【MICA RESEARCH】BTC stabilizes at $100,000, funds flow into the Decentralized Finance ecosystem

With the stable inflow of Spot ETF funds, BTC has finally returned to $100,000 and broke through $106,000 earlier today, setting a new high. Ethercoin has also reached $4,000. However, the overall market increase is not significant compared to Decentralized Finance Tokens. Currently, funds are gradually shifting from main chain coins to Decentralized Finance related Tokens, and the relaxation of regulations is rapidly brewing in the increase.

ETF Spot inflows continue to be the main driving force behind the rise of BTC. Except for Friday, there were net inflows of over $200 million for four consecutive days last week, indicating that Wall Street fund companies continue to buy BTC in response to Trump's crypto-friendly policy. In addition, the latest November inflation rate remained at an annual increase of 2.7%, and there were no major issues in the overall environment. The next stage to watch out for may be the upcoming U.S. GDP forecast.

It is worth noting that this trend may continue after Trump takes office, as many hedge funds were previously resistant to buying BTC, but now the sentiment is slowly changing, and there will be a certain degree of sustainability in the overall bullish atmosphere. For example, BlackRock publicly advises investors to allocate 2% of their multi-asset portfolios to BTC, indicating that IBIT has been profitable for the company and has received a warm market response.

More fund companies have decided to invest in BTC ETF distribution and asset custody. We have also seen more investment institutions show interest in BTC. The US BTC ETF has been launched for almost a year, with a cumulative capital inflow of over $50.5 billion. On the other hand, companies continue to buy BTC as a value investment tool. The most well-known MicroStrategy purchased an additional 21,550 BTC this week at an average price of $98,782, with a total holding of 423,650 BTC.

We expect that BTCSpot ETF will continue to maintain a net inflow of funds, so there is no need to worry about funds from Wall Street buying in. However, the trading market in the coin circle appears to be more active. Currently, funds have rapidly overflowed into main chain coins, small and medium-sized cryptocurrency coins, and Decentralized Finance Tokens. Next, let's talk about the overflow market of Decentralized Finance Tokens.

Sources: MICA RESEARCH A. Before December 10th, CZ, CEO of coin安, said that China may establish BTC reserves.

Former Coin An CEO Changpeng Zhao (CZ) said at the BTC MENA conference in Abu Dhabi on December 9 that he believes China may become one of the countries that adopt strategic BTC reserves, that is, may follow the plan proposed by the incoming Trump administration in the United States, but first he believes that "smaller countries" may be the first to adopt BTC reserves, but this change may happen slowly.

However, he also mentioned that due to the lack of transparency from the Chinese government, its position on cryptocurrencies is difficult to predict. However, Trump has not yet taken office, and the strategic BTC reserve plan has not yet been launched. If this really happens, we will be able to observe the reactions of other countries. That is, when the United States really starts to establish BTC reserves, it may trigger other countries to start imitating.

He also added that there is no sign of the Chinese government hoarding BTC at the moment, but he believes that establishing a strategic reserve is 'inevitable'. He believes that the Chinese government will hoard BTC first before announcing its strategic plan, rather than announcing the policy in advance. CZ believes they have to do this at some point because BTC is the only 'hard asset'.

B. December 11 SEC commissioner calls on the government to reshape the regulatory environment for the crypto industry

U.S. SEC Commissioner Hester Peirce proposed three priorities in a recent interview with Fox Business aimed at addressing regulatory barriers to the development of the crypto industry. She first called for an end to the controversial 'Chokepoint 2.0' initiative, government policies that restrict access to banking and financial services for the crypto industry, such as allowing banks to provide custody services to crypto exchanges or Decentralized Finance (DeFi) firms, enabling the smooth development of the crypto industry.

She further emphasized the need for clear SEC regulatory boundaries, resolving the dispute over which cryptographic Tokens are considered securities, protecting assets that are not securities from unnecessary regulation, and promoting more cryptographic Tokens to be listed on Spot ETF for trading. Finally, she called for regulatory agencies to collaborate with cryptographic enterprises, publicly discuss how existing rules are applied, identify areas in need of adjustment, and promote transparent and rapid progress.

