The U.S. interest rate cut is approaching, Ethereum is迎来重要里程碑, and market sentiment is gradually recovering.

Recent economic data released in the US has alleviated market concerns. The current market anticipates a 100% chance of an interest rate cut in September. US stocks are undergoing a style rotation as expected, with the concentration of large tech stocks beginning to dissipate, while small-cap stocks and non-tech sectors are presented with opportunities. In July, the cryptocurrency market was significantly influenced by sentiment, but it has now stabilized. Ethereum spot ETFs have started trading; although Grayscale's sell-off has temporarily put pressure on prices, the rapid pace of the sell-off may mean that this pressure will not last long.

On July 25, the United States announced that the GDP for the second quarter of 2024 grew at an annual rate of 2.8%, higher than the expected 2.0%. The PCE price index grew by 2.6% in the second quarter, down from 3.4% in the first quarter. The core PCE price index, which is closely monitored by the Federal Reserve, increased by 2.9%, also lower than the previous value of 3.7%. However, the market does not seem to fully agree with this data. On the day the data was released, U.S. stocks experienced significant volatility, indicating a divergence in market views on the economic outlook.

Some investors question the accuracy of the economic data released by the U.S. government. The Department of Labor significantly revised down the data from previous months while announcing the latest non-farm payroll figures. This practice has sparked market speculation and doubt, suggesting that economic data may be used as a tool for policy regulation.

Long-term interest rate hikes have significantly impacted the U.S. economy. The market generally believes that some economic data may be aimed at creating a rationale for interest rate cuts. Current data shows that the probability of rate cuts starting in September is as high as 100%.

This extreme expectation indicates that the market has begun to reprice various assets for a rate cut cycle. The yield on 10-year U.S. Treasury bonds is generally on a downward trend, as funds shift from the risk-averse sentiment of the rate hike cycle to repricing assets in the rate cut cycle.

Observing the recent trends of the Russell 2000 small-cap index and the Nasdaq Composite Index, an interesting phenomenon can be found: on July 11, when the Nasdaq peaked, it was exactly the day when the Russell 2000 began to rise. On this day, the U.S. released the latest CPI data, and the market keenly captured the signals of easing inflation, leading to a general belief that interest rate cuts could begin in September. Funds quickly withdrew from large-cap stocks and started to flow into small-cap stocks.

During a rate cut cycle, the increase in liquidity will enhance the speculative nature of the market. Compared to large-cap stocks, small-cap stocks exhibit higher volatility and are more suitable for speculation. Therefore, this shift in style from large-cap stocks to small-cap stocks is reasonable.

Currently, among the "Magnificent Seven" in the US stock market, Tesla and Alphabet have released their second-quarter financial reports. Tesla's performance fell short of expectations, while Alphabet's overall performance exceeded expectations, although YouTube's advertising and revenue did not meet expectations. The performance of these two companies has intensified market concerns regarding the overall profitability of the "Magnificent Seven."

If the AI concept only benefits Nvidia while other companies perform poorly, coupled with a shift in investment style, the US stock market may face more adjustments. Pay attention to the subsequent performance of Apple, Microsoft, and Nvidia; if they can exceed expectations, along with the overall liquidity brought by interest rate cuts, the overall returns of the US stock market may continue.

In July, the cryptocurrency market experienced significant fluctuations due to multiple factors. The price of Bitcoin fell below $54,000 at its lowest, then broke through $70,000, and fell back to around $66,000 by the end of the month. Recently, the Bitcoin volatility index reached a high level, indicating that the market is in a stage where both bulls and bears are evenly matched.

The sharp decline at the beginning of the month was mainly due to emotional selling. Trump's speech at a certain cryptocurrency conference caused a brief market fluctuation, but ultimately had limited impact. There are disagreements in the market regarding the feasibility of Trump's statements and their long-term effects, which may have also overestimated the probability of Trump being elected president.

On July 23, the 10th anniversary of the first public sale of Ethereum, the Ethereum spot ETF began trading. However, the market performance was lackluster: over $100 million in net inflow on the first day of trading, but a continued net outflow in the following days. A certain trust company's product experienced significant outflows, similar to the situation when the Bitcoin spot ETF was launched.

However, there is no need to worry too much about this situation. Currently, the selling speed of this trust company's ETF is very fast, and the selling pressure may quickly decrease. The rapid launch of the Ethereum spot ETF proves that crypto assets are being accepted by traditional markets at an unexpectedly fast pace, and the future prospects of crypto assets are bright.

Overall, the market in July was mainly driven by sentiment. The crypto market currently may lack a new narrative for a bull market, combined with a decoupling from the U.S. stock market, resulting in a relatively chaotic period that is more susceptible to emotional influences.

However, the market has basically digested these emotions, showing a spiral upward recovery trend, with Bitcoin prices developing in a positive direction. The continuous net inflow of Bitcoin spot ETFs reflects that market panic has not persisted, indicating that a larger market movement may be on the horizon.

Despite the uncertainties in the macroeconomic and traditional financial markets, the cryptocurrency asset market has shown its independence and resilience, and is expected to play an increasingly important role in diversified portfolios, providing investors with new growth opportunities. Although the price of Bitcoin has been highly volatile this month, it is largely influenced by sentiment, and the long-term trend represented by Bitcoin spot ETFs remains strong. The launch of the Ethereum spot ETF has also brought new vitality and stability to the market. While the future of the cryptocurrency market is full of challenges, it is also full of hope.