Crypto Market Weekly Report: Review and Outlook of BTC and ETH Trends

This week, the crypto market showed an overall downward trend. Bitcoin was significantly affected by the compensation distribution incident, resulting in a substantial decline. The volatility of Ethereum has gradually decreased, indicating that the negative impact related to spot ETFs is fading, which is beneficial for its long-term price trend.

Important Event Review

Compensation distribution process

Compensation work is ongoing, and this week we continue to transfer BTC from relevant addresses to exchanges in preparation for payouts. Currently, there are approximately 32,899 BTC remaining in the address. Although the price of BTC did not fluctuate significantly in the initial phase of the compensation plan, as other uncertainties increased and market purchasing power declined, this event began to affect the price.

Federal Reserve monetary policy

This Thursday, the Federal Reserve announced that it would maintain the interest rate at 5.25%, in line with market expectations. The Fed Chairman hinted in a subsequent speech that a rate cut in September was possible, which also aligned with market expectations. This led traders to fully price in a rate cut in September and raise the expected cut from 25 basis points to 50 basis points. As a result, U.S. stocks rose, and U.S. Treasury yields fell across the board. However, this also caused the originally limited liquidity to flow from the crypto market to the stock and bond markets, resulting in insufficient liquidity in the crypto market, decreased purchasing power, and a situation where U.S. stocks rose while cryptocurrencies fell.

The geopolitical situation is tense.

On July 31, a senior leader of a certain organization was killed in an airstrike in Tehran. This incident may further exacerbate the instability in the Middle East region. Analysts generally believe that if Iran intervenes directly, the United States could be drawn into the conflict. Following the news, US stocks generally fell after opening, while oil and gold prices rose in the short term.

Overview of the Small-Cap Cryptocurrency Market

Overall Performance

This week, the market fear index has dropped to 12%, indicating an extreme fear phase, a significant decline from last week's 42%. This is mainly influenced by factors such as macro and policy uncertainty, escalation of geopolitical conflicts, and ongoing compensation events. Especially after the Federal Reserve hinted at a rate cut in September, market liquidity began to flow towards U.S. Treasuries and U.S. stocks, resulting in further reductions in the already limited crypto market liquidity and a decrease in purchasing power. These factors have a significant impact on smaller coins, leading investors to tend to avoid risks and adopt a wait-and-see attitude.

price performance

This week's gainers list did not show a significant sector concentration characteristic, with rising tokens scattered across various sectors, and the gains are all lower than last week, indicating a substantial correction in the overall small-cap market.

popular theme

According to social media data, the hottest topic this week is public chain projects.

Important Events Preview for Next Week

• August 6: Asia Blockchain Summit; A trading platform's settlement hearing with the U.S. Commodity Futures Trading Commission.
• August 7: The Democratic Party of the United States will determine the presidential candidate.
• August 10: VeeCon 2024 Conference
• August 11: FORESIGHT 2024 Hong Kong Summit

Market Outlook

1. Bitcoin: Compensation distribution continues, along with recent increases in macro uncertainty and the market's full pricing of a Fed rate cut in September, leading to liquidity flowing from the crypto market to the stock and bond markets, further weakening market purchasing power. It is expected that Bitcoin may continue to experience wide fluctuations next week.

2. Ethereum: After the approval of the spot ETF, the market continues to "sell the news." A certain fund is still heavily selling its ETH holdings. Although the selling volume has decreased, there is still a daily sale of about 40,000 coins, putting significant selling pressure on Ethereum. Coupled with insufficient market liquidity, weakened purchasing power, and overall market sentiment being low, this has led to a considerable pullback in Ethereum.

3. Small-cap coins: Due to increased market uncertainty, along with the impact of the decline in ETH prices and overall poor market performance, investor sentiment has significantly declined, leading to more cautious investments in various tokens. At the same time, the market lacks new hot topics or events, and it is expected that the small-cap coin market may still follow the overall market trend next week, making it difficult to see an independent market scenario.