It can be seen that the United States is promoting the normalization of crypto industry regulation, in the past many banks were not allowed to provide financial services for crypto companies, in the future with the relaxation of regulations in the United States, more banks will contact crypto companies and provide them with fiat coin custody, transfer and financing services, stable coin related companies are expected to obtain a more relaxed regulatory environment, the first beneficiaries should be PayPal, Paxos and USDC.

On December 12th, Ray Dalio called on investors to abandon debt assets and invest in BTC.

Bridgewater Associates founder Ray Dalio shared his current investment strategy at the Abu Dhabi Financial Week, advocating that investors should abandon traditional debt assets and shift funds to 'hard assets' such as gold and BTC. The main reason is that the global economy is facing unprecedented debt crises, with debt levels of major economies including the United States and China soaring to unprecedented heights, which may soon be at risk of default.

In the future, only "debt, coins, economic and technological innovations" are the key forces driving the development of the world, rather than investing in debt assets M He stressed that he wants to move away from debt assets such as bonds and debt and instead hold hard currencies such as gold and BTC, unlike criticism of BTC a few years ago, Dalio has now become its advocate, especially when BTC exceeded $100,000 for the first time.

He suggests that investors should not overly focus on the ups and downs of daily news, but should strategically think from a global perspective. In the future, governments around the world will continuously loosen for economic development. The value of debt assets will only decrease with inflation, and there is also the risk of technical default hidden by the government. In comparison, enterprises with the ability to generate cash flow and technological innovation, as well as the limited quantity of BTC, are better investment targets.

It is expected that the regulatory environment will be relaxed, and funds will flow into Decentralized Finance

The biggest news recently is undoubtedly that World Liberty Financial (WLFI), under the control of Trump, has begun to inject funds into Decentralized Finance projects. Originally, WLFI was established in September this year, with a business model of providing lending and interest income services for encrypted assets. However, with Tron founder Sun Yuchen announcing an investment of 30 million US dollars in WLFI on November 25, becoming the largest investor and joining the WLFI advisory team, the project has immediately transformed into a more proactive investment company.

WLFI recently purchased a variety of cryptocurrencies with $12 million USDC, including $10 million Ethercoin (ETH), $1 million Chainlink (LINK), and $1 million Aave (AAVE), sparking a frenzy among market investors for previously undervalued Decentralized Finance Tokens. Although the amount is not large compared to the tens of millions invested by other institutions, as it is a Decentralized Finance project led by the Trump family, it undoubtedly sends a strong message to the market - "Decentralized Finance regulation may be significantly relaxed".

WLFI previously announced a partnership with Chainlink, announcing that it will adopt its price oracle and cross-chain technology, and choose to establish a lending Decentralized Finance protocol on the Aave v3 main chain. Although the investment amount is not large, due to Trump's support, this cooperative investment case also led to a surge of over 50% in two tokens, and it is predicted that capital rotation will move from BTC to Decentralized Finance Token.

Taking LINK as an example, according to Santiment's analysis, the rise in LINK price is mainly attributed to the large increase in holdings by whales. In the past two months, wallets holding more than 100,000 LINK have increased by 5.69 million, while wallets holding less than 100,000 LINK have decreased by 5.67 million. This pattern usually indicates the possibility of further price growth in the future, and it also indicates that the main investors have already completed their positions and are only waiting for the WLFI news to drive the price up.

In addition to investment news, market analysts are expecting the SEC to further relax regulations on Decentralized Finance companies and allow these companies to access banking services. SEC commissioners have already spoken out, hoping to assist crypto companies in obtaining financial services from US banks, including account custody, transfers, and related financial transactions, implying that Decentralized Finance companies will have greater innovation opportunities under the Trump administration.

The market is focusing on the bullish news and policies, and is redeploying funds to Decentralized Finance Tokens, such as Uniswap, SUI, and other decentralized trading protocols, which have seen remarkable gains. However, we believe that it is only the beginning for decentralized finance after the recent surge in crypto coins. If the overall market does not decline, there is a good chance that the rise of Decentralized Finance Tokens will surpass the overall market. It is still the early stage of the rise of Decentralized Finance, and it is worth the attention and expectation of investors.

LAST WEEK'S REVIEW [MICA RESEARCH] BTC ONCE EXCEEDED $100,000, WHAT SHOULD THE MARKET PAY ATTENTION TO?

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〈【MICA RESEARCH】BTC stabilizes at $100,000, funds flow into the Decentralized Finance ecosystem〉This article was first published in Blockchained.