Can the ETF concept rekindle the market and move towards a bull market again?

The ETF concept is rekindled. Can the market move into a bull market again?

——Compilation of the views of space guests on March 20

introduction

The cryptocurrency market has presented a complex and controversial picture under the interweaving of multiple factors such as the Fed's policy swing, the approval of Bitcoin ETFs and the obstruction of altcoin ETF approval. In a recent live broadcast with the theme of "The ETF concept is rekindled, can the market go bull market again?", three industry veterans - Cofounder of Bitlayer Charlie @CharlieHusats,

Senior institutional investor, financial self-media investor TALK Jun @TJ_Research01, Beosin researcher Eaton @Beosin_com - Discuss from multiple dimensions such as policy, technology, and market. Based on the dialogue record, this article systematically sorts out the guest's views and analyzes the core contradictions and future trends of the current crypto market ETF.

1. Federal Reserve Policy: Short-term Emotional Reassurance and Long-term

Uncertainty

1.1 Signals released by the interest meeting

At the Fed's interest rate meeting ended in the early morning, the Fed announced that it would keep interest rates unchanged and plans to slow down the balance sheet shrinking process from April. The dot matrix chart shows that a 50 basis point rate cut is still expected this year. Investment TALK pointed out that this resolution is more of a short-term emotional comfort than a substantial policy shift. He believes that the market's interpretation of "no bad news" has driven the rebound of risky assets, but the long-term impact still needs to be observed.

Key signal analysis:

Slowing balance sheet shrinkage: The Fed continues to reduce balance sheet shrinkage, seen as implicit support for liquidity.

Inflation expectations management: Powell stressed that the impact of tariffs on inflation is "temporary" in an attempt to alleviate market concerns about stagflation.

Policy path dependence: The Federal Reserve still uses the tariff cycles in 2018 and 2019 as reference and lacks a clear response framework for the current complex situation.

1.2 Short-term and long-term impacts

TALK, the investment firm believes that the dovish statements of the Federal Reserve have stabilized market sentiment in the short term, but the long-term uncertainty has not been eliminated. "The implementation time and intensity of the tariff policy are still the sword of Damocles hanging on the market." Once the tariff policy is clear, the market may usher in a real directional breakthrough.

Mr. Charlie added that the correlation between the Federal Reserve's policy and the cryptocurrency market is increasing. The linkage between Bitcoin price trends and US technology stocks (such as Nvidia) has significantly improved. The decline in trading activity over the weekend and intensified weekday volatility reflects the deepening of institutional investors' participation in cryptocurrencies.

2. Bitcoin ETF: "Compliance Channel" for Institutional Entry

2.1 Market Impact of ETFs

Since the Bitcoin Spot ETF was approved in January 2024, its asset management scale (AUM) has exceeded US$100 billion, becoming the core force driving this bull market.

Charlie noted that the passage of ETFs marked the official entry of cryptocurrencies into the mainstream financial system, but its inflows came mainly from high-net-worth individuals and arbitrage institutions rather than traditional pension funds or insurance companies.

Three major functions of ETFs:

1. Reduce volatility: The entry of institutional funds has brought Bitcoin price fluctuations closer to traditional assets, and the day trading model has gradually become "US stocks".

2. Liquidity improvement: The linkage between CME futures contracts and spot prices has increased, and the arbitrage mechanism has become more mature.

3. Transfer of pricing power: ETF issuers represented by BlackRock and Franklin are reshaping the pricing logic of Bitcoin.

2.2 "Decoupling" between Bitcoin and altcoins

Charlie emphasized that the current market is characterized by "bitcoin dominance", which is completely different from the ICO boom in 2017 or DeFi Summer in 2021. "Bitcoin and altcoins are already two independent markets." Institutional investors' perception of Bitcoin tends to be unified, while altcoins are difficult to gain equal attention due to problems such as insufficient compliance and dispersed liquidity.

TALK, investing in MicroStrategy (MSTR) as an example, pointed out the premium fluctuations of its stock price and Bitcoin ETF, reflecting the differences in preferences between retail investors and institutions for leveraged Bitcoin investment. “MSTR has become a barometer of market sentiment, but its high premium risk cannot be ignored.”

