Highlights of this issue:1. Wall Street financial advisors are waiting for ETF approval2

Highlights of this issue:

1. Wall Street financial advisors are waiting for ETF approval

2. Why does ETH lose color?

01Twitter viewpoint

1. Phyrex (@ Phyrex-NI):The current market is still driven by emotions and is far from a bull market

Although the price of BTC remains firm, as of early morning trading, MSTR fell 4.55%, GBTC fell 3.81%, and even Coinbase fell 4.1%. As we said yesterday, the turmoil in the US stock market may not directly affect the currency market for the time being, but affecting the related industries in the US stock market may be the first step.

Another obvious sign is that the discussion about # Bitcoin spot ETFs has begun to decrease. This round of BTC's rise is undoubtedly driven by the expected positive performance of spot ETFs. However, as GBTC turns to spot ETFs in the short term, there is no hope that BlackRock's actual approval may still take some time. The hot topic seems to be gradually disappearing, and BTC's spot ETFs may not be accepted by investors again in the short term, However, there are still short sellers questioning why there has been no pullback since the end of the bullish market. In fact, we have talked about this situation many times in the past two days, and the current situation is very similar to the situation after BlackRock's first application for BTC spot ETF was exposed on June 17th.

At that time, # BTC also maintained for nearly a month between $30000 and $31000 after breaking through $31000 in a short period of time, and there was no decent positive news during this month. However, there were indeed no obvious negative news during this period, but many of the comments at that time were even more exaggerated. Some said that BlackRock would be approved in July, while others said that internal sources said that approval was inevitable, Just waiting for time. However, it can be seen that these comments have driven many investors who were originally planning short-term arbitrage to show no signs of leaving, and the situation is similar now. Last Tuesday, when we saw the distribution of BTC prices, we saw a total stock of 4.786 million out of $4500, ranging from $25500 to $30000.

And now, three days later, the total stock between this range is 4.317 million. The stock of 470000 BTCs reduced in three days is not much or even small during the price surge, and the daily average short-term profit chip reduction is about 3%. This data also indicates that more investors who successfully took the bottom in this round still believe that there is room for prices to continue to rise, and have not chosen to profit and leave for the time being, This data is basically consistent with mid to late June, so before the sentiment of this group of investors has dissipated, the stable behavior of prices is still good. That is to say, even if there is no further substantial positive, as long as there is no clear negative, the current price can still maintain for a period of time. As for whether it can continue to rise, there is no doubt that there is a need for positive stimulus again.

This is the biggest difference from a true bull market. Bull markets are not entirely driven by emotions, but more by funds. However, the current stage is more like emotion driven funds, where funds are only passively entering due to concerns about short selling and FOMO. However, in reality, there is not that much money, which may return to a dead cycle. If there is enough funds on the market to push BTC above $65000, shouldn't there be enough funds? And this has also become a rhetorical question. Why is the price of BTC only half of its high level, even with sufficient funds? This is because more on the market funds do not care about the so-called short selling. For large funds, deterministic information is more important. Compared to the current increase, the long-term benefits brought by spot ETFs in the future are the most important.

2.0xSea. eth (@ 0xSea):BTC Ecological Depth is Developing

Before 2023, regardless of the size of the institution/fund, buying # BTC may turn around and leave, turning their attention to other ecosystems such as # ETH.

After 2023, especially the first stop for spot ETFs to drive more funds into the market is still BTC. But some investors will find that there are many sub coins/sub protocols to play in Big Cake L1/L2, which will provide good TVL depth and capital precipitation for the BTC ecosystem, just like other public chain ecosystems use TVL as their core indicator.

What impact will this subtle change bring? ProbableNothing

There are more and more related targets, and it is expected that exchanges/information platforms will launch specialized modules. Some of the header protocols and tokens I am following:

L1

Ordinals (BRC-20): $Ordi, $Sats

Improved version of BRC-20: TapProtocol, $- Tap

Atomicals (ARC-20): $Atom

Runes: Not officially released yet

L2

Stacks $STX and its ecological DeFi platform $ALEX

TapootAssets: Currently short of assets

RGB: Currently short of assets, there are rumors that stable coins will be issued on it

3. CryptoChan (0xCryptoChan):Absolute majority of short-term profiteers

The current BTC on chain indicator has reached a new high since October 21. The black line indicator in the figure is # BTC price; The orange line indicator is the ratio of the number of short-term BTC holders in a profitable state on the chain to the number of short-term BTC holders in a losing state.

02 On chain data

@0xCryptoChan:Long term holders continue to accumulate and slow down their growth momentum

The current halving cycle has gradually eased the momentum of the cumulative growth of # BTC long-term holders' chips during the bear market period. Referring to the years 16-17, the future may be a bull process of continuous distribution of BTC long-term holders' chips for up to two years.

@KaikoData:Compared to the US dollar stable currency, the trading volume of the Euro stable currency is still very low

Despite the growth of both the US dollar and the Euro stable currency, the trading volume of the Euro stable currency remains very low compared to the trading volume of the US dollar stable currency.

