This article will summarize some hidden events in the market over the past two months and highlight the positive factors that may be overlooked, looking forward to the main storylines that may emerge in the second half of the year.
(Background:
Learning from “bear market investment”: identifying the best opportunities and making good use of the additional value of the bull market.)
Contents of this article:
BTC spot ETF inflows turn positive
Cryptocurrency regulation shifts focus & Ethereum spot ETF accelerates
Traditional Web2 players accelerate their presence in Web3
Large payment/financial institutions return to the market
Conclusion
In the past two months, although there have been continuous hot events such as memes and top project airdrops, the market has been in a paradoxical and sluggish atmosphere. The sound of bears seems faintly audible, while the footsteps of bulls are uncertain. Market collapses and restarts seem to happen in an instant.
This article aims to explore and summarize some hidden events in the market over the past two months, while looking forward to the positive factors that may be overlooked and envisioning the main storylines that may emerge in the second half of the year.
The market always tends to overestimate the short-term effects of new things and underestimate their long-term influence. For the Bitcoin spot ETF, which has been launched for nearly half a year, there is a signal worth noting recently:
According to SoSoValue data, the Bitcoin spot ETF has been experiencing a new wave of capital inflows since mid-May, lasting for nearly a month. On June 4th, it reached a historical high of $886 million, second only to March 12th’s $1.05 billion.
Although there has been a continuous decline since last week, the overall situation has clearly reversed compared to April and May.
As of June 21st, the net asset value of the Bitcoin spot ETF was $55.55 billion, with a net asset ratio (market value-to-total market value of Bitcoin) of 4.39% and a cumulative net inflow of $14.56 billion.
Against the backdrop of the 2024 election year, both the regulatory and financial aspects have shown a positive macro environment, brewing a new round of bullish catalysts (recommended reading: “Trump and Biden are vying for Bitcoin, is U.S. cryptocurrency regulation about to shift?”).
First, on May 22nd, the “21st Century Financial Innovation and Technology Act” (FIT21 Act) passed the House of Representatives with 279 votes to 136 votes, and the U.S. Securities and Exchange Commission (SEC) officially approved 8 Ethereum spot ETFs’ 19b-4 forms on May 24th.
This means that the stance of U.S. regulatory agencies has shifted from being tough to softening, especially when the expectation of Ethereum ETF’s approval nodes has been greatly advanced. Interestingly, although the attitude change and approval speed of U.S. regulatory agencies this time exceeded expectations, it seems that there were actually some traces beforehand:
At least as early as when Ethereum was around $3,000, whales such as Justin Sun had started accumulating ETH chips and firmly going long on the ETH/BTC exchange rate, which seems to indicate that individuals/institutions with keen senses had already made early layouts.
Directly, ETH’s performance in the secondary market has also swept away its previous decline and gradually started to strengthen. The most noticeable change is the ETH/BTC exchange rate. Since October last year, ETH has been declining compared to BTC, and the ETH/BTC exchange rate has fallen from above 0.064 to below 0.045.
Since mid-May, the ETH/BTC exchange rate has started to break the downward trend, surpassing the 0.05 and 0.055 marks in the past month, reaching a recent high of 0.058, showing overall strength.
On June 6th, Robinhood announced the acquisition of cryptocurrency exchange Bitstamp for $200 million, expanding its reach beyond the United States. The two parties have reached an agreement, but it still requires regulatory approval. Compared to NXC’s acquisition of a subsidiary of Korean company in 2018 for $400 million, the acquisition price is half, making it a great bargain.
As is well known, Robinhood is one of the most commonly used stock and cryptocurrency CEX platforms in the United States, with 11 million monthly active users. Its popularity in the cryptocurrency trading field is even higher than Coinbase. In the first quarter of this year, Robinhood’s transaction-based revenue increased by 59% year-on-year to $329 million, with cryptocurrency revenue reaching $126 million, a 232% increase, showing strong performance.
Founded in 2011, Bitstamp is considered one of the cryptocurrency CEX platforms with higher compliance. Its business spans Luxembourg, the UK, Slovenia, Singapore, and the United States, and it holds valid licenses and registrations in more than 50 countries/regions worldwide. This can provide assistance to Robinhood’s expansion into other regions for cryptocurrency business.
This is an almost perfect complementary relationship – Robinhood’s current market mainly focuses on the United States, while competitors Kraken and eToro have stronger businesses in Europe. Although Bitstamp’s 4 million users may not be many, the majority are in Europe, making it a huge leap for Robinhood’s expansion in Europe.
It is worth noting that just a month ago, Robinhood received a Wells notice from the U.S. Securities and Exchange Commission (SEC) staff, which involved topics such as the listing of RHC’s cryptocurrency assets, custody, and platform operation. Therefore, the acquisition of Bitstamp will expand Robinhood’s global layout, thus offsetting the impact of strong regulation by the U.S. SEC and ensuring that it always stays in the game.
Furthermore, according to predictions by Fortune magazine, this transaction will not only increase Robinhood’s number of new cryptocurrency customers by around 4 million but also enable Robinhood to offer a wider range of cryptocurrency products to institutional clients:
From the current 15 tokens available in the U.S. market and more than 30 in Europe to over 85 included in Bitstamp. Bitstamp’s diverse services, such as pledging, stablecoins, trading, custody, and major brokerage businesses, will also help Robinhood attract more institutional clients and potentially accelerate its expansion in the European market.
In addition, Binance recently allowed Mastercard users to purchase cryptocurrencies on its platform, and the Binance-branded Visa card has also resumed its use on the exchange. Earlier in March, MetaMask also partnered with Mastercard to conduct the first blockchain payment card test. Marketing materials show that the MetaMask/Mastercard payment card issued by Baanx will be the “first truly decentralized Web3 payment solution”, allowing users to use cryptocurrencies for daily consumption anywhere that accepts bank cards.
This undoubtedly greatly solves the problem of increasing users’ awareness and entry barriers, moving towards a seamless deposit and withdrawal experience (instant fiat-to-stablecoin conversion) and abstracting the user experience for ease of use (account abstraction, approaching the payment experience of Web2). In particular, it bridges the gap between cryptocurrency and offline consumption scenarios, facilitating the establishment of anchors for cryptocurrency assets in a broader asset pool.
Overall, in this market environment of fluctuating ups and downs, there are still many positive factors slowly fermenting. As long as we observe carefully, we can still see confidence.
Although the sound of bears seems faintly audible and the footsteps of bulls are uncertain, in this context, the only thing we can do is to remain cautiously optimistic, observe constantly, and actively participate.