Daily News | BTC is replacing gold; institutions predict that BTC will reach $70K by the end of this year; EigenLayer TVL exceeding $3.5 billion because of canceling staking limit TVL

Crypto Daily Digest: Yellen warns of crypto risks, institutions predict that BTC will reach $70,000 by the end of this year

On February 6th, US Treasury Secretary Janet Yellen warned the House Financial Services Committee about the latest work of the Financial Stability Oversight Committee (FSOC) that the crypto industry poses various potential risks to the financial , including the dangers of stablecoins, runs on crypto platforms, and price fluctuations.

And it stated that it will continue to cooperate with Congress on crypto legislation, “applicable rules and regulations should be implemented, and Congress should pass legislation to regulate the spot market of stablecoin and non securities crypto assets.”

On the same day, Markus Thielen, founder of 10x Research, stated that Bitcoin is expected to rise by about 65% from its current level and reach $70,000 by the end of the year.

Thielen wrote in a report last Friday that with the support of macroeconomic conditions, favorable monetary policy, the US election cycle, and increasing demand from TradFi investors to allocate Bitcoin ETFs, it seems possible for Bitcoin to rebound to $70000. Thielen pointed out that although Bitcoin has been on the rise for 10 out of its 13 years of existence, its returns in January were even more uneven, with only 7 years of growth and 6 years of decline.

In addition, Thielen stated in Friday’s report that although the Federal Reserve has postponed its first interest rate cut to May or June, inflation rates are decreasing and economic growth is also maintaining. He also noticed that the US presidential election cycle coincides with the year when Bitcoin was halved, and historically, Bitcoin prices have been bullish. Specifically, Bitcoin rose by 152% in 2012, 121% in 2016, and 302% in 2020, with an average increase of 192%.

This is similar to the view of Matrixport, which also released a report stating that Bitcoin’s return rate has shown a clear quarterly pattern, with the highest return rate in the fourth quarter, followed by the second quarter. Although it is still a positive return, the average performance in the first and third quarters is mixed. It is worth noting that February is a more favorable month for Bitcoin, with 7 out of the past 10 years showing positive returns and an average increase of +8%.

Recently, Cathie Wood has been singing a lot again. On February 6th, Ark Invest CEO Cathie Wood stated that Bitcoin is actually replacing gold as a value storage asset, and BTC is more of a safe haven asset, as well as an asset that investors pursue in times of economic uncertainty.

Cathie Wood also shared a Bitcoin chart priced in gold, which shows a strong long-term upward trend in BTC. Cathie Wood stated that this reflects that Bitcoin is now partially replacing gold. And it indicates that this chart only shows you that Bitcoin is rising even relative to gold. Now that Bitcoin has alternatives, we believe this situation will continue because there is a simpler and less frictional way to access Bitcoin spot ETFs.

Recently, the re-staking track has been hot. On February 6th, the popular liquidity re-staking protocol EigenLayer TVL reached 1.5026 million ETHs, with a value of approximately $3.455 billion.

It is understood that EigenLayer has temporarily lifted the staking limit of 200,000 ETH, and its total value locked (TVL) has increased by $750 million within a few hours.

DefiLlama’s data shows that within two hours after Eigenlayer lifted its deposit limit, over 1 million ETH flowed into the protocol, driving its cumulative TVL to over $3 billion, currently at $3.12 billion. Lido’s stETH token accounts for 80% of EigenLayer’s new deposits, approximately $560 million. According to a recent blog article by EigenLayer, the lifting of the upper limit on liquidity staking tokens (LST) is aimed at “increasing organic demand.” The new cap will be implemented on February 9th, but the project states that it plans to permanently lift deposit restrictions at some point in the future.

Macro: Powell once again suppresses expectations of interest rate cuts, and the crypto market may benefit from the May rate cut window

On Monday, due to Powell’s speech and US data setting expectations for interest rate cuts, the possibility of a March rate cut was almost eliminated by the federal funds rate swap, and the opportunity for a May rate cut was also reduced. Market risk appetite decreased, and the US faced a dual kill in stocks and bonds.

