The US government transferred 29,800 bitcoins and the market crashed to 66,000. It is not clear why the US has made the latest bitcoin transfer. Some people joked that this is a move to prepare for Mr. Donald Trump’s recent announcement that the US will establish a strategic bitcoin reserve plan.
This week the market's focus has returned to the macro level:
The small non-farm payrolls on Wednesday, the interest rate meeting on Thursday morning, and the unemployment rate on Friday are all the focuses of this week.
Let’s talk about the interest rate meeting first. It is almost impossible to adjust the interest rate at the July meeting. Even the market does not expect a rate cut. Therefore, the key point is whether Powell will mention the expectation of a possible rate cut in September during the Q&A session.
At present, the market generally believes that the Federal Reserve will start its first interest rate cut in September. Even some Federal Reserve officials thought so when they were interviewed. Therefore, the probability of a rate cut in September given by CME is close to 90%. If the rate cut starts in September, there is a high probability that there will be no unexpected events. In this case, the rate cut in September will be a defensive one, which is good for the market.
Why is it so difficult for Bitcoin to break new highs?
This month, after the negative news of Germany selling BTC was digested, the market began to rise dramatically due to Trump's assassination and the US election.
From $58,000 in the middle of the month to around $68,000, the market fell back after Trump announced a very positive view on various types of Bitcoin for the election. But not long after, the interest rate market generally expected the Federal Reserve to cut interest rates for the first time this year in September, and BTC spot ETF data continued to have a net inflow. Under the influence of a series of positive news, BTC then began to surge upward again. Just when BTC broke through $70,000 and was close to the historical high of $73,777 set in March, the market was frustrated again and trended downward. Why is it so difficult to set a new high?
1. BTC contract position data hits a new high, which is often the short-term high of BTC.
Contract data, to a certain extent, represents the market funds’ views on future market trends. Contract data hit a record high, indicating that the market is too consistent in the short term and is extremely optimistic about BTC’s short-term trend, and is constantly increasing leverage. Therefore, it often ushers in a correction to clean up chips and move forward lightly.
2. Ethereum spot ETF net inflow is less than Grayscale outflow.
After the BTC spot ETF was approved, the BTC price also experienced a period of decline. History also happened on Ethereum. Just when the market thought that its inflow data would be bleak due to the lack of support for staking income, it attracted $1.183 billion in capital inflows in its first week of launch.
3. Huge transfers from the U.S. Department of Justice address, a custodial or sell-off mystery
A transfer of 10,000 BTC worth $670 million was a deposit to an institutional custodian or service. Speculation is that the transfer could be a wallet consolidation that holds custody of the seized Bitcoin.
So far, market participants have different opinions on whether these deposited BTC are being held in custody or sold, but the negative impact on the market is still in effect.
4. The Mentougou compensation has started, and the huge selling pressure has caused market concerns.
This morning, Mt.Gox transferred 0.02 BTC to a newly created address, which may be a transfer test, and will continue to pay compensation. It can be expected that before the compensation is completely completed, the market will still be negatively affected by its huge selling pressure.
The market needs greater positive factors to stimulate the market and change the status quo!
Although the price of Bitcoin fluctuated during Trump’s Bitcoin conference speech, the market did not move as wildly as expected. The price of Bitcoin remained between $67,000 and $70,000, with volatility falling significantly.
Trump's speech echoed industry expectations, but the market may need a bigger positive to see a major breakthrough. This positive may come as the US election approaches, when promises and policies become clearer. Despite Trump's optimistic remarks, Bitcoin failed to break through its all-time high, so Bitcoin may continue to fluctuate in a range.
Based on historical data analysis, Bitcoin returns flattened in August and declined in September. However, tailwinds from U.S. interest rate policy, falling interest rates, and the election calendar are likely to cushion any downward pressure on the $1 billion token unlock in August. Bitcoin dominance is creating new highs this cycle and is having a significant impact.
Bitcoin is expected to eventually break new highs, but it may need macro (rate cut) help, and the Fed's interest rate decision on August 1 and the CPI report on August 14 will be crucial.
