After touching 70,000, it dropped straight to 4,000. Is that how the bull market ends?

Author: Azuma, Odaily Planet Daily

Bitcoin has once again experienced a rollercoaster market.

According to OKX market data, around 21:00 last night, BTC broke through 70,000 USDT for the first time in over a month, reaching a high of 70,050 USDT. However, just as the market speculated whether this would be a precursor to a new all-time high for BTC, it faced a rapid and significant pullback. As of today at 10:00, BTC briefly fell below 66,000 USDT, currently reported at 66,175.1 USDT, with a 24-hour decline of 3.51%.

The situation for ETH is slightly different. Perhaps influenced by the positive developments regarding ETFs and outflows from Grayscale, ETH's upward momentum before BTC broke through 70,000 USDT was not ideal. However, as the market seems to be anticipating a potential inflow/outflow turning point, ETH's pullback has not been too pronounced. As of 10:00, ETH is reported at 3,299.2 USDT, still recording a slight increase of 0.67% over the past 24 hours.

The performance of the altcoin market is relatively noteworthy. Breaking the previous trend of "altcoins not moving when BTC rises, and crashing when BTC falls," during this significant pullback of BTC, altcoins generally did not experience major declines, with most coins' 24-hour declines being smaller than that of BTC. Some altcoins like PEPE, AAVE, and LDO even recorded positive values temporarily.

Alternative data shows that today's Fear and Greed Index, although still in the "Greed" state, has dropped from 74 to 67, indicating a noticeable decline.

In terms of derivatives data, Coinglass data shows that in the past 24 hours, the entire network experienced liquidations of 197 million USD, with the vast majority being long liquidations, amounting to 140 million USD. In terms of specific coins, BTC saw liquidations of 87.144 million USD, while ETH had liquidations of 51.5846 million USD.

BTC: Pullback Expected, Institutions and Miners Remain Optimistic

First, let's look at BTC's market. Benefiting from the positive sentiment surrounding the Nashville Bitcoin Conference, especially with a series of unexpectedly friendly messages from political figures like Trump, BTC maintained a relatively strong performance last week (especially in the latter half).

Against this backdrop, as the conference concluded, the market also had certain expectations for a potential pullback in BTC.

Bitfinex Alpha released a report yesterday stating that during the Nashville Conference, the implied volatility in the Bitcoin options market surged, but recent implied volatility has decreased, indicating that a slight consolidation may occur in the short term.

However, around 7:30 this morning, a small test transfer (0.02 BTC) appeared again from a Mt. Gox address. Considering that similar operations in the past have led to substantial transfers, this heightened market panic, causing the pullback to further amplify—today's pullback low occurred around 8:15, shortly after this news broke.

Nevertheless, from the perspective of ETF inflows/outflows, institutions still maintain a relatively optimistic sentiment towards BTC. Trader T's monitoring shows that yesterday, the U.S. Bitcoin spot ETF saw a net inflow of 123.1 million USD, meaning that in the past half month (counting only trading days), there was only one day of net outflow in the ETF market, while over ten other trading days maintained positive inflows.

Additionally, research institution EMC Labs noted that the recovery in the hash rate market reflects the optimistic sentiment of miners. On July 20, the Bitcoin network's hash rate reached a historical high of 724 EH/s, with the 7-day average hash rate also nearing historical peaks. The recovery in hash rate signifies the strong bullish outlook of this important community for the future market, providing effective support for BTC to reach new all-time highs.

ETH: Waiting for the Turning Point

Unlike BTC, ETH's recent performance is largely influenced by the newly opened Ethereum spot ETFs.

Although the eight major ETFs, including BlackRock's ETHA, Fidelity's FETH, Bitwise's ETHW, and Grayscale's Mini ETH, have maintained positive net inflows, the massive outflows from Grayscale's ETH E have led to a liquidity situation that is not as favorable as BTC's, resulting in several hundred million USD of net selling pressure on ETH in just a few days.

Farside Investors data shows that yesterday, the Ethereum spot ETFs saw a total outflow of 156.5 million USD, with a cumulative outflow of 498.3 million USD over the past five trading days—of which Grayscale has seen outflows of 1.723 billion USD, while other ETFs have seen a total inflow of 1.225 billion USD.

However, a slightly optimistic point is that Grayscale's ETHE has seen a 19.7% outflow over the past five days. If we assume that the final outflow share will be 50%, it is expected to take another 17 days to achieve this. However, before that, as the outflow scale of ETHE decreases, the outflow data from other ETFs should offset it.

Overall, the outflow speed of ETHE is much faster than that of GBTC in its early days. If ETH can replicate BTC's "drop first, rise later" trend after the ETF launch, it is expected that ETH's turning point will appear earlier than BTC's did at that time.

Altcoins: Will the Bull Market Return?

In summary, aside from a few sectors like meme and AI, and a few projects like SOL that are expected to take over the ETF narrative, the performance of the vast majority of altcoins in this market cycle can be described as "disastrous." The reasons for the poor performance of altcoins can be attributed to three main factors:

• First, the approval of ETFs has changed the liquidity transmission model in the market. Previously, the path for incremental funds to enter was generally "stablecoins → BTC, ETH → altcoins," but now, incremental funds from traditional markets are more likely to invest directly in BTC through ETFs, leading to a lack of liquidity in the altcoin market.
• Second, the continuous massive unlocking of "VC tokens" has brought sustained selling pressure, resulting in a "supply exceeds demand" market situation—upon closer inspection of the circulation changes of some altcoins, you will find that while the prices of some tokens continue to decline, their circulating market capitalization keeps reaching new highs.
• Third, the exorbitantly priced new projects are continuously draining the remaining liquidity in the market. A slew of long-anticipated popular projects like io.net, ZKsync, LayerZero, and Blast have launched, with FDVs generally in the tens of billions, further exacerbating the liquidity shortage in the altcoin market.

However, even in this situation, some leading figures remain optimistic about the future of altcoins.

Rich Rosenblum, co-CEO and co-founder of cryptocurrency market maker GSR, stated on the X platform yesterday that altcoins will make a comeback and will return strongly, which is his most confident prediction yet.

Considering that the previous trend of "altcoins not moving when BTC rises, and crashing when BTC falls" has been broken, whether Rich's (what a great name…) prediction can come true remains to be seen.

Potential Variables: Macro Events This Week

It is important to note that several macro events this week may have potential impacts on the future market.

On Wednesday, July 31, at 11:00 AM Beijing time, the Bank of Japan will announce its interest rate decision and outlook report;

On Thursday, August 1, at 2:00 AM, the Federal Reserve will announce its interest rate decision, followed by a monetary policy press conference by Powell half an hour later;

That evening at 7:00 PM, the Bank of England will announce its interest rate decision, meeting minutes, and monetary policy report.

Adam, a macro researcher at Greeks.live, also stated that although market expectations are relatively consistent, any news that exceeds market expectations could be a bombshell.