Crypto Market Poised for Growth as Global Liquidity Shifts
Just one month after interest rate cuts, global capital markets have experienced multiple large-scale capital flows. The tech sector in the US stock market rebounded, driving up the Nasdaq Composite Index, while the S&P 500 and Dow Jones Industrial Average hit new highs. Prior to the National Day holiday, the A-share and Hong Kong stock markets also saw a strong surge. This week, funds have returned to the Nasdaq and the cryptocurrency market, driving up the prices of Bitcoin and other related assets, with Bitcoin expected to break through the $68,000 mark and reach new highs.
The rapid switching of funds between different tracks has created a “seesaw” effect. Currently, global liquidity is on the rise. How can we interpret the market situation? What will be the future trend of cryptocurrency assets?
Bitcoin Challenges Historical Price Highs
This week, the cryptocurrency market has performed remarkably well, with Bitcoin steadily rising and approaching the $68,000 mark. I personally predict that it will challenge the resistance level of $70,000 to $72,000 in the near future, breaking through historical highs.
The timing of the market’s rise is significant and may be related to the upcoming US presidential election. As the election day on November 4 approaches, the stability of the financial market becomes particularly important. Market stability and prosperity before the election play a crucial role in the Democratic Party’s prospects. Therefore, maintaining the smooth operation of the market becomes a top priority. After the election, regardless of who takes office, stabilizing and stimulating the financial market will be an important agenda for the new administration.
At the same time, looking globally, the situation in Northeast Asia remains tense, leading to cautious investment attitudes towards Asian markets and a slowdown in capital inflows. Against this backdrop, the US election results will reshape the international geopolitical landscape. The foreign policy orientation of the new government, whether it is the attitude towards the Russia-Ukraine conflict or the response to the Middle East situation, may trigger chain reactions. The changes in these geopolitical factors will affect global risk aversion and capital flows, leading to significant adjustments in the financial market in the period after the election.
In addition to political factors, the cryptocurrency market itself is releasing signals worth noting. Firstly, there is the breakthrough in MicroStrategy (MSTR) stock price. As the largest publicly traded Bitcoin holder, the value of MicroStrategy’s stock not only reflects the company’s valuation but also represents the US stock market’s expectations for the future price of Bitcoin. In the past month, MSTR stock has risen by approximately 50%, reflecting institutional investors’ optimistic attitude towards cryptocurrency assets.
Secondly, Bitcoin has completed the necessary consolidation. Over the past half year, Bitcoin has undergone a long period of consolidation, successfully absorbing selling pressure from Germany, the United States, and other countries. These selling pressures mainly came from Bitcoin spot ETFs approved by regulatory agencies and various institutional settlements. After the market fully digested these sell-offs, the timing for Bitcoin to make a breakthrough has matured.
Furthermore, Ethereum is currently showing good investment value. In the market adjustment of the past six months, Ethereum has experienced a greater decline compared to Bitcoin, creating a significant price gap. Based on historical experience, this gap is likely to be repaired in subsequent market trends, making Ethereum attractive to funds at its current price.
Global Liquidity Emerging, Crypto Market Poised for Growth
In addition, there is an interesting phenomenon between traditional capital markets and the cryptocurrency market. When traditional capital markets are strong, the cryptocurrency market tends to be weak, while when cryptocurrency asset prices rise sharply, some traditional capital markets perform poorly, creating a unique “seesaw” effect. This “seesaw” effect reveals the flow of global capital, with funds always chasing the most speculative market opportunities. In the context of intensified global competition, continuous policy changes, and the emergence of new asset classes, capital is accelerating towards areas that can bring the highest returns.
Although we currently see the phenomenon of liquidity “jumping around,” from a long-term perspective, global liquidity will inevitably pour into the cryptocurrency market on a large scale, and the inflection point is also approaching.
Firstly, from the perspective of economic logic, the rise of the cryptocurrency market is attributed to the free flow of capital and greatly improved efficiency. Traditional financial markets are constrained by various regulations and intermediaries, limiting the liquidity of capital globally. The cryptocurrency market, through blockchain technology, achieves the free flow of funds worldwide, reducing the friction costs of capital flow.
By reducing intermediaries, increasing transparency, and improving the efficiency of financial services, the cryptocurrency market can adapt to market changes faster and respond to the needs of global investors. This improvement in liquidity and efficiency will have a greater impact on the global economy and promote capital allocation towards more optimized and rational directions. At the same time, with the continuous popularization and application of cryptocurrency technology, more ambitious scenarios can be realized in the future. With the continuous development of RWA and DePIN, traditional economies can be promoted, which is an important driving force for the future potential of the cryptocurrency market.
Meanwhile, the emergence of the “seesaw effect” indicates that in the industry’s development over the past two years, cryptocurrency assets have become a mainstream choice in the capital market alongside traditional assets. The cryptocurrency market has tremendous potential, and one important reason it has not attracted large-scale funds in the past is the lack of compliance paths. However, now the US has launched Bitcoin spot ETFs, introduced cryptocurrency regulatory frameworks, and supported the development of Web3, opening up a compliant path for the cryptocurrency market.
Today, the “seesaw” of global liquidity is gradually tilting towards Hong Kong. Since 2023, Hong Kong has implemented a new cryptocurrency regulatory framework, allowing retail investors to participate in cryptocurrency asset trading legally through licensed exchanges. At that time, HashKey Exchange became the first licensed exchange to provide trading services to retail investors. Currently, HashKey Exchange’s total trading volume has exceeded HKD 538 billion, with user assets exceeding HKD 5 billion. As of October 16, according to the latest data from Coingecko, HashKey Exchange ranks in the top 8 among global exchanges and is the highest-ranked licensed virtual asset exchange in Hong Kong.
Hong Kong not only provides existing policy guarantees but also has the advantages of innovation and technological development, effectively attracting global liquidity capital inflows. For investors, this combination means they can safely enter a highly innovative market while enjoying strong legal and policy protection. Through this two-way liquidity bridge, Hong Kong can continue to consolidate its position as a global financial hub and further enhance its importance in the international capital market by leveraging new sources of liquidity through Web3 development.
In this era of global liquidity and capital allocation, the cryptocurrency market, with its unique advantages and innovative potential, is becoming a new battlefield in the global capital competition. With the continuous advancement of technology and the gradual improvement of regulations, the cryptocurrency market is expected to have broader development space and become an indispensable force in global capital allocation.
