After the release of non-farm payroll data in early August, the mainstream cryptocurrency market experienced a sharp decline in prices. Subsequently, the market has experienced multiple ups and downs, with implied volatility gradually decreasing from its peak on August 5, and the overall market showing a wide-ranging and volatile state. The current market urgently needs guidance from new economic data to drive the development of the next phase of the market.

The market generally expects the Federal Reserve to announce an interest rate cut at its meeting on September 19. However, the new non-farm payroll data to be released on September 6 will be crucial. If the data shows strong performance, it will significantly reduce the probability of a mid-September interest rate cut by the Federal Reserve.

In addition, the PPI and CPI data to be released on September 11 and September 12 will also be closely watched. If these inflation indicators do not show a significant decline, it will also reduce the likelihood of a Fed rate cut. Therefore, it is necessary to closely monitor the upcoming economic data to determine future market trends.

There are about 19 days until the next Federal Reserve interest rate meeting (September 19, 2024).

In the past week, both BTC and ETH have experienced a spike followed by a fall back to areas of high trading volume.

In the past week, both BTC and ETH had the highest trading volume when they plummeted on August 27. There was no significant change in open interest for BTC and ETH.

In the past week, BTC and ETH had the highest historical volatility when they fell on August 27. Implied volatility for BTC decreased while it increased for ETH.

For the past week, the average annualized return for BTC financing fees was 0.3%, and the contract leverage sentiment remains low.

No significant data was released in the past week, waiting for the non-farm payroll data release on 09.06.

BTC is about to face the most challenging month. Historically, the return rate in September has been negative, adding extra pressure this year, including expectations for the future of the USA technology industry after Nvidia's earnings forecast, the Federal Reserve's policy decisions, and the upcoming US election. Many events will have a significant impact on Bitcoin's price trend.

BTC spot ETF has seen continuous outflows for four days, especially BlackRock's IBIT saw the first outflow of 13.5 million USD since May. USA PCE data lower than expected increases the possibility of a rate cut by the Federal Reserve in the fourth quarter. If next week's non-farm payroll data is weaker than expected, it will confirm the reason for the USA starting to cut rates since September, with the current rate cut probabilities at 33.0% (25 basis points) and 67% (50 basis points). Given the limited impact of recent macro news on the crypto market, Bitcoin may continue to fluctuate within the range of 58,000 to 65,000 USD in the short term as the market awaits positive catalysts to break out of this range.

When will the funds return to the market?

The financial market is playing a "cost-effective game"; when one sector becomes expensive, funds will naturally move to speculate on a relatively undervalued sector.

After the hype in the US stock AI sector, besides blockchain, which sector is as imaginative as AI, including the potential returns that can be compared to AI. I think it's a natural process for funds to transition from AI to blockchain.

I think this process of fund transfer should start in the second half of 24. Judging purely from the US stock cycle, funds tend to exit after about two years of speculation. Nvidia has been hyped for about 600 to 700 days, and there hasn't been much novelty in AI from the beginning to now.

There is a foundation of existing funds supporting the uptrend, but we still need to wait for clear signals. The above logic needs further validation.

Currently, in terms of liquidity expectations, the sentiment is relatively optimistic. On the one hand, it is due to Powell's dovish expectations. On the other hand, the global macro liquidity level index has already surpassed the high point of March 2022. However, it is still at a low level.

But I think it doesn't matter. This can still bring about a relatively good expectation. And the expectation of improved liquidity will enter the cryptocurrency market faster.

This bull market does have many different points. Many people feel that they cannot make money. The root cause is that the growth level of cryptocurrency prices cannot match the overall liquidity. In other words, the price of Bitcoin rises, but the market lacks money. Previously, the global liquidity level was high, Bitcoin skyrocketed, and the bloodsucking of VC coins caused the current situation.

The downside is that many sectors have not grown, and the altcoin season of universal rise has disappeared. The upside is that market expectations are more advanced, and many sectors will lead the market one step ahead. They will not wait for Bitcoin prices to rise before making moves, but follow the rise of Bitcoin, resulting in some strong sectors. In a market with insufficient funds, sector rotation will also be particularly evident.

How to find an operable sector? I think it should at least meet the following characteristics:

The ceiling is high enough to spark investors' imagination.

It has value compared to the current price.

It is best to have fundamentals. Some innovative tracks can do without fundamentals as well. The financial and capital markets themselves encourage innovation and have added value and rewards for innovation.

Whether sector assets are scarce, if an exchange lists a lot of coins from a particular sector, the funds will definitely diverge and flow when speculation occurs.

I am more bullish on two sectors, one is the bitcoin ecosystem, and the other is one with real cash inflow and fundamental factors, tokens have also been unlocked, and the circulating supply is almost fully distributed. Currently, in the market, concepts and trends have not been hyped, so we can only return to the basics and focus on projects with solid fundamentals and impressive revenue, such as AAVE.