The ETF concept is reignited. Can the market head towards a bull run again?

The concept of ETFs is reigniting; can the market head towards a bull market again?

——Summary of guest opinions from space on March 20

Introduction

The cryptocurrency market presents a complex and controversial picture under the intertwining of multiple factors such as the Federal Reserve's policy swings, the approval of Bitcoin ETFs, and the obstacles faced in the approval of altcoin ETFs. In a recent live broadcast themed "With the ETF concept reignited, can the market rise to a bull market again?", three industry veterans - Cofounder of Bitlayer Charlie @CharlieHusats,

Senior institutional investors, financial self-media person Investment TALK Jun @TJ_Research01, Beosin researcher Eaton @Beosin_com——discussing from multiple dimensions such as policy, technology, and market. This article systematically sorts out the views of guests based on the dialogue transcript, analyzing the core contradictions and future trends of the current cryptocurrency market ETF.

I. Federal Reserve Policy: Short-term Emotional Easing and Long-term Uncertainty

1.1 Signals Released by the Monetary Policy Meeting

At the Federal Reserve's monetary policy meeting that ended in the early morning, the Fed announced that it would keep interest rates unchanged and plans to slow the balance sheet reduction process starting in April. The dot plot indicates that a rate cut of 50 basis points is still expected within the year. Investment expert TALK pointed out that this decision is more about soothing short-term sentiment rather than a substantive policy shift. He believes that the market's interpretation of "no bad news" has driven the rebound in risk assets, but the long-term impact remains to be observed.

Key Signal Analysis:

Balance sheet reduction slows: The Federal Reserve continues to decrease the pace of its balance sheet contraction, which is seen as implicit support for liquidity.

Inflation expectations management: Powell emphasized that the impact of tariffs on inflation is "temporary," attempting to alleviate market concerns about stagflation.

Policy path dependence: The Federal Reserve still refers to the tariff cycles of 2018 and 2019, lacking a clear response framework for the current complex situation.

1.2 Short-term and Long-term Effects

Investment TALK believes that the Fed's dovish statements have stabilized market sentiment in the short term, but long-term uncertainty has not been eliminated. "The timing and intensity of the implementation of tariff policies still hang over the market like the sword of Damocles." Once the tariff policy is clarified, the market may experience a real directional breakthrough.

Teacher Charlie added that the correlation between Federal Reserve policies and the cryptocurrency market is strengthening. The price movements of Bitcoin are significantly more correlated with U.S. tech stocks (such as Nvidia), and the characteristics of reduced trading activity over the weekend and increased volatility during the workweek reflect a deeper involvement of institutional investors in cryptocurrencies.

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

2.1 Market Impact of ETFs

Since the approval of the Bitcoin spot ETF in January 2024, its assets under management (AUM) have exceeded $100 billion, becoming the core driving force behind this bull market.

Charlie pointed out that the approval of the ETF marks the official entry of cryptocurrency into the mainstream financial system, but the capital inflow mainly comes from high-net-worth individuals and arbitrage institutions, rather than traditional pension funds or insurance companies.

Three Main Functions of ETF:

1. Reducing volatility: The entry of institutional funds has made Bitcoin price fluctuations closer to traditional assets, and the intraday trading model is gradually becoming "U.S. stock-like".

2. Liquidity improvement: The correlation between CME futures contracts and spot prices has strengthened, 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 The "Decoupling" of Bitcoin and Altcoins

Charlie emphasized that the current market displays the characteristic of "Bitcoin being dominant," which is distinctly different from the ICO boom of 2017 or the DeFi Summer of 2021. "Bitcoin and altcoins are now two independent markets." Institutional investors have a unified understanding of Bitcoin, while altcoins face challenges in gaining equal attention due to issues such as insufficient compliance and dispersed liquidity.

Taking MicroStrategy (MSTR) as an example, Investment TALK points out that its stock price and the premium fluctuations of Bitcoin ETFs reflect the differences in preferences between retail and institutional investors for leveraged Bitcoin investments. "MSTR has become a barometer of market sentiment, but its high premium risk cannot be ignored."

