Skyrocketing! The crypto market picked up overnight, who ignited the fire behind it?
After months of silence, the crypto market finally ushered in a round of general rise after a long absence.
On August 19, in the US market, Bitcoin quickly rose from a low of about 64,100 US dollars during the day, and recently hit 69,000 US dollars again. At the beginning of June, Bitcoin fell below 70,000 US dollars and returned to around 69,000 US dollars. Since then, it has fluctuated more than 60,000 US dollars for most of the time. Now, after a lapse of nearly 3 months, it has once again reached this position, and market sentiment has clearly heated up. At one point, Ethereum rose by about 8.6%, and altcoins such as XRP and SOL all rose by more than 6%. The Fear and Greed Index also rebounded from the extreme fear range to a neutral fear level of around 40.
This wave of markets is coming very fast, but it's not without any signs.
Over the past few weeks, Bitcoin has been stuck in a sideways trade of more than $60,000. Prices are falling little, and buying is not strong enough, and the market is waiting for new catalysts every day. As of today, several factors have just come together: the fall in US bond yields, the weakening of the US dollar, improved US regulatory expectations, and the continued absorption of funds by large players on the chain have finally ignited the market.
The first fire came from the US Treasury bond market
The news that has had the biggest impact on the market today comes from the US Treasury.
The US Treasury Department announced that it will increase the liquidity support repurchase scale of 10-year to 30-year treasury bonds. The maximum limit for a single operation will be raised from 2 billion US dollars to at least 4 billion US dollars, which will be implemented on September 9.
After the news came out, the yield on US long-term treasury bonds fell rapidly. The 30-year US Treasury yield fell by nearly 10 basis points, the 10-year yield returned to around 4.65%, and the US dollar index also weakened markedly.
This is important for Bitcoin.
US bond yields have remained high for some time. The 30-year US Treasury yield was once close to 5.34%, a multi-year high. As far as global capital is concerned, when US Treasury bonds can provide a yield of about 5%, capital is naturally more cautious; there is not much need to chase the volatile Bitcoin.
Now that long-term yields have begun to decline, the US dollar is weakening at the same time, market concerns about liquidity have temporarily eased, and high-risk assets are also taking a breather.
Jeremy Stretch, head of foreign exchange strategy at CIBC, believes that the actions of the US Treasury indicate that the policy level has noticed the pressure on the long-term bond market and the impact of this pressure on other assets.
Second catalyst, new draft SEC token issuance
The US SEC proposed a new draft rule called “Regulation Crypto Assets” on August 18. It plans to establish a more targeted issuance system for some investment contracts involving crypto assets, including a startup issuance exemption of up to $5 million and a financing exemption of up to $75 million every 12 months.
The key benefit is the “safe harbor” rule. Simply put: In the past, many crypto projects could be treated as “securities” by the SEC as “securities” and faced fines and removal at any time. Now, the draft provides a clear way out: the project party has completed (or officially stopped) the promised development and operation, and after reporting to the SEC, this coin is no longer considered a security. In the future, everyone will be able to trade and trade more freely, and there is no need to worry about sudden regulatory action. In addition, early projects can raise up to 5 million US dollars, and the procedures are much simpler.
One sentence: The US has finally drawn a clear “graduation line” for crypto projects to reduce uncertainty and facilitate project implementation and transactions with ordinary investors.
However, it is still only a proposal, which does not mean that the US crypto regulation issue has been completely resolved. However, market transactions have never been just reality, but also expectations. Crypto concept stocks such as Coinbase and Circle also clearly strengthened on the same day, indicating that this part of the expectation was not only reflected in currency prices.
Giant whales have been collecting money for a long time
Today's surge seems abrupt, but from an on-chain perspective, big capital movements didn't come out until today.
CryptoQuant data shows that over the past 60 days, large Bitcoin holders — which excludes exchange and mining pool wallets from the statistics — have increased their net holdings by about 43,000 BTC. Based on the previous price of around 64,000 US dollars, the value is about 2.75 billion US dollars; if calculated at around 69,000 US dollars today, this batch of bitcoins is already close to 3 billion US dollars, and some of the large capital has slowly begun to be received.
Real demand for goods is also picking up.
According to recent CryptoQuant research, Bitcoin's 30-day “spot demand” has quickly recovered from negative about 206,000 BTC on July 23 to negative 5,000 on August 18. It is only one step away from recovering to a positive value, and the closest to a correction since the end of February.
This indicator measures whether there are actually people in the market who are really willing to buy coins with money.
CryptoQuant's historical backtesting shows that when this demand indicator changed from negative to positive, Bitcoin's median increase of about 18.1% over the next 60 days, with an increase probability of about 78%; if at the same time, in an undervalued environment similar to the current one, the median increase was about 23.3%, and the historical win rate rose further to 87%.
This shows that real cash purchases, which have been lacking in the crypto market for the past few months, are gradually coming back.
Glassnode observed a similar phenomenon.
The agency recently stated that “strong players” are buying back Bitcoin. When profit settlements slow down and so-called “conviction buyers” (conviction buyers) begin to accumulate chips, it is often a characteristic worth watching in the process of bottoming out the market. Glassnode believes that the current structure is similar to the late 2022 bear market, and points out that the biggest increase in the previous round of positions of this category of buyers occurred when Bitcoin fell to around $60,000.
Outlook: Is the cow returning quickly?
Technical analyst Aksel Kibar previously pointed out that the BTC daily line is forming an inverted shoulder structure, and the key neck line is around $66,600. If the price effectively breaks through and stabilizes, based on the pattern, the upper target may point to 76,000 US dollars. Today, after BTC broke through this position, it has clearly accelerated. CoinGlass data shows that short positions of about 1.4 billion US dollars were liquidated in just 4 hours, and bear compensation further amplified the increase.
However, an increase in bottom signals is not directly equivalent to the start of a new bull market.
VanEck's latest Bitcoin ChainCheck shows that 8 of the 12 “capitulation” indicators it tracks have been triggered, and the US spot Bitcoin ETP has re-recorded a net inflow of about US$663 million over the past 30 days. However, historical data also shows that after similar signals appeared, BTC's average earnings for the next 90 and 180 days did not outperform the long-term benchmark, and it often took about a year to actually show its advantage.
In the short term, it also depends on a few variables: whether the position of 68,000 US dollars can actually stand firm and become an effective support, and whether the US bond yield and the US dollar's pullback can continue. The market will also continue to explore clues about the subsequent interest rate path from the minutes of the Federal Reserve's July meeting. Furthermore, whether leading copycats such as ETH and SOL can maintain their relative strength can also help us determine whether this round of risk appetite restoration is only a partial phenomenon or a complete restoration in the true sense of the word.
Author: seed.eth
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