The US administration's move toward deregulation, the Treasury's long-term bond buyback, and miners' transition to AI data centers are driving Bitcoin's rise, bringing change to the altcoin market.
Want the next one from this channel too?
The recent rebound in the crypto market has created a positive atmosphere across the industry. Kim Nam-woong, CEO of Fophylus, noted that the market rebound provided the industry with "a week to breathe." This market recovery is leading to an overall improvement in investor sentiment.
Three main factors are cited for driving Bitcoin's rise. First is the US administration's move toward deregulation, second is the Treasury's long-term bond buyback policy. Finally, miners' reduced selling pressure, as they utilize their infrastructure for AI inference costs in response to increased demand for AI data centers instead of selling Bitcoin, has also had an impact.
The US government has recently shown moves towards regulatory improvement, including permitting derivatives trading and allowing token offerings without securities registration under certain conditions. An announcement in May indicated that perpetual futures trading would be permitted, and the CFTC chairman stated that they would pursue institutional improvements independently without waiting for the Clarity Act, laying the groundwork for US companies to undertake various businesses. These changes are acting as positive signals for the virtual asset market.
While the Clarity Act's legislation is delayed, the US administration is creating short-term market boosts through measures it can take proactively. This is interpreted as an intention to instill positive prospects in market participants and improve investment sentiment for the crypto market. Kim Nam-woong, CEO, explained that it is especially important for the administration to directly convey messages to create market expectations and encourage entrepreneurs and investors to maintain a positive attitude towards the market.
Such proactive measures by the administration can inject vitality into the market and lay the groundwork for long-term growth, even if immediate legislative passage is difficult. They play a crucial role in reducing uncertainty and securing market confidence during the interim period before the bill passes.
The importance of message delivery cannot be overlooked from a psychological market perspective. Positive messages can directly influence investor behavior and contribute to market revitalization. In the short term, such messages can act as a powerful catalyst, as much as actual policy changes.
Bitcoin mining companies are expanding their business models by utilizing surplus computing resources for AI inference. Major mining companies like Galaxy Digital are already building AI data centers through this transition, securing additional revenue streams beyond mining profits. This change contributes to market stabilization by reducing forced selling pressure during Bitcoin price declines.
The expansion of mining companies into the AI business has acted as a key mechanism to defend against forced selling pressure during Bitcoin downturns. In the past, mining companies relied solely on Bitcoin prices for revenue, but now they have gained flexibility against market volatility through a new revenue source: AI inference. Kim Nam-woong, CEO, analyzed that this change "prevented Bitcoin from falling further" during this bear market.
AI and Bitcoin mining are not mutually exclusive; rather, they can coexist by flexibly allocating computing resources based on market conditions. Mining companies still hold a vision for Bitcoin and view mining as an investment act. A paradoxical relationship has formed where they can return to mining if Bitcoin prices rise.
Even if the number of mining companies decreases, the Bitcoin network's transmission function remains stable. Kim Dong-hwan, CEO, emphasized, "Whether there are ten, five, or two mining companies, transmission still occurs." In fact, a decrease in the number of mining companies can reduce the selling volume in the market, positively impacting Bitcoin price stability.
The Jackson Hole meeting this week is a critical event for understanding the Federal Reserve's (Fed) interest rate stance, as emphasized by Kim Nam-woong, CEO. The Treasury's long-term bond buyback reflects the administration's desire for short-term rate cuts, and Chairman Powell's announcement on quantitative easing and interest rate policy direction is expected to significantly impact the market. Market volatility could increase depending on the meeting's outcome.
The outcome of the US midterm elections will be a key variable determining the direction of the Clarity Act. The election results could significantly affect the Trump administration's lame-duck status or its legislative momentum. Analysis suggests that in the long term, the midterm elections will have a more significant impact on the crypto industry than the Jackson Hole meeting.
The Fed Chair's message at the Jackson Hole meeting will greatly influence market interest rate expectations. While the Fed is an independent body separate from the administration, the Chair is appointed by the President, allowing for potential reflection of the administration's intentions. If an interest rate cut stance is confirmed, it could heighten expectations for a general market boom.
In the past, altcoin bull runs were speculative, with major Layer 1 (L1) coins like Ethereum and Solana rising alongside Bitcoin. However, recently, there has been a surge in specific assets such as SN, Pump.fun, and Hyperliquid. This suggests that investment strategies should differ based on the actual user activity and revenue generation of services or applications, rather than the blockchain's own revenue.
Now, investors are focusing on platforms with actual business models and users, rather than simply speculative approaches based on Bitcoin's price movements. This change indicates that as the crypto market matures, there is increasing interest in projects that generate real value.
The crypto investment trend is shifting from blockchain chains themselves to service platforms that have successfully acquired users. In 2021, chains themselves accounted for 98% of revenue, but now, interest is concentrated on specific service platforms that can generate profit. For example, Hyperliquid is gaining attention by serving as a derivatives exchange beyond just an L1.
Investing in individual memecoins is highly volatile and considered a 'player's domain' for general investors, so it's best to avoid it. Instead, just as those who sold pickaxes during the Gold Rush made more money than those who mined for gold, it is recommended to invest in the platforms where memecoins are traded and issued. This strategy allows investors to avoid the high risks of individual coins while benefiting from overall market growth.
Currently, prominent memecoin issuance platforms include Pump.fun and Fomo. These platforms support the creation and distribution of memecoins, with a structure that allows them to indirectly profit from the revitalization of the memecoin market. This approach is advantageous for diversifying risk and pursuing stable returns.
Due to the nature of the memecoin market, with frequent short-term surges and drops and severe information asymmetry, it is difficult for general investors to profit from individual coins. Therefore, platform investment can be an alternative to leverage the memecoin craze in a safer and more rational way.
Answers come from the transcript, with the exact spot cited.
Want the next one from this channel too?
When 삼프로TV 3PROTV publishes, we'll write it up like the one you just read and email it to you.
{channel} published 90 in the last 7 days.
We skip Shorts. You can unfollow any time.
