound ofW+ Anonymous Doctor.

The following is a condensed version of the AMA content. For detailed content, please listen to the Space review.

Q1

Odaily Planet Daily: First, please have each guest introduce themselves.

OKXBenson: I'm Benson, a nearly 6-year veteran of OKX. In fact, OKX has many connections with the Bitcoin ecosystem, including the BRC20 craze this year, which we have been strongly supporting.

We at OKX have also done some work related to public indexing and cross-validation for the Ordinals protocol, and have been working with industry leaders such as UniSat to try to create standards for the system. We have also integrated convenient tools related to BRC20 display, issuance, and transfer in our Web3 wallet, to avoid users having to run some tedious tasks such as nodes.

In fact, whether it's the exchange or Ventures, our strategy has always been the same, walking on two legs: CEX centralized business, where we prioritize security and user experience; and on-chain activities, where we hope to lower the threshold for developers or users, and incentivize innovation in more aspects.

Phyrex: I'm Phyrex, and I do some "bricklaying" work on Twitter, mainly sharing some macro data. Today, I hope to share my personal perspective on the application for ETF and the subsequent market trends.

Jason Chen Jian: I'm Jason Chen Jian, and I usually post some project analysis on Twitter.

Benson Sun: I'm Benson, and I mainly share some insights on secondary market operations on Twitter. Actually, my knowledge about ETF is also enhanced through Phyrex's feed to help me improve my industry-related knowledge. So, I will focus more on looking at the ETF from the perspective of a secondary market trader, and how we can maximize profits at the trading level, which is what I mainly want to share today.

Q2

Odaily Planet Daily: Regarding the progress of Bitcoin spot ETF and its impact on the market, how do you assess the bullishness of this news? To what extent can they support the rise of Bitcoin?

Phyrex: I want to make a point first that macro perspectives and understanding of the market cannot determine price trends. Sometimes, we may personally think that certain factors may be unfavorable to the market, but market sentiment may bring about a different result.

First of all, we all know that there is currently no news of any institution obtaining approval for a spot ETF.

In fact, looking at the recent market surge, BTC mainly rises during the major trading hours in Asia, from 8 am to 2 pm every day. The increase in the United States' major trading hours is not particularly significant. At the same time, for American investors, buying BTC may not be something everyone is willing to do, but buying stocks may be more convenient.

From this situation, I personally think the best way to monitor whether someone is front-running the market is probably by observing the changes in Coinbase's stock price. Because Coinbase is basically an important monitoring indicator for all institutions applying for spot ETFs. If Coinbase takes 3.5% from each institution, assuming it is responsible for 10 institutions, it could take 35% of the profits, which may be higher than the profits of any single institution. So, if there is news, Coinbase's stock price is likely to have a good increase, at least not inferior to BTC. Other investment tools such as GBTC and MSTR may also be affected.

Next, which institutions applying for the ETF are more likely to be approved. First, the situation between Grayscale and the SEC, which recently went to court. Grayscale winning this lawsuit has attracted a lot of attention in the market. The last surge happened with the support of the expectation of Grayscale's ETF. Although Grayscale won the lawsuit, the appellate court did not directly approve Grayscale's conversion to an ETF. Currently, Grayscale has re-applied for the conversion of GBTC to an ETF. Although the review time is uncertain, buying GBTC now may be like buying discounted BTC.

Other institutions applying for the ETF include BlackRock and ARK Invest led by Cathie Wood. BlackRock has submitted many applications recently, but this does not mean they will definitely be approved. Currently, SEC Chairman Gary has not made a clear statement, so we cannot be sure whether BlackRock's application will be approved.

In the next three months, by January 10th, the SEC will make a final decision. Because ARK Invest led by Cathie Wood is the last time point for applying for the ETF. We cannot be sure what decision the SEC will make, but if the SEC cannot find new reasons to reject, they may approve BlackRock's ETF and some other applications.