3. Shanzhai Coin ETF

3.1 The Root Cause of SEC Approval Delays

Eaton analysis states that the SEC's fluctuating stance on altcoin ETFs stems from the political cycle and changes in regulatory leadership. Currently, SEC Chairman Gary Gensler is serving in an acting capacity, and the crypto-friendly candidate Paul Hour, nominated by Trump, is about to take over, which is exacerbating policy uncertainty during this transition period.

The core reason for the approval delay:

Compliance Threshold: The SEC requires altcoins to prove their level of decentralization, market depth, and resistance to manipulation.

Differences in lobbying power: The Bitcoin ETF benefits from strong lobbying by Wall Street institutions, while altcoins lack equivalent resources.

Insufficient market demand: The price performance of Ethereum ETFs has been weak after approval, dampening market expectations for altcoin ETFs.

3.2 The Future of Altcoin ETFs

Although Teacher Charlie believes that "it's just a matter of time for the top ten altcoin ETFs to be approved," Teacher Eaton takes a cautious stance. He points out that the capital inflow into Ethereum ETFs is far lower than that of Bitcoin, and the price continues to decline. "The market needs to see a substantial impact from ETFs on prices; otherwise, enthusiasm for approval will further cool down."

Investment TALK Jun added that if altcoin ETFs want to break through, they need to meet two major conditions:

1. Underlying asset innovation: For example, tokenizing real income such as rental income from real estate and mining revenue.

2. Regulatory sandbox experiments: Accumulate credit through compliance pilot programs in places like Singapore and Dubai.

4. Institutional Entry: Restructuring Market Logic

4.1 Changes in Capital Structure

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

From retail-driven to institution-led: institutions account for over 60% of the average daily trading volume of Bitcoin ETFs.

From speculation to allocation: Bitcoin is gradually being incorporated into the asset allocation framework of "digital gold," with rising demand to hedge against inflation and geopolitical risks.

Teacher Charlie uses the miner community as an example, pointing out that their discourse power has been weakened due to institutional involvement: "Miners used to be able to influence prices through joint control, but now they have no advantage in front of Wall Street capital."

4.2 Evolution of Pricing Logic

Investment TALK believes that institutional investors focus more on the long-term volatility of Bitcoin rather than short-term prices. "A decrease in volatility is a prerequisite for Bitcoin to be included in pension fund portfolios." Currently, Bitcoin's 30-day volatility has fallen from 80% in 2021 to 35%, close to the level of gold.

Professor Eaton emphasized that the compliance process (such as anti-money laundering reviews and tax reporting) is increasing market transparency, but it may also dampen retail investor enthusiasm.

V. Market Outlook: Key Variables for the Second Half of 2024

5.1 Federal Reserve Rate Cuts and Cryptocurrencies

The three guests unanimously believe that whether the Federal Reserve will start cutting interest rates in 2024 will become the biggest variable affecting the market. If the rate cut exceeds expectations, Bitcoin may break through 100,000 USD; if inflation rebounds leading to a restart of rate hikes, the market may face a deep correction.

5.2 Regulation and Technological Innovation

Regulatory Breakthrough: The advancement of the U.S. cryptocurrency bill and the expansion of virtual asset licenses in Hong Kong may become catalysts for a new round of market trends.

Technical Iteration: The maturity of Bitcoin Layer 2 (such as Stacks, RSK) and Ethereum ZK Rollup is expected to enhance the practicality of on-chain assets.

5.3 The Survival Battle of Altcoins

Teacher Charlie predicts that 2024 will be the "shuffle year" for altcoins. "90% of altcoins will go 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 could become dark horses.

Conclusion

The cryptocurrency market in 2025 presents unprecedented complexity amidst the collision of traditional finance and decentralization concepts. Bitcoin enters the mainstream through ETFs, altcoins struggle to survive amidst compliance and innovation, while every fluctuation of Federal Reserve policies reshapes the market's risks and opportunities. For investors, while pursuing returns, it is essential to remain vigilant of the undercurrents in market differentiation and regulatory changes.

Live replay link:

Note: This article is based on the live discussion of guests and does not constitute investment advice. The market is risky, and decisions should be made with caution.