The US stock market fell collectively, with the Dow Jones Industrial Average falling 0.71%, the S&P 500 Index falling 0.38%, and the Nasdaq falling 0.2%. NVDA. O rose 4.79% to a new high of $1.7 trillion in market value. The price of US treasury bond bonds continued the downward trend of last Friday, and the yield of 10-year US treasury bonds rose nearly 14 basis points to 4.16%; The yield on interest rate sensitive two-year US Treasury bonds has risen to a one-month high of 4.48%.

The US dollar index further strengthened, reaching a new high since mid-November last year, reaching a peak of 104.6 and ultimately closing up 0.49% at 104.47. The joint rise of the US dollar index and US bond yields has put pressure on precious metal prices, with spot gold falling more than 1% during trading, below $2020 per ounce for the first time since January 29, and ultimately closing down 0.73% at $2024.89 per ounce. Spot silver closed down 1.48% at $22.35 per ounce.

Due to the escalation of the situation in the Middle East, crude oil rebounded from a three-week low, and WTI crude oil rose to over $72 per barrel, ultimately closing up 0.6% at $72.74 per barrel; Brent crude oil rose above $78 per barrel in trading, ultimately closing 0.74% higher at $77.96 per barrel.

Earlier, Federal Reserve Chairman Powell was interviewed on a program called “60 Minutes” during which host Pelley asked Powell, “Did you disappoint many people last week? The next meeting to decide on interest rate direction will be held in March this year. Based on what you know now, is the likelihood of a rate cut greater or lesser at that time?”

Federal Reserve Chairman Powell responded, “The overall situation is that the economy is strong, the labor market is strong, and inflation is decreasing. My colleagues and I are trying to choose a suitable time to start reducing our restrictive policy stance.

This moment is about to come. We have said that we hope to have more confidence in inflation dropping to 2%, and I believe the committee is unlikely to have that level of confidence at the March meeting in seven weeks. Except for two attendees, all others believe that it is appropriate for us to ease our restrictive stance by lowering interest rates starting this year. So, this is the basic situation, we just want to find a suitable time.”

During this period, host Pelley also asked Powell, “In December last year’s Federal Reserve forecast, the magnitude of this year’s interest rate cut will drop to around 4.6%. Is it still possible?” Powell said: “These predictions were made in December last year, and they are all personal predictions from the participants. This is not the committee’s plan, and we will update them at the March meeting. However, I have to say that during this period, nothing will make me believe that the committee will significantly change their predictions.”

According to The Block, Andre é Dragosch, head of research at ETC Group, stated that based on the current prices of federal fund futures, market participants expect the Federal Reserve to begin a rate cut cycle in May. The federal funds futures contract essentially represents the market’s expectation of future interest rates. Investors can use these futures contracts to express their opinions on the direction of interest rates and manage interest rate risk in their investment portfolios.

Dragosch added that the market has ruled out the possibility of the Federal Reserve starting to cut interest rates in March, but the prospect of longer-term interest rate hikes and the latest US employment data may “counterintuitively increase the possibility of early rate cuts.”

Dragosch said, “I believe that an increase in ic risk and/or a significant increase in unemployment within the banking could trigger a reversal of monetary policy. The longer the Federal Reserve maintains interest rates at current levels, the more likely we are to see some kind of surprise or credit event within the regional banking , especially in institutions with significant exposure to US commercial real estate. I think the recent pressure on banks such as New York Community Bank fully illustrates this.”

Dragosch predicts that Bitcoin and other cryptocurrencies may initially experience a sell-off in response to the possible delay in interest rate cuts until May. He added, “In the event of a possible recession in the US economy, global economic growth expectations may decline.” However, the potential reversal of monetary policy in May, especially in the context of a weak US dollar, should provide an important driving force as a second-order effect.