In general, we cannot determine the approval time for the spot ETF, but we can expect that before January 10th, the SEC may approve at least two applications. This may include ARK Invest led by Cathie Wood and BlackRock. Before this time, market expectations may have an impact on the price of BTC. I personally think that if any news comes out, Coinbase's stock price may increase, and investment tools related to the price of BTC may also be affected.

Anonymous Doctor: From my personal analysis of market trend predictions, Bitcoin's current trend is quite strong. Traditional technical analysis cannot provide accurate predictions for its trend. Global assets, including the US dollar, US bonds, and A-shares, are all facing pressure for a pullback, and the market is generally bearish.

I tend to think that there is a high probability of ETF approval in January. According to trading logic, it is generally to buy the rumor and sell the news. The news about ETF has not been confirmed yet and there are expectations. Some institutions have discussed that after the ETF is approved, Bitcoin may reach $50,000 in the short term and $100,000 to $200,000 in the long term. Although the specific timing is uncertain, I think it's just a matter of time.

Overall, it is currently the stage of buying the rumor, and market expectations may be raised around January, and the price of Bitcoin may be higher. But I think January may be the most dangerous time, and I suggest reducing leverage.

OKXBenson: I agree that the approval of the ETF will not be so quick. As an asset class, Bitcoin's cycle theory may need to follow the cycle of monetary assets. If the ETF can be approved in January next year, after several months of preparation, it may officially launch in April or May, which would be a reasonable path. From the perspective of investment institutions, we not only see Bitcoin as an asset, but also hope that it can become an entire ecosystem like Ethereum, with practical application value and other infrastructure.

Currently, the Bitcoin ecosystem is relatively incomplete, and there are still deficiencies in actual application and ecological relevance. In terms of the primary market, organizations or entrepreneurial institutions building the Bitcoin ecosystem are relatively lacking. We hope to provide support for resources and value capabilities to the Bitcoin ecosystem. If the ETF can be approved next year, it will be a relatively perfect timeline. In fact, we need to give this process some time to allow the ecosystem to develop gradually.

Q3

Odaily Planet Daily: Regarding the progress of the ETF, in the past two years, many futures ETFs have been approved in the United States and Canada, but spot ETFs have not yet appeared. What are the obstacles in this?

BensonSun: In addition to the United States, many countries and regions have already approved Bitcoin spot ETFs, such as Canada, the UK, and Brazil. However, the holdings of Bitcoin spot ETFs in these countries are relatively small. The holdings of Bitcoin in two spot ETFs in Canada are about 20,000 coins, which is roughly equivalent to one-fifth of Binance's holdings. The holdings of Bitcoin spot ETF in the UK are about $200 million, with Bitcoin accounting for about 70% of the total holdings, which is roughly at the level of over 100 million. Therefore, the idea of a rush of funds entering is somewhat unrealistic.

In addition, as a US trader, besides the channel of Bitcoin spot ETF, you can also purchase other Bitcoin-related assets through other means, such as MicroStrategy (MSTR), GBTC, and purchasing through Coinbase. Therefore, I personally think it is not very realistic to expect a new surge of funds after the approval of Bitcoin spot ETF.

I think we should return to the fundamentals, focus on external interest in Bitcoin, rather than internal speculative sentiment. I think from a macro perspective, the current situation does not strongly support this speculative sentiment. However, reflexivity in trading is strong, so fundamentals may not be that important, and sentiment is very significant. Traders need topics to drive the market.

I think Bitcoin's trend is more influenced by the amount of funds, rather than by innovation trends like Ethereum. If the United States, as the world's largest financial market, approves the Bitcoin spot ETF and lists a spot ETF, it has already gained the most liquid entry point in the market. Therefore, I think it is a new chapter for Bitcoin now.

The space for Bitcoin's price discovery is not as large as before, so I have been telling my partners to seize the opportunity now, because in the next Bitcoin cycle, it may not be as favorable for retail investors.

