HashKey Livio: Global capital continues to play "teeter-totter," liquidity is imminent, and Bitcoin will break historical highs

The interest rate cut has only been a month, and the global capital markets have already experienced several large-scale capital flows—U.S. tech stocks rebounded first, driving the Nasdaq index up, while the S&P 500 and Dow Jones indices reached new highs. The A-shares and Hong Kong stock markets also saw a strong surge before the National Day holiday. This week, funds have returned to the Nasdaq and cryptocurrency markets, pushing Bitcoin-related asset prices to break through $68,000, with expectations of soon surpassing historical highs.

Funds are rapidly switching between different sectors, creating a "seesaw" effect. Currently, global liquidity is on the verge of emerging; how should we interpret the market landscape? What will be the trend for crypto assets?

Bitcoin Challenges Historical Price Highs

This week, the crypto market performed remarkably, with Bitcoin continuing to rise, now approaching the $68,000 mark. I personally expect it to challenge the resistance levels of $70,000 to $72,000 soon, breaking through historical highs.

The timing of the current market rise is quite significant and may be related to the upcoming U.S. elections. As Election Day on November 4 approaches, the stability of the financial markets becomes particularly important—before the election, market stability and prosperity play a crucial role in the Democratic Party's electoral prospects, making it essential to maintain smooth market operations; after the election, regardless of who takes office, stabilizing and stimulating the financial markets will become an important agenda for the new administration.

At the same time, looking globally, the current situation in Northeast Asia remains tense, leading to a cautious investment attitude from international capital towards Asian markets, with the "eastward flow" noticeably slowing down. Against this backdrop, the outcome of the U.S. elections will reshape the international geopolitical landscape. The new government's foreign policy orientation—whether regarding the Russia-Ukraine conflict or responses to the Middle East situation—could trigger a chain reaction. Changes in these geopolitical factors will affect global risk aversion sentiment and capital flows, leading to significant adjustments in financial markets for a period after the elections.

In addition to political factors, the cryptocurrency market itself is also releasing signals worth noting. First is the breakthrough in MicroStrategy (MSTR) stock price. As the largest publicly traded Bitcoin holder, MicroStrategy's stock value not only reflects the company's valuation but also represents the U.S. stock market's expectations for Bitcoin's future price. The MSTR stock price has risen about 50% in the past month, reflecting institutional investors' optimistic attitude towards crypto assets.

Secondly, Bitcoin has completed the necessary consolidation. Over the past six months, Bitcoin has undergone a long period of sideways consolidation, successfully digesting selling pressure from countries like Germany and the U.S. This selling pressure mainly came from the approval of Bitcoin spot ETFs by regulatory agencies and various institutional liquidations. After the market has fully digested these sell orders, the timing for Bitcoin's price change has matured.

Additionally, Ethereum currently shows good investment value. During the market adjustments over the past six months, Ethereum has experienced a more significant decline compared to Bitcoin, creating a notable price gap. Historically, such gaps often get corrected in subsequent market movements, making Ethereum particularly attractive to capital at its current price level.

Global Liquidity is Emerging, and the Crypto Market Has Great Potential

Moreover, an interesting phenomenon has emerged between traditional capital markets and the crypto market—when traditional capital markets are strong, the crypto market tends to be relatively sluggish; conversely, when crypto asset prices surge, some traditional capital markets show weakness, creating a unique "seesaw" effect. This "seesaw" effect reveals the flow patterns of global capital—capital always chases the most speculative market opportunities. In the context of intensified global competition, constantly changing policies, and the emergence of new asset classes, capital is accelerating towards areas that can yield the highest returns.

While we currently observe a peculiar phenomenon of liquidity "jumping around," from a long-term perspective, global capital liquidity will inevitably be injected into the crypto market on a large scale, and the turning point is approaching.

First, from the underlying economic logic, the rise of the crypto market can be attributed to the free flow of capital and significant improvements in efficiency. Traditional financial markets are constrained by numerous regulations and intermediaries, limiting capital's liquidity globally. The crypto market, through blockchain technology, enables the free flow of funds worldwide, reducing friction costs in capital movement.

By reducing intermediaries, increasing transparency, and enhancing the efficiency of financial services, the crypto market can adapt more quickly to market changes and respond to global investors' needs. This improvement in liquidity and efficiency will have a greater impact on the global economy and drive capital allocation towards a more optimized and rational direction. At the same time, as crypto technology continues to be widely applied, more grand scenarios can be realized in the future. The ongoing development of RWA and DePIN can drive innovation in the traditional economy, which is an important driving force for the future potential of the crypto market.

Meanwhile, the emergence of the "seesaw effect" indicates that, in the past two years of industry development, crypto assets have become a mainstream choice alongside traditional assets in the capital world. The significant potential of the crypto market, which previously failed to attract large-scale capital, was largely due to the lack of compliant pathways. Now, with the U.S. introducing Bitcoin spot ETFs and establishing a regulatory framework for cryptocurrencies while supporting Web3 development, a compliant path for the crypto market's growth has been opened.

Now, the "seesaw" of global liquidity is gradually tilting towards Hong Kong.

Since 2023, Hong Kong has begun implementing a new regulatory framework for cryptocurrencies, allowing retail investors to legally participate in crypto asset trading through licensed exchanges. At that time, HashKey Exchange became the first licensed exchange approved to provide trading services to retail investors. Now, HashKey Exchange's total trading volume has surpassed HKD 538 billion, with user assets exceeding HKD 5 billion. As of October 16, according to the latest data from Coingecko, HashKey Exchange ranks among the top 8 global exchanges, being the highest-ranked licensed virtual asset exchange in Hong Kong.

Hong Kong not only offers existing policy guarantees but also possesses dual advantages of innovation and technological development, effectively attracting global liquidity capital inflows. For investors, this combination means they can safely enter a highly innovative market while enjoying strong legal and policy protections. Through this two-way liquidity bridge, Hong Kong can continue to consolidate its position as a global financial hub while leveraging Web3 to develop new sources of liquidity, further enhancing its importance in the international capital market.

In this era of globalization of liquidity and capital allocation, the crypto market, with its unique advantages and innovative potential, is becoming a new battleground in the global capital competition. With continuous technological advancements and gradual improvements in regulation, the crypto market is expected to welcome broader development space, becoming an indispensable force in global capital allocation.