Title: Blofin Whales' View: War, Gold and Crypto

Source: Blofin

Translation: Lila, BlockBeats

The increase in global uncertainty is one of the main reasons for the continuous improvement in the liquidity level of the cryptocurrency market in the near term, and also an important factor for the recent strong performance of Bitcoin.

Due to the lack of hedging properties, the performance of altcoins depends more on the changes in macro liquidity and the game status of on-exchange funds.

Compared with ETH, altcoins have gained some advantages in liquidity competition, which further adversely affects the performance of ETH.

Bull Market in Geopolitical Crisis

After the release of last week's US non-farm payroll data, the "lower-than-expected rate cut" seems to have gradually been accepted and digested by investors.

This week, central banks led by the European Central Bank will also announce their latest interest rate decisions. Although Europe's performance in terms of inflation is far better than that of the United States, and the expectation of a rate cut by the European Central Bank is higher, considering the weaker influence of the European Central Bank compared to the Federal Reserve, it can be determined that the speed of the return of global cash liquidity to risk asset markets in the future will slow down. For the cryptocurrency market, the bull market may be more "mild and enduring."

However, the reality seems to be different. Since early April, the return speed of cash liquidity within the cryptocurrency market has significantly accelerated. In the past week, the entire cryptocurrency market has gained nearly $3 billion in cash liquidity, and the overall scale of cash liquidity has also returned to the level of the same period in the third quarter of 2022. Influenced by this situation, the prices of BTC, ETH, and other altcoins have all received strong support, and market sentiment has significantly recovered. What has caused the abnormal change in cash liquidity?

Let's take a look at the performance of other assets together. While Bitcoin has set a new all-time high, the price of gold has risen by over 25% in the past 6 months, also breaking historical highs. At the same time, the prices of silver and copper are also approaching their highest points in nearly a year. The rise in the price of gold is usually related to risk aversion. As a long-standing "hard currency," gold is an important hedge when macro uncertainty rises, especially in the context of geopolitical tensions.

However, when we observe the price trends of silver and copper, things become interesting. Silver and copper are important military and strategic materials closely related to weapon production and the defense industry. Therefore, to some extent, the rapid rise in the prices of silver and copper is also another reflection of geopolitical conflicts and macro uncertainty risks.

So, are there more similar clues? Of course! Since the beginning of 2024, the price of crude oil has risen by over 20%. Due to the increased demand and supply chain tensions caused by geopolitical crises, the prices of important strategic commodities such as coffee have also soared.

Risk aversion sentiment is not only reflected in one asset; when uncertainty arises, people will exchange cash for "safe hard currency" or raw materials, which is an important reason for the rise in prices of commodities such as gold, crude oil, and coffee, and of course, also for cryptocurrencies such as Bitcoin.

BTC: Will It Continue to Rise?

Considering the escalation of geopolitical tensions in the Middle East and Eastern Europe, the risk aversion demand of global investors is unlikely to be effectively alleviated in the short term. Therefore, risk aversion sentiment will strongly support the demand for BTC. At the same time, although the speed of expected return of cash liquidity will slow down, it is unlikely that liquidity tightening will occur again. Therefore, the scale of liquidity locked in spot BTC ETFs will remain relatively stable. In the long run, the return of liquidity in the future will also steadily push up the price of BTC.

Traders in the options market also hold similar views. Although the bullish sentiment of investors towards BTC has been slightly weakened by short-term fluctuations, investors' bullish sentiment towards BTC remains stable and dominant in terms of prospects and long-term outlook. However, compared to March, investors' expectations for the medium to long-term performance of BTC have slightly decreased, and the weakening of expectations for a rate cut may be one of the reasons.

Based on the latest distribution of Gamma exposure, as the "asset allocation cycle" comes to an end, the price of BTC seems to show some signs of stability. The price of BTC may receive some support around $63,000 to $65,000. However, if the price of BTC continues to rise, it will encounter some resistance around $74,000, and as the price rises, the resistance will significantly increase.

It is worth noting that the latest implied volatility data shows that traders still hold a relatively cautious attitude towards the performance of BTC. Facing the upcoming BTC halving, although the level of macro uncertainty is relatively low and the pricing of tail risk levels has decreased, traders still expect the 7-day price volatility range of BTC to reach 9.27%, and the 30-day price volatility range to reach 20.74%.

Considering that investors' bullish sentiment is still relatively high, in an ideal scenario, the price of BTC still has the potential to break through $80,000. However, volatility is never one-way; we cannot ignore the possibility of BTC price falling below $65,000.

Traders' caution seems reasonable. In the spot market, although the number of whales holding over 1,000 BTC is still increasing, overall, the number of whales holding over 100 BTC has stagnated, indicating weakening buying power. Overall, although holding BTC in the medium to long term is still a better choice, with the temporary end of the "asset allocation cycle," the rise in BTC price may gradually stabilize.

Non-BTC Coins: Internal Game

Compared to BTC, ETH's luck is not as good. The probability of a spot ETH ETF being approved is gradually becoming slim. Even the most optimistic ETH investors are gradually accepting that the negotiations and games surrounding the spot ETF will be long-term. The performance of ETH depends more on the reconfiguration of internal liquidity in the cryptocurrency market and the changes in macro liquidity levels within the cryptocurrency market.

From a macro perspective, traders remain optimistic about the long-term performance of ETH, benefiting from the expectation of a rate cut. However, similar to BTC, the weakening of expectations for a rate cut has also negatively affected the future performance expectations of ETH, as reflected in the change in ETH futures annualized premium.

Although investors have priced in relatively high price movements for ETH (9.94% for 7 days, 21.5% for 30 days), from the perspective of the latest Gamma distribution, investors are more likely to be concerned about the volatility brought about by a downward trend rather than the volatility brought about by an upward trend. If the price of ETH shows a downward trend, it can only receive some support after falling to around $3,300.

Compared to resistance in the upward range, the support in the downward path seems "insignificant." Unless there are enough positive events in the current market operation mode based on "liquidity reconfiguration," market makers' hedging behavior will make it difficult for the price of ETH to break through and stabilize above $3,700.

Fortunately, ETH whales seem to have slowed down the selling of spot. Under the influence of projects such as Ethena, staking for profit has become a relatively profitable business, and traditional covered call strategies have once again gained favor when the price rise slows down. However, this only means that the whales are temporarily maintaining a "neutral" position in the price game.

For speculators, it seems more appropriate to invest in other coins with greater potential when the price of ETH is weak, further adversely affecting the performance of ETH. ETH's market share once fell below 16%; although there has been some recovery recently, compared to last month, ETH's market share has still significantly shrunk. Considering that the market share of BTC has not changed much in the past month, it is clear that altcoins have gained some advantage in the liquidity competition with ETH.

Overall, holding ETH is not a "bad strategy"; for whales, the rich interest income channels of ETH can still bring relatively stable and substantial returns. However, for investors seeking breakthrough returns, considering the current leverage levels and the relatively low speculative sentiment reflected by altcoins, it seems more appropriate to follow the pace of liquidity reconfiguration in the cryptocurrency market.

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