In addition, I noticed that the position data of the Chicago Mercantile Exchange (CME) is very special. In previous market trends, when Bitcoin was at a critical position, the holdings of mainstream exchanges in the crypto circle often showed a similar situation, but this time is different. The holdings of exchanges like Binance did not significantly decrease, while the holdings of CME have been continuously increasing, even approaching 100,000 coins. This is a situation that has never occurred before. Although many short positions of mainstream exchanges were liquidated, the holdings of CME were not greatly affected. Therefore, I think everyone should pay special attention to the position data of CME.

I noticed the Commitment of Traders report (COT) from CME, where one type of trader has a very strong ability to go long, and their accuracy is very high. Basically, as long as they close their positions, their trades are almost at the highest point in the market in the past year and a half. Therefore, I personally think the end of this market trend may be observed from CME. The holdings of CME have been continuously increasing before this market trend.

If the Bitcoin spot ETF is really approved, you can pay attention to Coinbase, because Coinbase may benefit from it regardless of whether the Bitcoin spot ETF is listed. In addition, GBTC still has a discount, so you can profit from the rise in the price of Bitcoin and also from the convergence of the discount. Therefore, I think this is a direction worth paying attention to.

Finally, I want to emphasize that as a participant in the secondary market, you should seize the opportunities to make profits, rather than focusing too much on defining and predicting the bull market. Because it is difficult to accurately define the bull market in advance, we can only observe the past through the rearview mirror. We can formulate trading strategies and seize the opportunities we can grasp.

Q4

Odaily Planet Daily: Regarding the future market trends, what are your expectations? Additionally, next year Bitcoin will undergo a halving event, what impact will the halving event have on the market?

BensonSun: I personally don't like to predict trends because trends are observed as they unfold. But if I have to say when this market trend and cycle will end, I have a few criteria to consider.

First is that the funding rate on Bybit and BitMax has been maintained at 0.01% for a long time. Usually, once the funding rate is maintained at the 0.01% level for a long time, it may be a signal of a top.

The second criterion is to pay attention to the position data of CME, because it is currently in an abnormal state, with holdings approaching or even exceeding those of the largest exchange in the crypto circle, Binance. So if the holdings of CME suddenly decline while oscillating at a high level, it may mean that the market trend is about to end.

The third criterion is that we can observe from the candlestick chart. If the candlesticks frequently fluctuate up and down, with the main force attempting to rise but quickly being pushed down, it may mean that the main force, after attempting to rise, has found significant market resistance and may turn to distribution.

I would wait for these three conditions to occur simultaneously, and then consider selling spot or closing long positions. However, it is still difficult to say now because market sentiment is very chaotic, and a new game is needed to allow retail investors to participate again before the main force can determine the next direction. I think this requires time to observe and confirm.

Anonymous Doctor: This market trend has indeed left many people empty-handed or bearish, but funds usually flow into the direction with the least combined strength in the market. I think the market trend will continue for a few more weeks. Initially, I planned to build positions overall on October 23rd, 24th, and 25th. However, the rebound trend in the market in the past few days has broken many technical expectations. Therefore, although the funds in the market and macro stablecoins have not changed much, the sentiment of the entire market has formed.

The time periods I am relatively optimistic about are November and January. There may be a new surge in November, followed by a period of volatility in December, as many Wall Street institutions, hedge funds, and market makers may take a break during the Christmas period. In January, there may be a test of a new high, and it may also be the time when the Bitcoin spot ETF is approved.

Bull markets often rise in hesitation, catching people off guard, causing those who chase the rise to miss out, and many people are also afraid to chase the rise, resulting in most people missing the opportunity. I think trading overall this year is difficult, with no clear smooth trends. But the recent breakthroughs show that the overall trend of the bull market is relatively smooth.

Q5

Odaily Planet Daily: Regarding altcoins, especially Ethereum, the exchange rate of Ethereum and Bitcoin on OKX has dropped below 0.05, the lowest point since June 2022. So, does Ethereum have any new development space in the future? How do the guests view the future trend of Ethereum?

BensonSun: In addition to the halving event, the market is very much looking forward to the Bitcoin ETF. So I think the first half of next year will revolve around these two trends. Therefore, I think Ethereum will not outperform Bitcoin for a long time.

