Currently, there is a strong correlation between the volatility of the cryptocurrency circle and the macro market. Bitcoin took a roller coaster ride last night following the macro data. The market in June was not so smooth, but don’t worry. After the shock, the market will readjust its expectations and regain support. The outlook is firmly optimistic, so short-term fluctuations do not mean anything.
With the current market adjustments, it is a good opportunity to pick up bargains. This was the case in May and will remain the case in June.
Several key messages from last night’s Fed meeting:
1. The U.S. core CPI fell to a three-year low in May, lower than expected, and expectations for a rate cut increased.
2. The Federal Reserve kept interest rates unchanged for the seventh consecutive time, in line with market expectations.
3. The dot plot predicts only one 25 basis point rate cut in 2024 and four rate cuts in 2025.
4. The inflation rate has eased significantly, but it is still too high, and interest rates are not expected to be cut until inflation is sustainable towards 2%.
5. It is not yet time to announce the date for a rate cut, and monetary policy will be relaxed as appropriate in the future.
The US CPI is lower than expected, and the market is excited again. It can only be said that the US is too good at managing expectations. However, it is obvious that the Federal Reserve still has no urgency to cut interest rates. There are three important indicators:
1. Inflation has still not reached below 3%. Even if it is achieved in advance, it is still a long way from the promised 2%.
2. The unemployment rate has not increased significantly, and employment continues to show strong performance.
3. Not only is there no crisis in the financial system, there may also be overheating due to excessive money supply. After all, no one believes that there is a bubble in the boom cycle, which is why financial clearing cycles always occur.
Although Mr. Bao’s speech did not dovishly echo the market’s expectations, it does not affect the overall situation!
The market believes that if the data improves, there will be two more rate cuts this year, but Bao does not want the market to get excited in advance. So the wide range of fluctuations should continue (now it is a process from the upper edge to the lower edge of the fluctuation zone). If Bao did not suppress it last night, then a good market should start in the end of June.
After the suppression, we have to continue to look at the macro data, such as the next non-agricultural cpi pce, etc. Even if the data is positive, the good market expectations will be postponed to July. From a technical point of view, the low point on May 10, the daily MA120, and the lowest point of 6.6w on Tuesday this week are all supports. But it is uncertain whether 6.6w can hold up, so it is safer to continue to wait and see.
Why have altcoins performed poorly in this cycle, and can they surge?
Altcoins haven’t been able to rally consistently since BTC started its strong run from $27,000 in October, so, these are the numbers It’s clear that altcoins are severely underperforming $BTC, but before we look ahead — it’s important to understand why.
1. This is a Bitcoin narrative-led cycle
The narrative driving BTC to new all-time highs is the spot ETF narrative, and the corresponding strong inflows.
While BTC and altcoins are correlated, there is no broader market catalyst as strong as BTC’s right now.
2. Specific narratives significantly outperform others (with the main narrative lagging behind)
So far, memes, AI, and RWA have been the clear narrative leaders of this cycle.
If you don’t have adequate capital allocated in these areas, you may feel FOMO and a strong temptation to rebalance your investments.
3. Altcoins reach all-time high
The crypto market created nearly 1 million new crypto tokens in May, which is twice the total amount created on Ethereum between 2015 and 2023.
4. Token unlocking is flooding the market
Currently, the daily unlocking volume is about $200 million (the following data is only for major tokens), which is a new selling pressure that continues to suppress the market's rise.
The more tokens that are continuously launched, the more unlocked volume will flood into the market.
So, to summarize:
This is a cycle dominated by the Bitcoin narrative, with very few narratives being implemented, and new tokens are being launched at a rapid pace, with the number of new coins reaching an all-time high
Taking all the above factors into consideration, it is not surprising that altcoins are performing poorly.
But right now, you’re probably all wondering this – will this situation ever get better?
If so, when can we expect the situation to improve?
There has been some disagreement lately on where we are from an altcoin perspective, mostly because the returns have been very unevenly distributed this cycle, in the two previous cycles altcoins peaked exactly 546 days after the halving, for various reasons (cycle acceleration, macro factors, etc.) I think we will peak sooner than that, I also admit that looking at 2 data points is an oversimplification.
However – we are still very early in this cycle from an altcoin perspective and in the first half of the cycle, Bitcoin will naturally lead, and in fact, this is healthy for the market structure.
Altcoins usually don’t start to outperform until late in the market, but does this mean that all altcoins will rise?
Most likely not.
As mentioned before, market dilution is a major factor – more than ever before, so the choice of copycat is crucial.
