Fed maintains interest rate, stablecoin and RWA development accelerate, crypto market awaits new opportunities

A. Market View

1. Macroeconomic Liquidity

Currency liquidity shows signs of improvement. The Federal Reserve has kept interest rates unchanged at its last five meetings, maintaining the federal funds rate target range at 4.25% to 4.50%. The Fed Chair did not provide clear guidance on a rate cut in September, emphasizing that inflation risks remain while noting that the labor market remains solid. These statements suppressed market expectations for a rate cut this year. The dollar index rose to a two-month high, and US stocks continued to set new highs. In contrast, the cryptocurrency market performed relatively weak.

2. Overall Market Conditions

This week, Bitcoin has been fluctuating at a high level, while altcoins have performed poorly, and cryptocurrencies stocks have generally declined. The market is mainly focusing on projects related to the Ethereum ecosystem.

Among the top 300 cryptocurrencies by market capitalization:

Top 5 Gains:

• LOKA: 300%
• ZORA: 60%
• ZBCN: 50%
• KTA: 40%
• REKT: 40%

Top 5 Declines:

• TKX: 60%
• FARTCOIN: 30%
• M: 30%
• VIRTUAL: 20%
• GRASS: 20%

It is worth noting that:

• ZORA, as a social finance project, has partnered with a certain public chain app. A well-known foundation supports it, leading to a tenfold increase from its low point.
• The new and old stablecoins under ENA continue to be profitable and have established a US stock investment company for ongoing purchases. ENA has also partnered with a lending platform to release stablecoin revolving loans.
• CFX is a domestically compliant public chain, and there are reports that Hong Kong plans to issue stablecoin licenses in September.

3. On-chain Data

Bitcoin liquidity is facing severe challenges. An early investor sold over 80,000 bitcoins through over-the-counter transactions, with a total transaction value approaching $10 billion. Nevertheless, the market has effectively absorbed this selling pressure, and currently, 97% of the circulating supply remains in a profitable state.

The supply of stablecoins maintains a stable growth of 1%.

Institutional funds continue to show a net inflow trend. The influx of funds has significantly increased driven by Ethereum, with the inflow amount from the beginning of the year to date exceeding the total for the whole of last year.

The long-term trend indicator MVRV-Z Score is benchmarked against the total market cost and reflects the overall profit situation. When the indicator exceeds 6, it is in the top range; below 2, it enters the bottom range. Currently, the MVRV has broken the key level of 1, indicating that holders are generally in a state of loss. The current indicator is 2.6, close to the middle range.

4. Futures Market

Futures funding rate: This week's rate remains at a normal level of 0.01%. A rate between 0.05% and 0.1% indicates high long leverage, which may suggest a short-term market top; a rate between -0.1% and 0% indicates high short leverage, which may suggest a short-term market bottom.

Futures Open Interest: This week, Bitcoin futures open interest has started to decline.

Futures Long-Short Ratio: Currently at 1.1, indicating a neutral market sentiment. Generally, retail sentiment is considered a contrarian indicator, with below 0.7 indicating fear and above 2.0 indicating greed. It is important to note that the long-short ratio data can be quite volatile, which reduces its reference significance.

5. Spot Market

This week, Bitcoin's price has fallen, but the exchange rate of Ethereum against Bitcoin remains strong. A few small-cap coins related to the stablecoin concept are leading the rise. Market funds are gradually rotating from Bitcoin to Ethereum and other altcoins, and it is expected that market risks may gradually accumulate in the later period.

B. Stablecoins and RWA

1. Stablecoin Sector

A financial regulatory agency stated that the first batch of stablecoin issuance licenses may be issued early next year. In the initial phase, the identities of compliant stablecoin holders in the region will require real-name verification.

A senior official from a regulatory agency stated at a technical briefing on the regulatory framework for stablecoin issuers that the number of stablecoin issuer licenses to be issued in the first batch has not yet been determined and will depend on the quality of the materials submitted by the applying institutions. The first license is expected to be issued early next year, and it was emphasized that the threshold for obtaining a license is quite high. Entering the "sandbox testing" phase does not guarantee the issuance of a license. The official also mentioned that the regulatory agency holds an open attitude towards the types of fiat currencies, and applicants can choose stablecoin solutions pegged to a single fiat currency or a basket of fiat currencies; the key is to clearly specify the types of fiat currencies when applying.

A blockchain department under a certain e-commerce giant has registered the names "JCOIN" and "JOYCOIN", leading the market to speculate that these may be the names of its stablecoins. The registration description indicates that related services include providing electronic fund transfers and cryptocurrency financial transactions through blockchain technology. The company is one of the participants in a financial regulatory authority's stablecoin issuer sandbox program and previously collaborated with a certain bank last July to test a stablecoin-based corporate cross-border payment solution.

A certain payment giant has announced the launch of a new payment feature in the US market, allowing small merchants to accept payments in over 100 different cryptocurrencies, including mainstream coins like Bitcoin and Ethereum. This move significantly expands the company's service offerings in the cryptocurrency payment space, encouraging more merchants to participate in digital currency transactions.

An investment institution will strategically invest $10 million in a synthetic dollar stablecoin project. This project allows users to mint USDf by collateralizing with stablecoins, mainstream cryptocurrencies, or tokenized government bonds. Currently, the circulation of USDf has exceeded $1 billion.

2. RWA Sector

A working group of a certain country's government has released an important policy report, which is the first public direction on cryptocurrency regulations since taking office. The report presents several core recommendations, including requiring relevant regulatory agencies to clarify rules for the registration, custody, and trading of crypto assets; promoting Congress to pass related bills; supporting the tokenization of securities on the blockchain, opposing the issuance of central bank digital currencies, and promoting the integration of crypto technology into traditional financial infrastructure.

The government of a certain region has confirmed its commitment to building a global digital asset innovation center. The region has introduced a licensing system for virtual asset trading platforms and will implement regulations for stablecoins. The government is advancing the draft for virtual asset trading and custody licenses and is establishing a regulatory sandbox mechanism to encourage the testing of innovative technologies such as blockchain, AI, and tokenized assets.

A large bank in a certain country has acquired a high-rise office building for approximately $680 million, planning to tokenize the asset using blockchain technology and issue digital securities. Institutional investors mainly participate through private REITs, while retail investors can purchase tokenized shares for fractional ownership through a certain platform. This move lowers the investment threshold, allowing ordinary users to participate in high-quality commercial real estate investments.