Expectations for interest rate cuts in the US rise, Ethereum welcomes the listing of Spot ETF.

Recent U.S. economic data has eased market concerns. Currently, the market expects a 100% probability of interest rate cuts starting in September. U.S. stocks are shifting styles as expected, with the concentration trend of large tech stocks gradually breaking down, while small stocks and non-tech sectors are seizing opportunities. The crypto market experienced significant fluctuations in July due to sentiment, but has now stabilized. The Ether Spot ETF has officially launched for trading, and although Grayscale’s selling pressure temporarily affects the price, this pressure may not last long due to the rapid selling speed.

On July 25, the United States announced a seasonally adjusted annualized GDP growth rate of 2.8% for the second quarter of 2024, exceeding the expected 2.0%. At the same time, the PCE price index grew by 2.6% in the second quarter, lower than the 3.4% in the first quarter. The core PCE price index, which is closely monitored by the Federal Reserve, grew by 2.9%, also lower than the previous value of 3.7%. However, the market reacted differently to this data, with significant fluctuations in the U.S. stock market that day, indicating a divergence of opinions among investors regarding the economic outlook.

A considerable number of investors question the authenticity of the economic data released by the authorities. For example, when the U.S. Department of Labor announced the latest non-farm payroll data, it significantly revised down the data for the previous two months. This practice has led to various speculations in the market, with some believing that economic data may be used as a tool for policy adjustment.

Long-term interest rate hikes have had a significant impact on the U.S. economy. Currently, the market generally believes that many economic data may be "staged" by the Federal Reserve and government departments to create a rationale for interest rate cuts. This expectation has already been reflected in market pricing: the yield on U.S. 10-year Treasury bonds is showing an overall downward trend, and funds are beginning to shift from the risk-averse sentiment of the interest rate hike cycle to the asset allocation of the interest rate cut cycle.

Recently, there has been a noticeable style shift in the U.S. stock market. Comparing the performance of the Russell 2000 small-cap index with the Nasdaq Composite Index, it can be seen that July 11 was a turning point: as the Nasdaq peaked, the small-cap index began to rise. This day coincided with the release of the latest CPI data in the U.S., and the market keenly detected signals of easing inflation, believing that interest rate cuts might begin in September. Funds quickly withdrew from large-cap stocks and started to flow into small-cap stocks.

Among the "Big Seven Tech" companies, Tesla and Alphabet have released their Q2 earnings reports. Tesla's performance fell short of expectations, while Alphabet performed relatively well. The market is closely watching the earnings reports of other tech giants, particularly the one from Apple, which is set to be announced on August 1. If only NVIDIA excels in the AI sector while other companies fail to maintain growth, coupled with a shift in market style, U.S. stocks may face further adjustments.

The cryptocurrency market experienced significant volatility in July, influenced by multiple factors. The price of Bitcoin fluctuated dramatically between $54,000 and $70,000. The Mt. Gox compensation case, the German government's sell-off, and Trump's speech at the Bitcoin conference all had an impact on the market. Trump stated that he wants to make the U.S. the "world Bitcoin center," but there are disagreements about the long-term impact of his remarks on the market.

Meanwhile, Ethereum has reached an important milestone: on July 23, at Eastern Time, it coincided with the 10th anniversary of Ethereum's first public offering, and the Ethereum Spot ETF began trading. However, the market response was relatively tepid. On the first day of trading, there was a net inflow of over $100 million, but in the following days, there was a continued net outflow. Grayscale's ETHE product experienced a large number of redemptions, similar to the situation when the Bitcoin Spot ETF was launched. However, the selling pressure of Grayscale's ETFE was relatively fast, and it is expected that this pressure will not last long.

Overall, the crypto market in July was mainly driven by sentiment. Currently, the market seems to lack a new bull market narrative, coupled with a decoupling from the movements of the U.S. stock market, placing it in a rather chaotic period. However, the market has begun to digest these emotions, showing a spiral upward recovery trend. Bitcoin Spot ETF continues to see net inflows, reflecting that the market's panic sentiment has not persisted, indicating that a larger market movement may be on the horizon.

Despite uncertainties in the macro economy and traditional financial markets, the crypto asset market has shown independence and resilience, promising to play an increasingly important role in diversified investment portfolios. The launch of the Ether Spot ETF brings new vitality and stability to the market. Although the future of the crypto market is full of challenges, it also contains immense opportunities.