On the news front, the Hong Kong government has recently actively promoted innovative financial services for central bank digital currencies, virtual banks, and virtual asset trading, demonstrating its leading position in the global financial technology field.

Author: Virtual Seed Global Research Department, Shengli Securities Research Department

Virtual Seed Global Research Department

Email: info@virtualseed.global

Shengli Securities Research Department

Email: research@victorysec.com.hk

1. Key data: Cryptocurrency market value

According to CoinMarketCap data, as of October 17, 2024, the global cryptocurrency market value was $2.32 trillion, an increase of 9.43% compared to last week. The price of Bitcoin rose from the opening price of 60326.39 USDT on October 10th to the closing price of 67620.01 USDT on October 16th, an increase of 12.09%.

10-year US Treasury yield

According to CNBC data, as of October 17, 2024, the 10-year US Treasury yield was 4.038%, slightly lower than last week.

US dollar index

As of October 17, 2024, the US dollar index was 103.308, a significant increase from the previous week.

Total market value of stablecoins

According to SoSoValue data, as of October 17, 2024, the total market value of stablecoins USDT, USDC, DAI, TUSD, and FDUSD reached $169.17 billion, a significant increase from last week.

Cryptocurrency Panic and Greed Index

According to CoinMarketCap's data statistics, as of October 17th, the index was 60, belonging to the greedy range and showing a significant change compared to last week.

Chart 1: Net Flow of Bitcoin Spot ETFs

Source: Coinglass https://www.coinglass.com/zh-TW/bitcoin-etf

According to Coinglass data, from October 10th to October 16th, the net flow of Bitcoin spot ETFs reached $1.559 billion, a tenfold increase in capital flow compared to last week, indicating a strong willingness of market funds to enter the market. Especially in the past four working days, there has been a continuous net flow, reflecting the rapidly increasing demand for Bitcoin spot ETFs in the market. From the perspective of market sentiment, there has been a significant shift in the flow of funds and the behavior of market participants, with panic gradually subsiding and being replaced by an atmosphere of extreme greed. This situation usually means that market participants have strong expectations for a price increase in the future of Bitcoin, but they should also be cautious of the short-term adjustment risks that may be triggered by overly optimistic emotions.

Chart 2 Net Flow of Ethereum Spot ETF

Source: Coinglass https://www.coinglass.com/zh-TW/eth-etf

According to Coinglass data, from October 10th to October 16th, the net flow of Ethereum spot ETF was $38.5 million per week. Despite positive flow, Ethereum's performance was relatively inferior compared to Bitcoin spot ETF's net flow of up to $1.559 billion. Especially on Tuesday, there was a net outflow of Ethereum spot ETFs in the market, indicating that investors' confidence in the asset is still fluctuating. This may reflect that investors are currently paying more attention to the market momentum of Bitcoin, prioritizing the allocation of funds to its strong performing targets. However, the long-term potential of Ethereum cannot be ignored, especially with the development of Layer 2 solutions and the continued expansion of the Ethereum ecosystem. It is expected that there is still considerable room for growth in the future market. In the short term, the performance of Ethereum spot ETFs in the market may be affected by overall cryptocurrency market sentiment and capital flows, but potential infrastructure upgrades and developments in the DeFi field in the future will still bring sustained demand and support for Ethereum.

Chart 3: Bitcoin Market Share

Source: CoinMarketCap https://coinmarketcap.com/charts/#bitcoin -dominance

According to the chart from CoinMarketCap, amidst the sluggish cryptocurrency market, cryptocurrency prices have continued to rise, with Bitcoin's market share reaching its highest level since April 2021. According to TradingView data, Bitcoin's dominant position climbed 58.77% this morning, reaching a new high in three and a half years, while its price also reached its highest point in ten weeks.

Chart 4: Changes in the Number of Bitcoin Addresses

Source: The Block https://www.theblock.co/data/on-chain-metrics/bitcoin

According to The Block, a16z Crypto research has shown that cryptocurrency activity has reached a historic high this year. As of September, there are approximately 617 million global cryptocurrency holders, with 60 million monthly active users, and it is expected to exceed 220 million by 2024. Base leads with 22 million addresses in the EVM chain, while Solana has over 100 million addresses in the non EVM chain. The number of mobile wallet users has reached a new high, with the United States accounting for 12% of the global total. The Ethereum Dencun upgrade and EIP-4844 have driven a 36% increase in ETH value on Layer 2, while the proportion of Layer 2 payments to Layer 1 fees has decreased by 94%.

3. Market dynamics

Shengli Securities launches compliant Web3 multi strategy fund in Hong Kong that accepts stablecoin subscriptions

On October 10, 2024, Victory Securities announced the launch of the Web3 multi strategy fund, Victory VSG Virtual Asset Multi strategy Fund, which accepts stablecoin subscriptions in Hong Kong. After consultation with the Hong Kong Securities Regulatory Commission, this fund has become one of the compliant and accepting stablecoin subscriptions through regulatory inquiry procedures. It is managed by Virtual Seed Asset Management (VSG) as an investment advisor and is held on a licensed virtual asset exchange in Hong Kong, which is underwritten by large insurance institutions. It provides safe virtual asset investment options for professional investors under the global compliance system.