Currently, there is a strong correlation between the volatility of the cryptocurrency circle and the macro market. Bitcoin took a roller coaster ride last night following the macro data. The market in June was not so smooth, but don’t worry. After the shock, the market will readjust its expectations and regain support. The outlook is firmly optimistic, so short-term fluctuations do not mean anything.
With the current market adjustments, it is a good opportunity to pick up bargains. This was the case in May and will remain the case in June.
Several key messages from last night’s Fed meeting:
1. The U.S. core CPI fell to a three-year low in May, lower than expected, and expectations for a rate cut increased.
2. The Federal Reserve kept interest rates unchanged for the seventh consecutive time, in line with market expectations.
3. The dot plot predicts only one 25 basis point rate cut in 2024 and four rate cuts in 2025.
4. The inflation rate has eased significantly, but it is still too high, and interest rates are not expected to be cut until inflation is sustainable towards 2%.
5. It is not yet time to announce the date for a rate cut, and monetary policy will be relaxed as appropriate in the future.
The US CPI was lower than expected, and the market was immediately excited. It can only be said that the Americans are too good at managing expectations. However, it is obvious that the Federal Reserve still has no urgency to cut interest rates. There are three important indicators:
1. Inflation has still not reached below 3%. Even if it is achieved in advance, it is still a long way from the promised 2%.
2. The unemployment rate has not increased significantly, and employment continues to show strong performance.
3. Not only is there no crisis in the financial system, there may also be overheating due to excessive money supply. After all, no one believes that there is a bubble in the boom cycle, which is why financial clearing cycles always occur.
Although Mr. Bao’s speech did not dovishly echo the market’s expectations, it does not affect the overall situation!
The market believes that if the data improves, there will be two more rate cuts this year, but Bao does not want the market to get excited in advance. So the wide range of fluctuations should continue (now it is a process from the upper edge to the lower edge of the fluctuation zone). If Bao did not suppress it last night, then a good market should start in the end of June.
After the suppression, we have to continue to look at the macro data, such as the next non-agricultural cpi pce, etc. Even if the data is positive, the good market expectations will be postponed to July. From a technical point of view, the low point on May 10, the daily MA120, and the lowest point of 6.6w on Tuesday this week are all supports. But it is uncertain whether 6.6w can hold up, so it is safer to continue to wait and see.
Why have altcoins performed poorly in this cycle, and can they surge?
Altcoins haven’t been able to rally consistently since BTC started its strong run from $27,000 in October, so, these are the numbers It’s clear that altcoins are severely underperforming $BTC, but before we look ahead — it’s important to understand why.
1. This is a Bitcoin narrative-led cycle
The narrative driving BTC to new all-time highs is the spot ETF narrative, and the corresponding strong inflows.
While BTC and altcoins are correlated, there is no broader market catalyst as strong as BTC’s right now.
2. Specific narratives significantly outperform others (with the main narrative lagging behind)
So far, memes, AI, and RWA have been the clear narrative leaders of this cycle.
If you don’t have adequate capital allocated in these areas, you may feel FOMO and a strong temptation to rebalance your investments.
3. Altcoins reach all-time high
The crypto market created nearly 1 million new crypto tokens in May, which is twice the total amount created on Ethereum between 2015 and 2023.
4. Token unlocking is flooding the market
Currently, the daily unlocking volume is about $200 million (the following data is only for major tokens), which is a new selling pressure that continues to suppress the market's rise.
The more tokens that are continuously launched, the more unlocked volume will flood into the market.
So, to summarize:
This is a cycle dominated by the Bitcoin narrative, with very few narratives being implemented, and new tokens are being launched at a rapid pace, with the number of new coins reaching an all-time high
Taking all the above factors into consideration, it is not surprising that altcoins are performing poorly.
But right now, you’re probably all wondering this – will this situation ever get better?
If so, when can we expect the situation to improve?
There has been some disagreement lately on where we are from an altcoin perspective, mostly because the returns have been very unevenly distributed this cycle, in the two previous cycles altcoins peaked exactly 546 days after the halving, for various reasons (cycle acceleration, macro factors, etc.) I think we will peak sooner than that, I also admit that looking at 2 data points is an oversimplification.
However – we are still very early in this cycle from an altcoin perspective and in the first half of the cycle, Bitcoin will naturally lead, and in fact, this is healthy for the market structure.
Altcoins usually don’t start to outperform until late in the market, but does this mean that all altcoins will rise?
Most likely not.
As mentioned before, market dilution is a major factor – more than ever before, so the choice of copycat is crucial.