3. Altcoin ETF

3.1 The root cause of SEC approval delay

Eaton analyzed that the SEC's repeated attitude towards altcoin ETFs stems from political cycles and regulatory changes. Currently SEC Chairman Gary Gensler serves as an agent, and Trump's nominated crypto-friendly candidate Paul Hour is about to take over, a transition period has led to increased policy uncertainty.

The core reasons for the delay in approval:

Compliance threshold: The SEC requires that altcoins be proved to their degree of decentralization, market depth and manipulation resistance.

Lobbying power difference: Bitcoin ETFs are thanks to strong lobbying from Wall Street institutions, while altcoins lack the same resources.

Inadequate market demand: The price performance of Ethereum ETF after approval has weakened market expectations for altcoin ETF.

3.2 The Future of Altcoin ETF

Although Mr. Charlie believes that "it is only a matter of time before the top ten altcoin ETFs pass", Mr. Eaton is cautious. He pointed out that the inflow of funds from Ethereum ETFs is much lower than that of Bitcoin, and the price continues to fall. "The market needs to see the substantial pull of ETFs on prices, otherwise the enthusiasm for approval will further cool down."

Investment TALK added that if altcoin ETF wants to break the deadlock, two major conditions must be met:

1. Innovative underlying assets: for example to tokenize real income such as real estate rents and mineral income.

2. Regulatory sandbox test: Accumulate credit through compliance pilot projects in Singapore, Dubai and other places.

4. Institutional entry: Reconstructing market logic

4.1 Changes in the capital structure

The entry of institutions such as BlackRock and MicroStrategy is changing the funding structure of the cryptocurrency market:

From retail-driven to institutional-led: Institutions account for more than 60% of the average daily trading volume of Bitcoin ETFs.

From speculation to allocation: Bitcoin has gradually been included in the asset allocation framework of "digital gold", and the demand for hedging inflation and geopolitical risks has increased.

Mr. Charlie took the miner group as an example and pointed out that his voice was weakened by the institution's entry: "Miners could influence prices through joint control in the past, but now they have no advantage in front of Wall Street capital."

4.2 Evolution of pricing logic

Investment TALK Jun believes that institutional investors are more concerned about Bitcoin’s long-term volatility than short-term prices. "The decline in volatility is the prerequisite for Bitcoin to be included in the pension fund portfolio." Currently, Bitcoin's 30-day volatility has dropped from 80% in 2021 to 35%, close to the gold level.

Teacher Eaton emphasized that the compliance process (such as anti-money laundering reviews and tax reports) is improving market transparency, but may also curb retail investors' enthusiasm for participation.

5. Market Outlook: Key Variables in the Second Half of 2024

5.1 Fed rate cuts and cryptocurrency

The three guests unanimously agreed that whether the Fed initiates interest rate cuts in 2024 will become the biggest variable affecting the market. If the rate cut exceeds expectations, Bitcoin may exceed $100,000; if inflation rebounds lead to a restart of interest rate hikes, the market may face a deep correction.

5.2 Supervision and technological innovation

Regulatory breakthroughs: the advancement of the US crypto bill and the expansion of Hong Kong's virtual asset licenses may become catalysts for a new round of market conditions.

Technology iteration: The maturity of Bitcoin Layer2 (such as Stacks, RSK) and Ethereum ZKRollup is expected to improve the practicality of on-chain assets.

5.3 The battle of survival of altcoins

Teacher Charlie predicted that 2024 will be the "reshuffle year" of altcoins. "90% of altcoins will be reset to zero, and the remaining 10% need to prove their real use cases." He specifically mentioned that innovative projects combining RWA (real-world assets) with DeFi may become dark horses.

Conclusion

The cryptocurrency market in 2025 has shown unprecedented complexity in the collision between traditional finance and decentralization concepts. Bitcoin has entered the mainstream through ETFs, altcoins have struggled to survive in compliance and innovation, and every swing of the Fed's policy is reshaping the risks and opportunities of the market. For investors, while pursuing returns, they need to be more wary of undercurrents in market differentiation and regulatory changes.

Live playback link: https://x.com/i/spaces/1zqKVjnVNzZKB

Note: This article is based on live discussions and does not constitute investment advice. The market is risky, so be cautious in making decisions.