Source: HashKey, first published on FT Chinese, authorized to reprint
Only one month after the rate cut, the global capital market has experienced several large-scale capital flows - the US stock technology sector rebounded first, driving the Nasdaq index to rise, the S&P 500 index and the Dow Jones index to hit new highs, and the A-share and Hong Kong stock markets also saw a wave of strong gains before the National Day. This week, funds returned to the Nasdaq and cryptocurrency markets, driving the price of Bitcoin-related assets to break through $68,000, and it is expected to break through a new high soon.
Funds quickly switch between different tracks, forming a "seesaw" effect. At present, global liquidity is about to emerge. How to analyze the market structure? How will crypto assets trend?
Bitcoin challenges historical price highs
This week, the crypto market performed well, and Bitcoin continued to rise, now approaching the $68,000 mark. I personally expect that it will challenge the pressure level of $70,000 to $72,000 in the near future, breaking through the historical high.
The timing of the current market rise is quite meaningful and may be related to the upcoming US election. As the election day on November 4 approaches, the stability of the financial market is particularly important. Before the election, the stability and prosperity of the market plays a key role in the Democratic Party's election situation, so maintaining the smooth operation of the market has become a top priority. After the election, no matter who enters the White House, stabilizing and stimulating the financial market will become an important agenda for their administration.
At the same time, looking at the world, the current situation in Northeast Asia continues to be tense, resulting in international funds becoming cautious about investing in the Asian market, and the pace of "Eastward Flow" has slowed down significantly. Against this background, the results of the US election will reshape the international geopolitical landscape. The foreign policy orientation of the new government, whether it is its attitude towards the conflict between Russia and Ukraine or its response to the situation in the Middle East, may trigger a chain reaction. Changes in these geopolitical factors will affect global risk aversion and capital flows, causing the financial market to face a major adjustment in the period after the election.
In addition to political factors, the cryptocurrency market itself is also sending signals worthy of attention. The first is the breakthrough of MicroStrategy (MSTR) MicroStrategy's stock price. As the largest publicly traded Bitcoin holder, MicroStrategy's stock value not only reflects the company's own valuation, but also represents the U.S. stock market's expectations for the future price of Bitcoin. MSTR's stock price has risen by about 50% in the past month, which can be seen as a reflection of institutional investors' optimism about crypto assets.
Secondly, Bitcoin has completed the necessary consolidation. Over the past six months, Bitcoin has experienced a long period of sideways consolidation, during which it successfully digested the selling pressure from countries such as Germany and the United States. These selling pressures mainly come from Bitcoin spot ETFs approved by regulators and various institutional liquidations. After the market fully digests these selling orders, the time for Bitcoin to change is ripe.
In addition, Ethereum currently shows good investment value. In the market adjustment over the past six months, Ethereum has fallen more sharply relative to Bitcoin, creating a significant price gap. According to historical experience, this gap is often repaired in subsequent market conditions, which also makes Ethereum more attractive to funds at the current price.
Global liquidity is about to emerge, and the crypto market has great potential
In addition, an interesting phenomenon has emerged between the traditional capital market and the crypto market - when the traditional capital market is strong, the crypto market is relatively sluggish; while when the price of crypto assets rises sharply, some traditional capital markets are weak, forming a special "seesaw" effect. This "seesaw" effect reveals the law of global capital flow - capital always pursues the most speculative market opportunities. Against the backdrop of intensified global competition, changing policies, and the emergence of emerging asset classes, capital is accelerating to those areas that can bring the highest returns.
Now we see the strange phenomenon of liquidity "jumping around", but from a long-term perspective, the liquidity of global capital will inevitably be injected into the crypto market on a large scale in the future, and the turning point is coming soon.
First of all, from the underlying logic of economics, the rise of the crypto market is attributed to the free flow of capital and the great improvement of efficiency. The traditional financial market is subject to many regulations and intermediary institutions, which has limited the liquidity of capital in the world. Through blockchain technology, the crypto market has achieved the free flow of funds around the world and reduced the friction cost in capital flow.
By reducing intermediaries, improving transparency and improving the efficiency of financial services, the crypto market can adapt to market changes and respond to the needs of global investors more quickly. This improvement in liquidity and efficiency will have a greater impact on the global economy and promote capital allocation in a more optimized and reasonable direction. At the same time, with the continuous popularization and application of encryption technology, more ambitious scenarios can be achieved in the future. With the continuous development of RWA and DePIN, the innovation of the traditional economy can be promoted, which is an important driving force for the future of the crypto market.
At the same time, the emergence of the "seesaw effect" means that in the past two years of industry development, crypto assets have become the mainstream choice of the capital world together with traditional assets. The crypto market has such huge potential. An important reason why it has not attracted large-scale funds before is the lack of compliance path. Now the United States has opened a compliance path for the development of the crypto market through measures such as Bitcoin spot ETF, the introduction of a cryptocurrency regulatory framework and support for the development of Web3.
Today, the "seesaw" of global liquidity is gradually tilting towards Hong Kong.
Since 2023, Hong Kong has implemented a new cryptocurrency regulatory framework that allows retail investors to legally participate in crypto asset trading through licensed exchanges. At that time, HashKey Exchange became the first licensed exchange approved to provide trading services to retail investors. Today, HashKey Exchange's total trading volume has exceeded HK$538 billion, and user assets have accumulated more than HK$5 billion. As of October 16, according to the latest data from Coingecko, HashKey Exchange ranks among the top 8 global exchanges and is the highest-ranked licensed virtual asset exchange in Hong Kong.
Hong Kong not only provides the dual advantages of both policy protection and innovation and technological development, but also can effectively attract global liquidity capital inflows. For investors, this combination means that they can safely enter a highly innovative market while enjoying strong legal and policy protection. Through this two-way liquidity bridge role, Hong Kong can continue to consolidate its position as a global financial hub, while using Web3 to develop new sources of liquidity and further enhance its importance in the international capital market.
In this era of globalized liquidity and capital allocation, the crypto market, with its unique advantages and innovative potential, is becoming a new battlefield in the global capital competition. With the continuous advancement of technology and the gradual improvement of supervision, the crypto market is expected to usher in a broader development space and become a force that cannot be ignored in global capital allocation.
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