The Hong Kong government promotes the regulation of digital currencies and virtual assets, and deepens financial innovation

According to a report by the Ministry of Finance, Hong Kong Special Administrative Region official Li Jiachao stated that the government will continue to promote financial innovation applications such as central bank digital currency, mobile payments, virtual banking, virtual insurance, and virtual asset trading. The measures include: firstly, promoting the cross-border payment application of central bank digital currency, and the Hong Kong Administration is testing cross-border trade settlement related technologies and expanding the participation of public and private institutions; 2. Improve the regulation of virtual assets and transactions. The Finance and Treasury Bureau will complete the second round of consultation on the regulation of over-the-counter virtual asset transactions and submit a licensing system for virtual asset custody services; 3、 To promote the tokenization of real-world assets and the ecosystem of digital currencies, the regulatory authority is advancing the Ensemble project.

SEC extends review of Cboe Ethereum ETF options rule amendment proposal until December 3rd

The US Securities and Exchange Commission (SEC) announced that it will extend the review time for the proposed rule changes to the Cboe exchange. The proposal aims to adjust exchange rules to allow listing and trading of Ethereum based exchange traded product (ETF) options, involving multiple Ethereum funds such as Fidelity, Grayscale, and iShares. According to the document, the SEC has extended the final decision date to December 3, 2024, in order to have more time to evaluate this proposal.

4. Technical analysis

Source: https://www.tradingview.com/chart/KBMGlAhS/

According to TradingView's data analysis, as of 13:45 on October 17th, the price of Bitcoin was 67392 USDT. Although the October line has not yet closed, there is currently a bullish trend with an upward trend, while this week's weekly line shows a large bullish trend with a downward trend. A bullish pattern with a clear upward trend at the daily level, with prices breaking through along the MA5, forming a strong bullish structure. At the 4-hour level, the MA5, MA34, and MA170 moving averages show an upward diverging trend. If we can succes**ully reach 69000 by the end of this month, the weekly MA34 can still maintain an upward slope, which will be a strong bullish signal. Before this round of rise, MA34, which is at the weekly level of Bitcoin, had already shown signs of flattening. We conclude that if the price of Bitcoin can rise above 69000 at the end of October, it means that MA34 will continue to rise in the future and the market will remain in a structural bullish trend. This indicator is an important reference for judging the market or bear market. According to the logic of moving average deduction, the turning point of MA34 is expected to occur at the end of this month. On March 14th of this year, Bitcoin reached 73777, and the closing price of the K-line for that week was exactly 68393, which can be seen as the historical high point area for MA34 deduction, around 69000 USDT. If the price of Bitcoin approaches or breaks through this region, MA34 will continue to maintain an upward trend, and the market can maintain a bullish expectation; However, if the price is much lower than the region, MA34 may experience a downward turn and send a risk signal that the market will turn into a bear market. Therefore, the closing price at the end of this month will be the key factor affecting the subsequent market trend.

5. Summary

On the news front, the Hong Kong government has recently actively promoted innovative financial services for central bank digital currencies, virtual banks, and virtual asset trading, demonstrating its leading position in the global financial technology field. At the same time, Shengli Securities has launched a Web3 multi strategy fund that accepts stable coin subscriptions in Hong Kong, providing professional investors with compliant virtual asset investment options. In addition, the US Securities and Exchange Commission (SEC) has extended the review time for the proposed amendments to the Cboe Ethereum ETF options rules, highlighting the continued market attention to Ethereum and related financial products.

In terms of data and technology, the global cryptocurrency market value has risen by $2.32 trillion, surpassing Bitcoin's 12.09% increase in October, demonstrating a certain level of market vitality. The net flow of the Bitcoin spot ETF from October 10th to October 16th reached $1.559 billion, indicating a rebound in investor confidence in Bitcoin. On the other hand, although the net flow of Ethereum spot ETFs was $38.5 million, their performance was slightly weaker compared to Bitcoin. Technically speaking, the price of Bitcoin remains around 67392 USDT, indicating a strong bullish structure, with both daily and weekly indicators showing positive upward signals.

Overall, the current market sentiment has shifted from panic to greed, indicating investors' optimistic expectations for the Bitcoin and cryptocurrency markets. However, short-term volatility in the market still exists, especially at the crucial hurdle of whether Bitcoin can break through 69000 USDT. If succes**ully maintaining this level, it may further confirm the continuation of the market; On the contrary, if the price falls back, we need to be alert to the risks of market turning.

6. Insurance withdrawal

Cryptocurrency Industry Compliance Insurance

The cryptocurrency market is in its early stages of development, and its characteristics, applications, and risks are constantly evolving. In order to ensure the safety of investors' assets and prevent financial risks, many countries around the world have continuously strengthened their supervision of cryptocurrency assets in recent years. Countries such as China, India, South Korea, and Argentina are tightening their regulatory measures. The severe fluctuations in the US federal base rate may have a significant impact on the cryptocurrency market and require close attention to market dynamics and regulatory changes.

Network Security Insurance

If encrypted assets and user information are subjected to cyber attacks, it will seriously endanger the reputation of the industry, trigger market panic and price fluctuations. Exchanges and related enterprises should take strict security measures to ensure the security of user assets and information.

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