Since the end of 2022, the digital asset market has shown clear signs of recovery, and the crypto industry is benefiting from advances in technology and legislation. $BTC $ETH $BNB

Macro factors may be the biggest risk in the current cryptocurrency market. Recent economic data shows low inflation and stable growth, a favorable combination that greatly reduces the possibility of a recession. Market expectations of a "soft landing" have boosted crude oil and regional bank stocks, which have lagged behind in the rise of risky assets.

If the U.S. economy can achieve a soft landing, the cryptocurrency market rally could continue. However, if the economy struggles or the Federal Reserve raises interest rates further, the cryptocurrency recovery could pause in the short term.

While Bitcoin briefly consolidated in July, other risk assets have further gained ground, driven by expectations of a “soft landing” for the U.S. economy: gradually returning inflation to target without a recession. We believe that the cryptocurrency market could benefit due to the correlation of mainstream tokens with risk assets and the various favorable factors currently in the industry. However, a soft landing is not a sure thing and is now increasingly becoming a consensus, so the market has digested the benefits of a soft landing to a certain extent.

In addition to regulatory progress, the near-term outlook for cryptocurrencies may depend largely on whether the soft landing expectations can be sustained. If the upcoming economic data continues to support the soft landing thesis, the mainstream token rally may continue. But if the economy struggles or the Federal Reserve further raises interest rates, the cryptocurrency recovery may pause in the short term. Until the outcome is determined, the cryptocurrency market may experience significant volatility in altcoins, as has happened in the past month.

Last month's data and Fed policy signals support the view that the economy can rebalance without falling into recession. Inflation has slowed further. Despite low unemployment, strong job growth and falling unemployment claims, the recovery is showing signs of slowing. In a press conference after the July 25-26 FOMC meeting, Powell said that the Fed staff does not forecast another recession.

In financial markets, the prospect of a soft landing has spawned a new group of outperforming stocks. Bitcoin, the Nasdaq Composite Index, and AI-related assets outperformed the broader market in the year to June 1, benefiting from the launch of AI tools including ChatGPT. However, during July, the lead shifted to previous laggards, including U.S. regional bank stocks and crude oil (Exhibit 2). Notably, the best-performing stocks in the U.S. stock market include a large number of shorts, suggesting that many active investors are not buying into a soft landing.

Bitcoin and Ethereum fluctuated in a small range, down slightly month-on-month, as the dominant forces in the market have shifted away from tech-related themes. Bitcoin is also driven by fewer factors than earlier this year, such as concerns about regional banks (March 2023) and optimism about spot ETF approval (June 2023). Both realized and implied volatility for cryptocurrencies have fallen to historical lows. Meanwhile, their correlation with the S&P 500 has rebounded after a decline in the first half of the year. Bitcoin on-chain transaction fees fell again in July and have been steadily declining after a surge in interest around ordinals in May. In contrast, Ethereum transaction fees rose in July, and gas prices and maximum extractable value (MEV) rewards surged on July 30 following the attack on the Curve protocol.

The cryptocurrency recovery has already seen clear gains since late 2022, and there is reason to be optimistic about recent technological advances as well as legal and legislative progress. As such, we believe that the macro outlook is now the biggest risk facing the cryptocurrency market. A soft economic landing could be positive for risk assets, including cryptocurrencies, as it could prompt the Federal Reserve to lower real interest rates. Bitcoin could also appreciate if the Fed decides to tolerate prolonged above-target inflation, given its anti-inflationary role as an alternative non-sovereign monetary system and a gold substitute. However, if the central bank decides to raise real interest rates further, or if the economy falls into a recession, the cryptocurrency recovery could pause in the short term. #fdusd #Multichain #荣耀时刻 #带你看看币安Launchpad