This article is only a personal opinion on the market and does not constitute investment advice. If you operate according to this, you will be responsible for your own gains and losses.
Beijing trader: On-chain data user, trend trader.
1. Who owns the pricing power?
The high trading volume on the first day of the BTC spot ETF listing undoubtedly demonstrated the high liquidity of the US stock market—far exceeding the liquidity of the coin circle. The other side of high liquidity is the reduction of volatility. Because the market can accommodate a larger volume of buying and selling orders, the future large daily fluctuations in BTC prices should become less frequent (however, the internal manipulation within exchanges is still unavoidable, which is related to the liquidity of each exchange). The volatility during non-US trading hours should also significantly decrease.
Based on the high liquidity of the US stock market, the pricing power of BTC has been taken over by centralized institutions (those with more money have the power of speech). BTC has become a slave to the centralized world, and the narrative of being the "decentralized world currency" has become increasingly untenable, the tragedy of BTC. Although it may not work as a world currency, there is still a narrative space for it as a scarce electronic gold. However, another cost of becoming gold is the significant reduction in volatility. Just look at the intraday volatility of gold, 2-3% is rarely seen.
2. Is there still a halving market?
The biggest bullish factor has already materialized recently, and many people have started to talk about the halving market again. Is there really still a halving market? Miners used to be a group with significant influence on market pricing, and the halving was a narrative theme dominated by the miner community. But now, the remaining BTC to be mined is less than 10%, and it is not mined all at once, so it has no impact on the market at all. Miners almost no longer have an impact on market pricing, so the so-called halving market is more of a macro coincidence or even non-existent.
3. What is the next market theme?
But every market trend will have a main theme (nothing rises without reason), so if there is no halving, where is the next theme? Most of BTC's real-world applications are still linked to illicit activities, so there is a clear distinction between "black" and "white" BTC. Some are used as a medium for illicit transactions, while others are held by normal hodlers or used for speculative trading. Why are the BTC spot ETFs that have been approved settled in cash rather than physically delivered? Because physical delivery may make it easier to launder "black coins". Cash trading, combined with the oversight of custodian institutions (banks and exchanges), presents certain obstacles for illicit BTC to enter mainstream circulation.
Where is the next market theme? Until its own applications are restricted and its technological development does not have an irreplaceable connection with the real world, it probably only has relevance at the level of a liquidity-bearing asset. Therefore, it can be inferred that there are two main themes in the future: the incremental capital brought by ETFs and BTC's reaction to interest rate cuts.
The first theme, from the perspective of a practitioner in the financial industry like the Beijing trader, for a newly listed asset, it is not possible to trade immediately (at least there are requirements for the scale, trading volume, liquidity, and market performance of the underlying asset. Retail investors do not consider these, but for any substantial capital, these are considerations). The decision-making process of an enterprise takes at least a couple of months, and needs to be repeatedly justified. The investment research analysts proposing the plan may be very confident, but many old folks who have decision-making power in investment institutions may not be so confident. Especially for large investment institutions, the more funds they manage, the lower their risk appetite, and they are more inclined to stable 5% returns rather than a 50% return with significant drawdowns during the process. BTC can diversify the investment portfolio, but even if it can be invested, it is not possible to allocate a large amount of capital to invest in BTC, as it would cause significant fluctuations in the net asset value of the investment portfolio. It does not meet the requirements of large institutions. Therefore, it is certain that the listing of ETFs will bring in additional funds, but it may not be as immediate as everyone expects, and the inflow of funds itself is also a slow process. It is even less likely that there will be a large influx of funds from large institutions at the beginning of the listing.
The second theme. Regarding interest rate cuts, it is more of a game between the Federal Reserve and the market. The actual process of interest rate cuts may not be consistent with market expectations. If US economic data shows strong resilience, the rate cuts will come later and be smaller than expected. If the economy can continue to grow with minor rate cuts or even without cuts, then there is no need for further cuts. Rate cuts are due to economic recession, and economic recession itself is a negative signal. The liquidity release brought about by rate cuts is a process, and it is only after reaching a certain level that it will provide support for the economy and price increases. This is also why rate cuts are always followed by declines. Essentially, it is because the economy can no longer bear it that rate cuts are made, and the fundamentals are already weak. There is more macro-level gaming and greater uncertainty, so it is more repetitive.
Therefore, based on profit-taking after the bullish factors have materialized, the slow entry of institutional funds after the ETF listing, and the disparity between interest rate cut expectations and reality, the Beijing trader does not believe that there will be a trend of brief pullback followed by a one-sided uptrend in the coming year. The most probable trend is probably just repeated large fluctuations.
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