Crypto Assets Market Weekly Report: Economic Data Provides Breathing Room, but Outlook Remains Uncertain

This week, Bitcoin opened at $80,708.21 and closed at $82,562.57, with a weekly increase of 2.31% and a volatility of 10.86%. The trading volume continued to decline compared to last week, with prices slightly rebounding within the descending channel.

The CPI data released by the U.S. was slightly higher than expected, and the news that the Russia-Ukraine conflict may ease has provided a brief respite for the stock market and Bitcoin. However, U.S. stock market valuations are still in the process of declining and bottoming out, with historical data indicating that there may still be room for further declines. The main factor leading to the decline in valuations—the tariff policy—could trigger inflation, and concerns about the U.S. economy slipping into "stagflation" have not been alleviated. Policymakers do not seem prepared to change their stance, and the Federal Reserve Chairman still insists on a data-driven approach.

This uncertainty and deadlock make the concerns about "stagflation" difficult to dissipate. The longer the situation lasts, the greater the potential for valuation adjustments. This is why we maintain a cautious attitude towards the short-term rebound of Bitcoin.

Macroeconomic Data Analysis

This week, the U.S. released its February CPI data, which was slightly lower than expected, alleviating some of the panic caused by last week's employment data. The unadjusted CPI increased by 2.8% year-on-year, lower than the expected 2.9%; the seasonally adjusted CPI rose by 0.2% month-on-month, also below the expected 0.3%. This data provided a brief respite for the market.

However, the preliminary consumer confidence index for March released by the University of Michigan fell sharply to 57.9, well below the market expectation of 63.1. At the same time, the preliminary one-year inflation rate expectation rose to 4.9%, exceeding the expected 4.2%. This indicates increasing concerns among American consumers about the economic outlook.

Despite this, global stock markets rebounded on Friday, mainly benefiting from news that a 30-day ceasefire agreement may be reached in the Russia-Ukraine conflict.

Stock Market Valuation Analysis

Currently, the S&P 500 Shiller PE ratio (CAPE) is at 34.75 times, down about 8.07% from the peak. According to historical patterns over the past 20 years, if it continues to decline, it may return to 32.89 times, indicating a further drop of more than 5%. If it reverts to the mean level of 27.25 times, there could be a potential pullback of over 21%. However, we believe the likelihood of such a deep adjustment is very low, unless there is a major policy error.

Crypto Assets Market Fund Flow

This week, the total inflow of funds into the crypto market amounted to $237 million, a significant decrease compared to last week. Specifically, Bitcoin spot ETF saw a net outflow of $842 million, Ethereum spot ETF had a net outflow of $184 million, while stablecoins experienced a net inflow of $1.264 billion.

Despite the increase in ETF fund outflows, the existing funds entering the exchange have been converted back into buying pressure, supporting the Bitcoin price to return to around $83,000. Currently, the fund inventory on the exchange has slightly rebounded, but this may only be a small-scale bottom-fishing behavior, insufficient to drive a full market reversal.

Investor Behavior Analysis

Short-term investors currently bear an average loss of about 9%, including a large number of ETF holders. In this round of decline, this group has been both a driving force and the main bearer of losses. In the future market fluctuations, they may continue to be under pressure or become a source of selling pressure for further declines.

In contrast, long-term holders have switched from reducing their holdings to increasing them over the past three weeks, accumulating approximately 100,000 Bitcoins. Another group worth noting is large investors, who have increased their holdings by nearly 60,000 Bitcoins, with a cost below 80,000 USD. In the long run, these two groups tend to achieve better returns and also play a role in stabilizing the market.

Market Cycle Indicator

According to the EMC Bitcoin cycle indicator, the current value is 0.375, indicating that the market is in an upward continuation phase.