Interpretation of Section 03

According to Coinmarketcap data, the top five currencies ranked in 24-hour popularity are PEPE, CAKE, BTC, SOL, and SHIB. According to Coinsecko's data, the top five sectors in the crypto market that saw growth were Transport, LaunchZone, Memes, RedditPoints, and KommunitasLaunchpad.

Hot Spots - A New Chapter in Digital Asset Interpretation: Bitcoin Leading the Way, Why Does Ethereum Disappear?

Why has Ethereum performed significantly weaker than Bitcoin this year? From a historical cycle perspective, in the process of the crypto market transitioning from bear to bull, funds will first flow into Bitcoin and then into other sectors; From a short-term perspective, compared to other crypto assets, the recent Bitcoin spot ETF has a significantly stronger stimulating effect on BTC; From the perspective of technological development and narrative, in addition to the original value recognition of "digital gold", Bitcoin has once again developed a new narrative, while Ethereum has further entered a technological bottleneck; From the data on the chain, Ethereum's pledge has slowed down and inflation has rebounded; From a regulatory perspective, Bitcoin's non securities status is clear, and Wall Street has a higher recognition of it. From different dimensions, the reasons for Ethereum's decline will also vary. So what are the most core influencing factors?

Overall, Ethereum's own technological bottlenecks are the main reason for its price stagnation. On the other hand, since the beginning of this year, Bitcoin has successfully sparked a wave of Meme hype through the NFT and BRC-20 protocols, which has further sparked the development boom of Bitcoin Layer2. Due to the extension of the Bitcoin ecosystem, funds begin to flow into the Bitcoin ecosystem after entering it, and many funds begin to stop in the Bitcoin ecosystem, resulting in a corresponding reduction in the traditional capital rotation effect. In addition, with the development of Layer2, many funds also began to flow between Layer2, which significantly reduced the number of transactions on the Ethereum chain and led to a certain rebound in inflation. From a macro perspective, Bitcoin is more favored by Wall Street and the market. Against the backdrop of continuous global liquidity tightening and regional tensions, Bitcoin has also experienced a certain degree of bloodsucking effect, which further leads to a weak performance of Ethereum.

04 Macro analysis

Empire Podcast: Many financial advisors and their clients are waiting for ETF approval

On October 26th, Bitwise submitted its amendment to its Bitcoin ETF application. In the Empire program, Bitwise CEO Hunter Horsley and CIO Matt Hougan delve into the world of ETFs together. They will discuss the doubts and misunderstandings surrounding early ETFs, why the approval of Bitcoin ETFs may change the adoption and maturity of cryptocurrencies, and the security and regulatory levels of ETFs.

1. SEC's Concerns over Special Currency ETFs

Jason pointed out that unlike traditional financial markets, the cryptocurrency market is a 24/7, 365 day market. When we consider ETFs in the United States, although there are international participants, all transactions are settled in a more controlled environment, while cryptocurrencies operate globally, which may raise concerns for the SEC.

Matt explained that the SEC has always been very concerned about market manipulation issues. In order to approve an ETF, the SEC hopes to monitor the market and detect market manipulation.

In the stock market, if someone tries to manipulate the market, the SEC can inquire with the New York Stock Exchange or Nasdaq to investigate the facts. In the crude oil market, if someone attempts to manipulate crude oil prices, the SEC can investigate who is trading crude oil futures and file a lawsuit. But in the field of cryptocurrencies, the long-standing challenge has been the lack of a clear institution or platform to inquire about detailed information about these transactions.

Matt pointed out that the first application for a Bitcoin ETF was submitted on July 1, 2013. But if we look honestly at the market at that time, it was not suitable for Bitcoin ETFs. At that time, there were no institutional custodians, no trading companies could conduct market making in them, and the market was more susceptible to manipulation. In the first 5-7 years, the reason why the SEC rejected Bitcoin ETFs was reasonable.

Matt emphasized that compared to 2013, the current market is more mature and institutionalized. Now, you can monitor the CME Bitcoin futures market, and companies like BlackRock are seeking a monitoring sharing agreement with Coinbase. Matt believes that these concerns about market manipulation have been resolved and hopes to see if the SEC agrees with this view in the coming months.

2. Analogy of gold ETFs

Matt pointed out that before the launch of gold ETFs, gold was considered a non mainstream asset, and people would hoard gold bars and hide them under mattresses, making it not the preferred asset for mainstream institutions.

However, the launch of gold ETFs has completely changed this phenomenon. Gold has become more institutionalized and seen as a stable and reliable asset. Matt mentioned that the price of gold has risen for 11 consecutive years, which is unprecedented in modern history. This rise is related to the launch of gold ETFs and subsequent large inflows of funds. The launch of gold ETFs has transformed gold from a marginalized asset into a widely accepted asset by mainstream institutions. Pensions, mutual funds, and other mainstream financial products have begun to include gold as part of their investment portfolios.

Matt predicts that Bitcoin ETFs will also have a similar impact on the encryption market. He believes that the launch of Bitcoin ETFs will mark a new era in the crypto market, with a "pre ETF" and "post ETF" market.