In addition, clearing institutions such as FTX and 3AC hold relatively little Bitcoin, so they have a higher proportion of dumping altcoins, and the liquidity of altcoins is not as good as Bitcoin. So this is a combination of three factors.

Currently, my personal position is 99% Bitcoin and 1% Ethereum. Because Ethereum is the leader of altcoins, if it performs poorly, altcoins will also perform poorly, so I am not considering holding altcoins for the long term at the moment. I think it would be better to make decisions based on the market's plot and trends when the time is right to switch to altcoins.

Jason Chen Jian: My view is the same as BensonSun's. In the short term, the conclusions for Bitcoin and Ethereum are relatively clear.

From the results of milestones, Bitcoin has two relatively certain bullish results, including the ETF and the halving event. But based on the current research, the certainty of Ethereum is relatively low, with only the London upgrade. However, the London upgrade has little impact on the price; it mainly reduces transaction fees, and the trading volume and application innovation are relatively weak. Therefore, the impact of the London upgrade on the price is limited.

If we only look at the results, the short-term increase in Bitcoin is definitely greater than that of Ethereum. Because the logic of Bitcoin and Ethereum is different, Ethereum either follows the rise after Bitcoin leads, or it truly can develop innovative applications on the Ethereum chain. For Ethereum, the most important thing is to see if on-chain transactions can increase, in my opinion.

Anonymous Doctor: My personal view is that the exchange rate of Bitcoin and Ethereum may fluctuate within the range below 0.06, and the increase next year may be similar to what several teachers have said.

The driving force of each bull market is usually led by Bitcoin. When Bitcoin rises to a certain extent, funds will overflow into Ethereum, and then be transmitted to other altcoins and DeFi projects.

In next year's bull market, Bitcoin may be seen as digital gold, and most stock investors may not know much about Ethereum. Especially after the ETF is approved, people may be more inclined to buy the higher-priced Bitcoin, because from an investment perspective, buying the expensive one is correct, because the most expensive one must be correct. According to this logic, many large funds may choose to invest in simpler and reflexive assets.

Next year's market may be Bitcoin attracting various altcoins. After one or two months, the market share of altcoins and the market share of Ethereum will climb to a certain extent, so I think next year's market will still be led by Bitcoin, or rather, dominated by the Bitcoin ecosystem.

Phyrex: Personally, I think Ethereum's increase is not bad, mainly because Bitcoin's performance is too strong. We can see that not only the exchange rate with Ethereum has decreased, but also the exchange rate with all other currencies has decreased, because currently, most of the funds are concentrated in Bitcoin.

Especially now, from a macroeconomic perspective, funds are decreasing, not only in the Bitcoin market, but also in the stock market. When funds are limited, they will definitely be concentrated in a few of the strongest capital markets.

Now we can see that many people who used to say they wouldn't buy Bitcoin because its increase was relatively low and the amount of funds was too large, you might need to spend over $3000 to buy 0.1 Bitcoin, and the increase was limited. But now, it is obvious that more retail investors are starting to buy Bitcoin because the increases in other assets simply cannot compare to Bitcoin.

Of course, there are also a few altcoins with significant increases, but relatively speaking, Bitcoin's increase is greater. When the Bitcoin spot ETF is approved, the Ethereum spot ETF will also be approved, which means that the gap between Bitcoin and Ethereum will not widen too much.

Due to the current limited funds, more funds are concentrated in Bitcoin. But when the Ethereum spot ETF is approved, I believe the entire market will be more inclined to choose Ethereum because of its higher stability. Currently, we can see that Bitcoin and Ethereum have the highest stability, and they alternate in their increases.

So I think when the Bitcoin spot ETF ends and it's Ethereum's turn for the spot ETF, the narrative for Ethereum will strengthen. At the same time, I also agree with Jason Chen Jian's point that events like the London upgrade, while bringing some upgrades and benefits, do not help Ethereum's price much. In fact, the help we receive may still come from some benefits in the traditional financial sector.

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