What factors make BTC and ETH so gratifying? How much will it increase next?

Deng Tong, Golden Finance

This morning, BTC and ETH rose one after another. According to CoinGecko data, BTC prices hit a maximum of $110,266.

ETH price hit a maximum of $2,705.80.

What makes BTC and ETH so gratifying? What factors are affecting the current crypto market? How much will BTC and ETH rise next?

1. New trends in China-US economic and trade: The United States considers

abolishing export controls in exchange for China to relax rare earth export controls

On Monday afternoon local time, the first meeting of the US-China Economic and Trade Consultation Mechanism was held in London, England. The U.S.-China economic and trade negotiations kicked off in London, and the U.S. signaled that it would lift export restrictions in exchange for China 's commitment to relax restrictions on rare earths.

On the morning before the first meeting of the China-US economic and trade consultation mechanism began, CNBC connected with the White House Economic Commission Director Hassett for an interview. He revealed for the first time that the U.S. government is considering abolishing some export controls in exchange for China to further relax the export control of rare earths. Hassett said the round of talks "will not be long, but will be a strong handshake"; if China allows large-scale exports of rare earths, "anyexpor controls from the US will be eased immediately" (anyexpor controls from the US will be eased). Then the two sides will continue to deal with some "smaller matters".

The People's Daily Zhongsheng published an article on the 10th, pointing out that the true picture of China-US economic and trade relations is complementary to advantages and win-win results. Only by demolishing the artificially set "iron fences" and smoothing the "two-way paths" of economic and trade cooperation can we promote the stable and healthy development of China-US economic and trade relations. As the world's top two economies, strengthening economic and trade cooperation will not only help each other's development, but will also provide important guarantees for the stability of the global industrial chain and supply chain. We believe that through equal consultation and practical cooperation, China and the United States can find mutually beneficial and win-win solutions. We hope that both sides will work together to create favorable conditions for the two countries' enterprises to carry out normal economic and trade activities, so that the results of cooperation can better benefit the people of both countries and make greater contributions to the recovery and growth of the global economy.

2. US SEC Chairman strongly supports DeFi

In the final meeting of five cryptocurrency roundtables held by the Securities and Exchange Commission (SEC) on Monday, institutional leaders and panels of experts discussed the regulation of decentralized finance (DeFi).

At the beginning of the roundtable, Atkins, chairman of the US SEC, talked about how decentralized finance (DeFi) fits with American values: “Economic freedom, private property rights, and innovative American values ​​are the core genes of the decentralized finance (DeFi) movement.” In addition, Atkins Chairman stressed that developers of neutral tools should not be held responsible for the actions of third parties : “Engineers should not be bound by federal securities laws only for publishing such software code. As a court stated, it is irrational to find that developers of self-driving cars are responsible for the violations or robbing banks by a third party – citing a court decision, in which case people will not sue the car company for accusing it of contributing to the violations, but will sue the individual who committed the violations.”

SEC Chairman Atkins said the committee is developing policies to protect decentralized finance (DeFi) platforms from regulatory barriers.

Atkins has directed SEC staff to study amendment of agency rules “to provide the necessary facilities for issuers and intermediaries to seek management of on-chain financial systems.” Atkins calls this potential exemption policy “an innovation exemption” that allows entities within SEC jurisdiction to “quickly” bring on-chain products and services to market.

“Many entrepreneurs are developing software applications that can run without any operator management.” While technology that enables private peer-to-peer transactions “sounds like science fiction,” he said, “Blockchain technology makes it possible to perform these functions without intermediaries.” “I don’t think we should allow a century-old regulatory framework to stifle innovation because these technologies may disrupt, and more importantly, improve and advance our current traditional intermediary model. We should not be afraid of the future for granted.”

“The SEC shall not violate the rights granted by the First Amendment by regulating code publishers just because others use code to engage in activities traditionally regulated by the SEC,” said SEC Commissioner Hester Peirce. “Centralized entities cannot evade regulation by simply labeling decentralized.”

"I appreciate the change in the tone and position of the committee. I think it's definitely a good thing for the United States," said Erik Voorhees, founder of the decentralized exchange ShapeShift.

For details, please view the Golden Finance article: "The latest speech of the US SEC Chairman: DeFi and the American Spirit (full text)"

3. BlackRock increases its holdings in ETH

BlackRock is quietly stocking up on Ethereum, currently holding 1.5 million Ethereum (valued at US$2.71 billion) and tokenize assets on the chain. The asset management company has purchased $500 million worth of Ethereum over the past 10 days, reflecting institutional investors ' confidence in the altcoin , although its price has fallen 48% from its all-time high.

Last week, Ethereum-based investment products led the inflow of cryptocurrency exchange-traded products (ETPs), attracting $296 million in funds despite the slowdown as investors waited for the Fed to introduce regulatory policies. This marks the seventh consecutive week of inflows of Ethereum ETP, setting a record high since the 2024 election victory of U.S. President Donald Trump, who currently accounts for more than 10.5% of the total assets of the cryptocurrency ETP managed by him. CoinShares also noticed a significant rebound in investor sentiment.

4. How to move forward in the future crypto market?

BTC rose to $150,000?

Some analysts expect Bitcoin price to rise to $150,000 as the U.S. government is about to raise its $4 trillion debt ceiling. However, futures market data show that markets remain hesitant in the short term, which may be caused by adverse macroeconomic signals and misunderstandings about the potential supply shock of Bitcoin.

Bitcoin 2-month futures annualized premium. Source: laevitas.ch

Since June 6, Bitcoin futures premiums have hovered around the typical 5% baseline of the neutral market. Recent price increases have not yet stimulated significant confidence among traders. However, it is inaccurate to say that market sentiment is totally pessimistic, especially when Bitcoin is currently trading only 3% below its all-time high of $111,965 set on May 22.

Recent price trends are not driven by excessive leverage speculation, which indicates a healthy market foundation. However, if recession concerns persist, it is unlikely that Bitcoin will remain above $110,000 given its ongoing correlation with traditional stock markets.

50-day correlation between Bitcoin/USD and S&P 500 futures.

Currently, Bitcoin has an 82% correlation with the S&P 500, which means the two assets are moving similarly. This trend has been maintained over the past four weeks. Despite the volatility of correlations over the past nine months, investors mostly view Bitcoin as a risky asset rather than a reliable hedge.

If confidence in the fiscal stability of the U.S. government declines, risk perceptions may turn to favor Bitcoin.

$3,600 on ETH?

Currently, ETH prices return to the midline of the Gaussian channel, a dynamic market trend indicator. A Gaussian channel or a normal distribution channel plots price changes in the dynamic range to accommodate market fluctuations.

Ethereum Gaussian Channel Analysis.

Historically, when Ethereum breaks through the Gaussian channel midline, there will be a rebound. For example, in 2023, ETH soared 93% to $4,000 after breaking through the Gaussian channel midline; in 2020, ETH soared 1,820%.

As ETH stabilizes above the key metric of $2,570, technical analysis predicts that if the momentum remains, ETH has the potential to rise to $3,100 to $3,600, thanks to the channel 's historical accuracy in forecasting short- term returns.