Matt mentioned that the launch of gold ETFs has led to a large influx of funds into the gold market, which has not affected other forms of gold investment, such as gold bars and jewelry. He believes that the launch of Bitcoin ETFs may also lead to a large influx of funds into the cryptocurrency market, without affecting other forms of Bitcoin investment. People underestimate the long-term impact of Bitcoin ETFs on the market. He predicts that in a few years, people will see the profound impact of Bitcoin ETFs on the market, which will completely change the face of the encryption market.

Hunter mentioned that many financial advisors are waiting for the approval of Bitcoin ETFs, and they believe that the launch of Bitcoin ETFs will be the most important development for traditional investment experts in the cryptocurrency industry. But at the same time, they also express concerns about investing directly in Bitcoin or other cryptocurrencies, as this requires them to manage private keys, wallets, and other technical details that they are unfamiliar with or do not want to handle. In contrast, they prefer simple and familiar investment methods, such as ETFs that can easily be included in clients' investment portfolios and traded through traditional brokerage accounts.

Hunter emphasizes that Bitcoin ETFs provide financial advisors with a simple and secure way to invest in Bitcoin for their clients without requiring them to directly process cryptocurrencies or learn new technologies. Hunter believes that the launch of Bitcoin ETFs will allow more financial advisors and their clients to enter the encryption field.

3. The reality of cryptocurrency investment

Matt described the three main components of American wealth: independent retail investors, financial advisors, and institutional capital (such as pensions and endowments). The wealth distribution ratio of these three parts is approximately: 20% independent retail, 40% consultants, and 40% institutions.

Matt pointed out that the crypto market, which has grown from zero to $1 trillion, is mainly driven by independent retail investors, which is the smallest of the three parts. Although this part may not have fully penetrated yet, the other two parts have hardly grown.

The launch of a cryptocurrency ETF will allow the other two components (consultants and institutions) to gradually reach the level of independent retail investors. Because ETFs provide a simple and familiar way to invest in cryptocurrencies without directly dealing with technical details.

Although independent retail investors often receive media attention, they are actually the smallest part of the market. Most of the funds are invested in financial advisors and institutional capital, which is also the goal of ETF services.

Hunter emphasized that the challenge faced by financial advisors is how to provide clients with a comprehensive investment portfolio while also paying attention to the latest developments in the crypto market. They need to establish relationships with a range of partners to ensure that they are always aware of the latest market trends.

05 Selected Research Reports

Riyuexiaochu:At present, the probability of peaking is relatively low

After three days of hot weather, the market began to cool in the middle of last night, and some currencies also experienced severe declines. But I think the probability of btc reaching its peak at this position is relatively low, and even the probability of a slight adjustment is not high. Unless there is a significant bearish situation. And our operation is based on probability, while risk control is done to prevent small probability events.

2. The market is still relatively strong. There are two main manifestations:

1) FTX has started to substantially sell coins, and its current holding value is still very large. But the market response is not very strong.

2) The US stock market has fallen sharply in the past two days, but the BTC has not experienced a decent decline despite its previous huge gains.

3. However, there are still problems in the market

1) There were no explosive coins. In a good market, one or two explosive coins often appear, rising to a surprising level. Open up imaginative space for the rising currency in the future. The market is currently experiencing the strongest rise in TRB, but it started rising two months ago. It wasn't this wave of market trends that started to rise. The rise in the past few days has mostly been for currencies that have fallen very severely. It is more like a self rescue of arbitrage funds, but when it reaches an important pressure level, it may need to be shipped, which is worrying about its sustainability.

2) There are no hot spots in the sector. We haven't seen the focused hype sector yet. There will be different voices in the market, such as btc ecology, gamefi, rwa, and so on. But now, the good news is all about pulling oneself and not focusing on it. In the current stock market, with limited funds, it is best to focus on one sector and create a profit making effect in order to attract more short selling funds to buy.

4. Regarding the upgrade of Cancun

This morning, the news was released that the Cancun upgrade cannot occur this year. However, there has been no significant decline in ARB and OP, indicating that there is not much funding due to Cancun upgrading its holdings of ARB and OP. But for me, it has caused a lot of confusion. Because half of my positions are held by them, now I have to consider adjusting my positions. But the problem is, this wave has not had many expected hotspots.

5. Focus on two new opportunities

1) FTX, there has been new news recently, and it is reported that it may be taken over by the end of this year. I think the probability of FTX restarting is relatively high, and the key is how, when, and how to handle debts. On the one hand, FTX has compliant brands in many places, and on the other hand, as it escalates into a confrontation between China and the United States, the United States will need an exchange that can compete against CZ. Recently, FTX's assets will be sold, and these will become news time and time again. The total market value of FTT is currently $460 million, with most of it frozen. Only 10% of the chips are on the Coin On Exchange, which means a circulating market value of around 40-50 million yuan.

2) STG. Now it's starting to spread that layerzero wants to issue coins again. It is said that this time it must be true again. So STG is worth paying attention to.

6. Operation plan

My personal position is relatively heavy, so I do not have an overall position. Maybe we will adjust our positions and move some of the upgraded positions in Cancun to other places. If the position is light, a pullback can buy some.

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