Over the past week, the market has digested a slow and consistent drip of Bitcoin from various whales, with the world's largest cryptocurrency reaching a key support level. How will the market unfold in the coming future? There are two critical catalysts that we must not overlook: the potential approval of ETH ETFs and mounting expectations for interest rate cuts, driven by weak U.S. economic data. This sentiment is also reflected in the slightly dovish message from Fed Chair Powell released in the hearings for two consecutive days. Bitcoin has regained its upward trend this week after its testing of the new bottom of $53,000. As such, the market is once again calling for the carnival of altcoins. We believe that if Bitcoin can take hold the $60,000 mark, it will reshape market confidence and potentially revisit the high of $70,000 soon.
Macro Environment
US Unemployment Rate Rises
Total nonfarm payroll employment increased by 206,000 in June, 12,000 less than the previous month yet higher than Bloomberg's forecast of 190,000. There was a total decrease of 110,000 in the matric for April and May. In June, average hourly earnings for all employees on private nonfarm payrolls increased by 0.3 percent as expected, 0.1 percent lower than that in May. The unemployment rate unexpectedly stood at 4.1%. Job growth disappointed on weak private sector hiring due to the drag of the service sector, while government employment rebounded. The June nonfarm data suggests an economic slowdown in the second quarter, with a further weakening expectation in the future.
Expectations for Fed Rate Cut Mount
“Fed whisperer” Nick Timiraos agrees with this expectation of a rate cut. Last year, the rate cut seemed premature as inflation rose in the first quarter and the economy grew steadily, despite Powell providing some justification. However, this week, Powell returned to Congress with more compelling rationale, laying stronger groundwork for a rate cut. If the CPI data this week shows no big changes, it is highly probable that a rate-cutting cycle will begin in September. The market has started pricing in the slashing rates, with the probability of a September rate cut remaining stable at over 70%. Traders are betting that September will mark the beginning of rate cuts.
Current State and Future Trends of the Crypto Market
This week, the price of Bitcoin showed an upward trend to a broader market, owing to the decreasing selling pressure as well as the short-term market sentiment support by the potential spot Ethereum ETF launch in the week of July 15. As a result, the Bitcoin Fear and Greed Index is tipping into "Greed" territory.
Bitcoin, mirroring the recent performance of the S&P 500, has regained strong momentum. As highlighted in the last research report, the recent downturn in Bitcoin's price could be yet another "buy the dip" opportunity after the selling pressure subsided.
Promising Sectors
1. Bitcoin Layer2
Hot: UNISAT's New Swap Product
UniSat announced important updates to its Swap product on July 7. With most of the engineering works for the swap module completed, the remaining work primarily involves assisting indexers other than UniSat Indexer to effectively recognize and calculate inscriptions related to the swap module. The UniSat has also made significant progress on its way to scale and extend Bitcoin systematically with an approach named Fractal Bitcoin. Given the current progress, the team is pretty confident about delivering Fractal Bitcoin in September. On Fractal Bitcoin, the team will deliver a swap product identical in functionality to the mainnet swap module — Fractal Swap, ensuring projects on Fractal Bitcoin have good liquidity from the start. In subsequent iterations, BTC and other mainnet assets can also exist on Fractal Bitcoin as brc-20 wrapped assets, providing greater flexibility.
What to Expect Next
The emergence of Ordinals presents a historic first opportunity to make profits by earning transaction fees from mining Bitcoin other than relying on fixed block rewards, which is crucial for maintaining the Bitcoin ecosystem. If the unemployment rate cools off this week, Bitcoin L2 could potentially continue to outperform Bitcoin.
2. Ethereum Ecosystem
Hot: Imminent Approval of Spot Ethereum ETFs
The Illinois district court judge declared that Ethereum qualifies as a commodity, clearing hurdles for the final approval of spot Ethereum ETFs. The market tips the Ethereum ETF approvals by SEC in the week of July 15, making now a potentially high-reward entry point into the Ethereum ecosystem.
List of Promising Cryptos:
UNI (Uniswap): A decentralized trading protocol that enables cryptocurrency trading through automated market makers (AMMs) rather than traditional centralized exchanges.
LDO (Lido): A decentralized Ethereum 2.0 staking protocol that allows users to stake ETH on the Ethereum 2.0 Beacon Chain while receiving stETH tokens pegged to ETH at a ratio of 1:1.
ENA (Ethena): A synthetic dollar protocol built on Ethereum, providing internet native yields.It employs a delta hedging strategy to issue a synthetic dollar, USDe.
User Engagement
1. Trending Cryptos on X
$IO
IO.NET is an open-source, cross-platform network for high-performance asynchronous programming on the platform. It provides a concise and powerful way to handle communication and supports protocols like TCP, UDP, and Unix suite, suitable for building various network applications and services.
On July 5, @maid_crypto said on the X platform: "IO insiders transferred out 2.5M IO tokens."
IO.NET's team member @TheAntiApe published the denial on social media, saying "This is definitely a FUD. 1. The contract involved is the one used for the third IO airdrop, stemming from Streamflow. The 2.5M IO rewarding the community and the remaining GPU rewards used separate contracts, therefore the total IO in this contract is 2.5M. 2. The content in @maid_crypto's link filtered transactions of over 10,000 tokens. Remove the filter, and you will see all the small claims."
$SD
Stader is a prominent non-custodial staking platform based on smart contracts, simplifying the discovery and utilization of liquid staking solutions.Stader is building key staking middleware infra for multiple PoS networks for retail crypto users, exchanges and custodians. The mission of Stader is to bring sustainable staking yields from digital assets by simplifying staking while offering the best risk-adjusted returns to delegators. It wants to build a one-stop, one-click, dynamic decentralized stake management platform.
Major exchanges are currently in the process of listing SD.
2. Popular DApps
Layer3
Layer3 is an attention infrastructure across the EVM, Solana, and Cosmos. In the brief time since launch, Layer3 has facilitated over 96M interactions and issued its token L3. L3 holders can engage in governance and staking. The total supply is 300 million L3, with the allocation for community accounting for 51% and the initial airdrop for 5%, scheduled in summer 2024. Layer3 Foundation will release the tokenomics and distribution timeline. L3 holders will be able to participate in governance regarding certain aspects of the protocol.
