Abstract
Spot ETFs continue to bring incremental funds, and the upcoming U.S. election will boost crypto assets. Meme coins start a new cycle and are expected to become the main theme of the market’s continuous uptrend.
ETFs Continue to Bring Incremental Funds, U.S. Election Boosts Crypto Assets
BTC Spot ETF inflows slow down, market expected to see volatile upsurge
Since the launch of BTC spot ETFs in January, net inflows have exceeded $14 billion, bringing substantial off-exchange funds to Bitcoin. However, the majority of inflows occurred between January and March, with recent inflow rates slowing down.
From a trend perspective, BTC retraced the MA120 in early May and is currently stabilizing above the average, indicating that the market is still in an upward trend. Looking ahead, Tide Capital expects spot ETFs will continue to maintain a momentum of net inflows, bringing long-term incremental funds to BTC and pushing for its volatile upsurge.
ETH Spot ETFs Expected to Boost the Market, Correction Provides Buying Opportunity
Compared to BTC, ETH has shown a slightly weaker performance this year, but the SEC unexpectedly approved ETH spot ETFs in late May, leading to a nearly 20% single-day surge in ETH, once again becoming the focus of the entire market. The next main theme trend is likely to remain highly correlated with ETFs.
It is worth noting that the open interest in ETH futures contracts has reached a historical high of $16 billion. Once the market experiences a correction, it may trigger further deleveraging. However, this does not mean the end of the trend. Tide Capital expects ETH spot ETFs will also bring substantial incremental funds, and the correction will provide a good buying opportunity.
The U.S. election is approaching, further boosting crypto assets
The 2024 U.S. election will arrive in November, and political maneuvering plays an important role in asset prices. Looking at the performance of capital markets during historical election years, U.S. stocks generally show a trend of overall annual increase, which also has a positive impact on crypto assets.
More importantly, U.S. voters’ attention and interest in cryptocurrencies are increasing, indicating a greater impact of cryptocurrencies in the U.S. election. According to recent polls by Grayscale, 47% of voters expect their investment portfolios to include cryptocurrencies.
In view of this, both the Trump and Biden campaign teams are actively embracing cryptocurrencies in hopes of gaining support from young voters. Looking forward, Tide Capital anticipates more cryptocurrency ETFs and more mixed financial products containing cryptocurrencies, ushering in a long-term bull market for cryptocurrencies.
Altcoins exhibit significant PvP characteristics, BTC and ETH remain better choices
Compared to BTC and ETH, altcoins generally show weakness in performance, with a faster rotation speed in the market, demonstrating severe PvP characteristics. Looking at the overall situation of altcoins (TOTAL3), there is still about a 15% gap from this year’s high.
The main reason for this is the lack of funds. In mid-May, the total size of stablecoins reached $167.9 billion, hitting a new high for the year. However, since then, the growth of stablecoins has stagnated, corresponding to the lack of sustained upward movement in altcoins.
For the dilemma of altcoins, perhaps only when BTC and ETH break through historical highs with strength can it be resolved. At that time, the market’s risk appetite will significantly increase, more retail investors will flock in, and altcoins that appear cheaper than BTC and ETH will be favored by funds, thus initiating a new round of altcoin season. As it stands, Tide Capital expects BTC and ETH will continue to lead the market.
Meme Coins Start a New Cycle, Expected to Become the Main Theme of the Market
Looking back at past bull markets, sectors such as DeFi, Layer 1, and GameFi have led the way and become the main theme of the bull market, while the rise of meme coins often signals the end of the bull market. However, this bull market is different from previous ones, as mainstream VC tokens are criticized by the market, while meme coins are favored for their fair, fully circulated, community-centric attributes, leading the rise ahead of other sectors.
Although altcoins as a whole exhibit significant PvP characteristics, meme coins have emerged as winners in this internal battle. Looking at the leading meme coins in terms of market capitalization, their gains in the past 30 days are quite impressive, with funds continuously flowing into the meme sector from other sectors.
Due to the lack of innovation in this bull market compared to the previous one, old mainstream coins have lost some market attention to some extent. Meme coins, with their low barriers to entry, strong communities, easily spreadable culture, and fair tokenomics, have attracted market attention and are becoming the main theme of the market.
Currently, the total marketcap of meme coins has reached $64 billion, accounting for 2.5% of the total marketcap of crypto assets. Among the top 50 tokens, meme coins occupy 5 positions. Tide Capital anticipates meme coins are becoming the main theme of the market, and the ceiling remains high.
Tide Capital
Tide Capital is a research-driven digital asset investment and trading firm. We study macro and fundamentals to capture beta and alpha opportunities from crypto waves to financial tides. Driven by value, we aim to invest in early-stage projects with significant growth potential. Concurrently, we assess market cycles to inform our investment decisions, trading in the public market to achieve returns.
Disclaimer
The information and data presented in this article are obtained from public sources. Any advice and opinions in this article are for reference purposes only and do not constitute investment advice.
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