10x Research has pointed the way again: first target 60,000, then target 50,000 - ChainCatcher

Author: 10x Research

Compilation: Azuma, Odaily Star Daily

The issuers of the six ETH Spot ETFs have submitted updated S-1 forms, which means that the US Securities and Exchange Commission (SEC) could approve the issuance of the ETH Spot ETF at any time. Meanwhile, Cryptocurrency seems to be in a rebound state this week. In our report last weekend, we predicted this rebound, which is due to market expectations of lower-than-expected CPI data to be released on Thursday in the US.

The Oversold indicator shows that the market is anticipating a possible small-scale Rebound, which means that the short-term trend will reverse. Currently, two of the three reversal indicators have shown bullish signals, and the RSI (Relative Strength Index) is currently at 38%, which means that shorts may also need to wait temporarily until the price of BTC encounters resistance in the range of $60,000 to $62,000, leading to another downturn in the market.

From the perspective of Technical Analysis, the price range of $55,000 to $56,000 is forming a support position. However, considering the deteriorating medium-term technical pattern, we predict that this will only be a short-term rebound and will not last long. It is particularly noteworthy that BTC has been falling during Asian trading hours and the trend of performing relatively well during European and American trading hours continues.

Despite a 20% drop in the price of BTC in the past 30 days, the attitude of BTC futures traders' Holdings remains relatively bullish since the approval expectation of the ETH Spot ETF on May 20th. Since then, the open interest of BTC has risen from 260,000 BTC to 305,000 BTC at one point, currently reported at 277,000 BTC, while the price of BTC has dropped from $66,000 to $57,000 during the same period; the situation is similar for ETH, with the trading price basically remaining around $3,068, but the open interest Holdings has increased from 2.6 million ETH to 3.1 million ETH.

Since May 24th, the net asset value (NAV) premium of the Grayscale Ethereum Trust Fund has been significantly reduced to only -1.5%, compared to its peak (-60%) in December 2022. This is mainly due to the expected approval of the Ethereum Spot ETF. The total assets under management of the Grayscale Ethereum Trust Fund is approximately $9 billion, and the transformation from ETN to ETF means that investors will be able to freely redeem their shares.

Once the ETH Spot ETF starts trading, Grayscale's redemption may cause significant selling pressure, similar to the case of Grayscale Bitcoin Trust (GBTC) in January 2024. Since the opening of BTC Spot ETF trading, GBTC's Assets Under Management have decreased by 47%. Therefore, it is predicted that Grayscale's outflows may offset the inflows of the other five ETF issuers.

Therefore, although the current price of ETH is still similar to the SEC's intention to approve, there may still be potential 'Favourable Information' when S-1 is approved. As for ETH, the unclosed contracts in the futures market show a strong bullish attitude towards ETH, while potential grayscale outflows may once again affect the market trend.

There is a similar pattern above BTC, that is, the inflow of funds into the Spot ETF has preceded the release of CPI data. Following the net inflow of $143 million into the BTC ETF last week, the net inflow of ETF on Monday reached $295 million. This corresponds to the continuous net inflow of $4 billion observed during the release of CPI data in May and June, totaling 20 days, but it is worth noting that after the release of CPI data in June, the BTC ETF experienced a net outflow of $1.2 billion.

It is expected that the CPI data to be released on July 11th will drop to 3.1%, which is in line with our expectations and the market's rebound expectations. If the core CPI on a month-over-month basis can drop by 0.2%, it is expected to still affect the price trend of BTC. However, potential selling pressures such as the German government, Mt.Gox, and upcoming Bitgo should not be ignored.

The news about "FTX creditors may receive about 16 billion US dollars in compensation" has recently attracted widespread market attention. However, many of FTX's creditors have actually been acquired by professional bankruptcy compensation agencies, which will only follow the expected recovery and arbitrage space of the creditors themselves, and are unlikely to reinvest the received dollars in the cryptocurrency market. We anticipate that the scale of funds flowing back into the market may be between 32 billion and 50 billion US dollars. In addition, in November 2022 when FTX was liquidated, the price of BTC was about 16,800 US dollars, but now it is 57,000 US dollars. The current pullback is not a tempting discount for FTX's creditors.

The deadline for the vote on the bankruptcy liquidation plan for FTX customers is August 16th, and the relevant hearing will be held on October 7th, when Judge Dorsey will consider whether to approve the plan. It is worth mentioning that overseas creditors may face up to 30% withholding tax in the final payment.

Overall, we expect that BTC is likely to rebound to around $60,000 in the near future, and then fall again to around $50,000, after which the market will enter a relatively complex trading environment. At that time, we expect that the market will gradually digest the selling pressure from the German government and Mt.Gox from a psychological level, which will pave the way for some bullish events in the future, such as the expected changes in FTX's compensation in mid-August and the potential impact of the upcoming US election on BTC.