Crypto Assets Market Weekly Report: Bitcoin Consolidates at High Levels, Awaiting Breakthrough to New Heights

Since rebounding from the low in April, Bitcoin has seen a maximum increase of 50%, outperforming the Nasdaq index and reaching an all-time high. However, the rapid rise in the short term has accumulated some selling pressure, and since May 22, the Bitcoin market has begun to experience large-scale sell-offs. This has created certain pressure on Bitcoin, which is at a high level and leading U.S. stocks, becoming a major reason for the price correction.

This Thursday, due to the rising panic in the market, Bitcoin once dipped to the support level of $100,000. Subsequently, the price continued to rebound, returning above the upward trend line. Along with the adjustment of U.S. stocks, the inflow of funds into Bitcoin spot ETFs has slowed down, making it difficult to absorb selling pressure in the short term. It is worth noting that with the price correction, the outflow scale from exchanges has significantly increased this week, indicating that new funds are taking advantage of the adjustment to accumulate chips.

The positive non-farm employment data has created a favorable atmosphere for Bitcoin's stabilization and rebound, but to break through to a new price level, greater progress may be needed in areas such as trade policy, Crypto Assets regulation, or Federal Reserve interest rate cuts.

Macroeconomic and Policy Trends

The U.S. non-farm employment data for May showed an increase of 139,000 jobs, which is the lowest since February, but slightly higher than the market expectation of 126,000. The unemployment rate remained at 4.2%, with no deterioration. The data performance slightly exceeded expectations, driving the three major U.S. stock indices up and gold down.

The market currently has strong expectations for a "soft landing" of the U.S. economy, meaning that after experiencing rapid growth and high inflation, the economy gradually slows to a sustainable growth level while avoiding severe recession or large-scale unemployment. Current economic and employment data essentially meet this characteristic; although GDP growth has slowed, it is mainly due to the Federal Reserve's proactive cooling, inflation is declining in an orderly manner, the unemployment rate remains stable, and the number of new jobs has not seen a significant drop. This also implies that the timing of the Federal Reserve's interest rate cuts may be delayed.

In terms of trade policy, the leaders of the US and China held their first call, emphasizing the principles of respect and reciprocity, and agreed that representatives would consult in the UK. However, negotiations are still ongoing, and it will take time to reach an agreement. Meanwhile, the US has raised steel and aluminum tariffs from 25% to 50%, and the Canadian government has also threatened to retaliate.

This week, the market was also affected by some sporadic events, such as a public opinion conflict between a well-known entrepreneur and political figures, which led to significant fluctuations in the stock prices of related companies and triggered a brief decline in U.S. stock indices and Bitcoin. However, the long-term impact of such events on the market is expected to be limited.

Overall, driven by slightly better-than-expected non-farm data and slow-moving trade negotiations, US stocks, US bonds, and the US dollar maintained a fragile balance over the past week, slightly tilting towards an optimistic direction.

Crypto Assets Market Analysis

Bitcoin has outperformed the Nasdaq index in the rebound since April. US stocks are building momentum to challenge previous highs, while Bitcoin set a new all-time high on May 22.

From a technical indicator perspective, Bitcoin underwent a two-week correction after reaching a new high. Last week it retraced by 3.07%, and this week it had significant fluctuations with a slight increase of 0.08%. The weekly chart shows a long-legged doji pattern. During the adjustment, trading volume is in a state of contraction.

The maximum pullback over the past two weeks has been around 10%, with the overall trend running above the previous low points. The lowest point occurred this Thursday, touching the ascending trend line. In the context where U.S. stocks have not yet hit new highs, this adjustment of Bitcoin after reaching a new high is foreseeable and is considered a healthy adjustment. A period of consolidation might be unavoidable; to break through to new highs and advance further, greater progress may be needed in trade policies, Crypto Assets regulation, or interest rate cuts from the Federal Reserve.

Market Supply and Demand Analysis

Since April, Bitcoin has rebounded from its low point with a maximum increase of 50%. As the price hits a new historical high, both short-term speculative funds and long-term holders have realized profits to a certain extent. This selling pressure peaked on May 22, and has gradually decreased since then.

It is worth noting that while the sell-off is decreasing, the outflow of Bitcoin from centralized exchanges is increasing. This week, the outflow reached 76,520.72 coins, far exceeding the usual weekly outflow of 10,000 to 20,000 coins. This large-scale outflow may reflect long-term funds' recognition of the current price level.

Capital Flow Analysis

After a phase of rising prices for Bitcoin, even funds through the ETF channel have seen a slight outflow. In the past two weeks, Bitcoin spot ETFs have experienced fund outflows, with $135 million flowing out last week and $128 million this week. This outflow occurred against the backdrop of a significant increase in Bitcoin's price and fluctuations in the US stock market.

On its own, it is difficult to predict when ETF funds will shift back to net inflows. However, considering the overall trend of the US stock market, concerns about a significant decline may be overly pessimistic. Although there is technically a possibility of continuing to drop to $100,000, timing the opportunity is relatively difficult. In a situation where the supply and demand balance is fragile, a breakthrough upward movement may occur within just a day or two.

Market Cycle Indicator

According to eMerge Engine data, the EMC Bitcoin cycle indicator is 0.625, in an upward phase.