Overview of BTC and ETH this week

The overall trend of the cryptocurrency market this week is showing a rebound:

Bitcoin: This week, Bitcoin has shown a rebound trend. Market traders have alleviated their concerns about trading during an economic recession, generally believing that the probability of a recession in the United States is relatively low. After the announcement of the U.S. CPI data in August, it can be seen that the CPI has been significantly alleviated and has made further progress towards the 2% target monitored by the Federal Reserve. As a result, the majority of traders in the market are betting that the Fed will cut interest rates by 25 basis points next week, but this represents a defensive rate cut as the U.S. economy has not experienced a recession. Therefore, a rebound has occurred this week after a sharp decline in the past two weeks.

Ethereum: This week, Ethereum's trend was weaker than Bitcoin, and the rebound was less than that of the large cap. Apart from external macro factors, the main issue is the confusion about Ethereum's future direction. The opinions of Ethereum developers are not accepted by the market users, and vice versa. This has led to a serious division, mainly because there have been no innovative and rapidly developing star projects on the Ethereum chain, leading to a lack of storytelling ability in the future and wealth creation effect. As a result, funds have been swiftly flowing from the Ethereum chain to various other public chains, posing a severe challenge to Ethereum's ecosystem development.

Overview of Altcoin this week

Overall Performance

This week, the market sentiment index has recovered rapidly, rising to 65.5% from just 11% last week. As the market gradually rebounds this week, the market sentiment has shifted from extreme fear to greed.

Altcoin market followed the rebound trend of the large cap this week and rebounded more strongly than the large cap. The rebound is mainly due to the market's belief that the possibility of a recession in the US economy in the future has decreased, alleviating concerns about a recession and causing the rise this week. Moreover, a significant amount of funds has flowed out from the Ethereum ecosystem and started to flow into various other public chains, causing projects in various ecosystems to rise.

Key Events

US CPI data lower than expected and lower than previous value

On September 11th, the US CPI for the end of August was announced to have an annual rate of 2.5%, significantly lower than the previous value of 2.9% and lower than the expected value of 2.6%. This indicates that inflation in the US is rapidly declining at this stage and is well controlled. The value is steadily approaching the Federal Reserve's target of 2%, further confirming the Fed's rate cut next week. The current market is most concerned about the number and magnitude of future rate cuts by the Fed, and the market interprets the CPI data as continuously declining and under control, which will not easily cause a rebound, thus the Fed's rate cut will continue multiple times.

Market Discussions This Week

Market discussions on the challenges and future development of ETH

Recently, Ethereum has not performed very well, and combined with the internal disagreements within the Ethereum ecosystem about the development direction, there has been analysis in the market about the challenges facing Ethereum. The main conclusion is that: as more and more transactions are being processed on Layer 2 solutions, the fees and economic activities that would have benefited the Ethereum mainnet are increasingly being redirected. This shift may lead to a decrease in demand for ETH and a significant reduction in gas fees, which in turn affects the burning of ETH and causes ETH to return to inflation.

Regarding the current situation, there are many opinions in the market about Ethereum. In summary, it is generally believed that Ethereum should abandon the heavy investment in infrastructure construction and recognize the nature of the current challenges, which requires the introduction of a large number of top-level applications to attract more users. Increase the income from staking ETH through projects like Eigenlayer. Increase the basic fees in Ethereum's gas fees to increase Ethereum's revenue, and use EIP-1559 to increase the burning of ETH. Modify the pricing mechanism of Blob, and so on.

Upcoming Crypto Major Events for Next Week

Tuesday (September 17) - US August Retail Sales MoM; Stable Rise

Wednesday (September 18) - Verdict on the 'hush money' case involving Trump; TON Asia-Singapore

Thursday (September 19) - US Federal Reserve Interest Rate Decision; Solana Breakpoint; DeFi 2049—Beyond THE Horizon; Impact 2049

Friday (September 20) - ETHGlobal Singapore

Saturday (September 21) - Decision on Bitcoin ETF Options by the US Securities and Exchange Commission (SEC)

Outlook for next week:

1. Bitcoin: Currently, bitcoin lacks its own bullish factors, and its price fluctuations are mainly influenced by market news and macro data, and cannot independently establish its trend. However, I expect that the trend of bitcoin will fluctuate next week around the announcement of the Fed's interest rate decision, and will be greatly affected by the Fed's dot plot.

2. Ethereum: This week, Ethereum's performance against the large cap is weaker, and the ETH/BTC exchange rate has been in a downtrend. I expect ETH to perform worse than BTC in the future, and the ETH/BTC exchange rate will continue to decline.

3. Altcoin: Although Altcoin closely followed the rebound trend of the large cap this week and had a stronger rebound force than the large cap, there was no unified market hot spot in Altcoin. The innovative tracks that appeared were in the early stage and not perfect, causing funds to be relatively dispersed and unable to form a combined force for a certain track or project. In addition, the current market funds are not abundant and trading users lack confidence in future development, which will cause Altcoin to only follow the trend of the large cap in the future and not have its own independent trend. Therefore, it is expected that Altcoin will continue to follow the trend of BTC next week.