Is the worst over? Cryptocurrency surges, funds snap up cheap chips

The decline that began last week got even worse over the weekend. Bitcoin (BTC) has bottomed out at $30,000 on Coinbase and some exchanges, and the pain for Ethereum (ETH) is also continuing.

Last Sunday, although Bitcoin fell again to $31,100, Coinbase's Ethereum fell even more, to as low as $1,725, a drop of 60.6%. In the sell-off on Sunday, some altcoins even lost more than 90% of their value.

Data source: Tracker Investment

For now, the new week started with an upward tone, which seems to be a good sign. Bitcoin is close to $38,000 and Ethereum is just below $2,500. BNB rose 36%, ADA rose 29%, Dogecoin rose 16%, XRP 22%, DOT rose 26%, LTC rose 24%, LINK also rose 39%, and MATIC rose to 79%. It can be expected that the worst period is over because the financing rate is in a serious negative range.

While low liquidity, selling pressure, and regulatory fears remain a huge negative for the market, miner capitulation and selling by businesses with Bitcoin on their balance sheets could see the bears return.

However, there are also positive drivers in the market, reflected in the increase in the supply of stablecoins. According to Coingecko, in the past seven days, the market value of USDT has increased from $58.14 billion to $60.26 billion, and the market value of USDC has increased from $16.86 billion to $20.63 billion.

Sam Trabucco, a quantitative trader at Alameda, said that while stablecoins can be used to buy cryptocurrency products, they can also be used to store them in yield farms or provide collateral for people trying to short. Not to mention, if the U.S. dollar exceeds $1, the supply will increase. Since mid-May, both USDT and USDC have seen some more volatility than usual.

In addition, various funds have also rushed to buy cheap cryptocurrencies with money. As Jason Choi, director of cryptocurrency fund research at Spartan Group, said: "Almost every retail investor I know has sold or is selling, but almost every fund I talk to is bidding, albeit slowly."

Another fund, Amber Group, reported inflows from crypto funds, macro funds, speculative VCs, which the group said “are beginning to buy BTC+ETH and blue chip DeFi with staggering limit orders and longer TWAPs.”

“Bitcoin is insurance for people” is how Ross Stevens, founder and CEO of New York Digital Investment Group (NYDIG), defined the cryptocurrency in a recent interview. NYDIG is a Bitcoin management firm and a subsidiary of asset management giant Stone Ridge, which manages more than $10 billion in assets.

In Ross Stevens' view, Bitcoin is a reward for freedom and dignity. When a person has only fiat currency, then "this is the melting ice of value" because the Federal Reserve will continue to print money. "The increase in wealth inequality and the serious unfairness of central bank activities" Stevens "sees the terrible power of Bitcoin."

So the Profit Academy infers: All of the above makes the market expect that the ongoing sell-off seems to be just the middle of a bull market, rather than the beginning of a bear market.

Yingfu Investment is a brand of the US Cinda Capital Group. Its operating entity is UBS Financial Investment Management Co., Ltd. It holds legal financial licenses such as NFA issued by the National Futures Association of the United States and MSB issued by FinCEN of the US Treasury Department. It also has a branch in Hong Kong to better serve customers in the Asia-Pacific region.

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