Last week, the cryptocurrency market rebounded slightly as investors' doubts about the "U.S. economic recession" disappeared. Bitcoin recovered from US$54,000 to US$58,000, with a weekly increase of 4%. Ethereum was affected by the continued outflow of spot ETF funds. Below, the price performance of the currency is worse than that of Bitcoin, continuing to drop to US$2,300. Compared with the significant recovery of US technology stocks, the cryptocurrency market appears to be much weaker.
What worries us is that although the Bitcoin spot ETF had a net capital inflow last week, the actual inflow was not much compared to the amount lost every day in the previous two weeks. It was unable to effectively recover the previous decline and continue to rise. The trading sentiment mentioned in the first report has not improved significantly. There are currently two main factors that are shrouding the cryptocurrency market in negative atmosphere, namely "U.S. economic recession" and "Trump concept assets".
In the past two weeks, the United States has released several indicators of overall economic data. For example, after the August non-farm employment report was released on September 6, the number of new non-farm jobs was 142,000, which was lower than economists expected. 165,000 people. In addition, the employment report will continue to revise data over time. This time, the pre-July value was revised sharply from 114,000 to 89,000, which means that the employment situation is not as good as expected.
Last week, the ISM Manufacturing Purchasing Managers Index continued to be below 50. These data seem to indicate that the U.S. economy is about to enter a recession, causing funds to continue to withdraw from risky assets. It is believed that the economic recession will cause funds to be transferred to safe havens, and the cryptocurrency market is also Therefore, it is under pressure. The overall turning point was the US Price Index (CPI) report on September 11. The annual growth rate fell to 2.5% for the first time. Although the core price index was affected by the tourist season, it still maintained an annual growth of 3.2%. Overall inflation pressure has gradually approached the 2.0% annual growth target set by the Fed.
Considering that oil prices will fall in the near future due to increased production and slowing demand, there is little need to worry about inflation. This has reversed the previous pessimistic atmosphere. When the economy declines, the job market is not so tight and inflation continues to decline, The Fed has more reasons to take more aggressive interest rate cuts. The Fed will definitely cut interest rates in September. As long as there is no excessive evidence of inflation, they will definitely take preventive interest rate cuts first to avoid an economic recession.
Judging from the current pace, the Fed will cut interest rates by one yard, and then we will see whether the slowdown in economic growth will approach a recession. If so, the Fed may cut interest rates faster than expected and quickly drop to the so-called neutral interest rate. "3.75%". For this reason, the Fed still has 6 chips (1.50%) to use, and risk asset prices will rise significantly. At present, US technology stocks have been the first to respond, but the cryptocurrency market has not. To keep up, it is mainly still negatively affected by the atmosphere of the US election.
Sources: MICA RESEARCH A. September 08 Arthur Hayes closes his short position and looks long at Bitcoin again
Former BitMEX CEO Arthur Hayes once again updated his trading log. He said that he had closed his short position on Bitcoin recently, claiming to have made a 3% profit. He had previously worried that there would be a sharp correction this weekend. He shorted Bitcoin on September 6 after warning that it could fall below $50,000. However, he said on September 8 that he had closed the short position and expected that Bitcoin might rebound next week.
Hayes believes that if the economic data continues to be weak next week or inflation slows down, the Federal Reserve may inject more U.S. dollar liquidity, which will help the price of Bitcoin rise. The current weakness in the economy and financial markets may prompt the Fed to take this action. He pointed out that if the market falls further, the Fed will likely print money to stimulate the economy. He described Yellen as observing market dynamics, and Bitcoin may rise as a result of loose policies.
Additionally, Real Vision analyst Jamie Coutts noted that the U.S.’s M2 money supply could be key to Bitcoin’s next rally. The rate of change of M2 money supply is quite important to the trend of Bitcoin. As the supply turned positive for the first time year-on-year in May this year, the currency began to enter the easing cycle again, and investors may begin to look for tools to fight inflation. Despite the concerns, Bitcoin's decline in September is consistent with previous halving cycles, with September typically being one of the most bearish months in Bitcoin history.
B. September 11 Glassnode Analysis: Cryptocurrency investors remain skeptical in the short term
The price of Bitcoin rebounded significantly yesterday, rising from US$54,000 to US$58,000, an increase of about 8%. However, according to the latest analysis issued by Glassnode, they believe that investors are still skeptical about the short-term prospects. The report pointed out that investment Investors are interacting less with centralized crypto exchanges (CEXs), leading to a reduction in overall trading volume and less enthusiastic buying and selling sentiment, reflecting reduced speculation and price discovery.
Furthermore, Glassnode analyzed 30-day and 365-day trading volume changes and found that the monthly average trading volume was significantly lower than the annual average, thereby verifying that investment demand has weakened and speculator trading activities have decreased. The current momentum of spot trading volume continues to decline, confirming that The increase in selling pressure over the past three months has put downward pressure on Bitcoin price trends.
In addition, institutional investors have also shown signs of weakening interest. Spot Bitcoin ETFs have shown net outflows since August 2024, reaching an average weekly net outflow level of $110 million. According to data from Farside, since August Between the 27th and September 6th, the total net outflow of U.S. Bitcoin ETFs reached US$1.2 billion. The market is waiting for the price index lottery draw tonight, which will affect the probability and trading sentiment of whether the Fed will cut interest rates this month.
C. On September 12, the annual growth rate of price index CPI dropped to 2.5%, but core inflation unexpectedly rebounded
The U.S. Department of Labor released the U.S. Consumer Price Index (CPI) in August. The results showed a moderate increase. The overall CPI monthly growth rate was 0.2%, j which was in line with expectations and the annual growth rate dropped to 2.5%, which is the lowest value since February 2021. , mainly benefiting from the impact of falling gasoline and energy prices. However, the core CPI monthly growth rate excluding food and energy rebounded to 0.3%. The overall original market expectation was mainly driven by rising hotel and air ticket prices, and the core inflation annual growth rate remained at 3.2%.
In addition to reflecting rising travel costs during the summer travel season, the inflation report continues to show rising rents, which may affect the Federal Reserve's (Fed) interest rate decisions. Although the Fed is still expected to cut interest rates this month, an unexpected pickup in core CPI reduced the likelihood of a significant rate cut. The chance of a 2-yard cut fell to 15% from 29%, while the odds of a 1-yard cut stood at 71%, according to CME interest rate futures.
Overall, it does not affect the market trend. Not many people thought that the Fed would cut interest rates by two cents in one breath. This must be a scenario that would only occur when the economy falls into a significant recession. In addition, the Democratic Party was expected to perform better in the US election. In line with the market's original expectations, the price of cryptocurrency did not change much, with the price of Bitcoin remaining around $57,000.
The Fed is about to cut interest rates in September, and the boost will be stronger than the negative impact of the presidential election.
Although the negative impact of the U.S. presidential election on the crypto market will continue in the short term, especially since Trump was at a disadvantage in last week’s debate, since the Republican Trump camp has previously proposed a series of friendly cryptocurrency industry policies, Trump now wins. The decline in the probability of selection has also affected the willingness of Bitcoin investors who had previously poured into "Trump concept stocks". The most important indicator is that the rate of return of Bitcoin spot ETF funds is much lower than that of U.S. technology stocks.
Compared with the previous large outflows, funds are actually flowing back into the market one after another. Although Wall Street institutional investors are advocating a market decline under the banner of "U.S. economic recession," many research reports point out that most institutional investors are I want to seize the market before the Fed cuts interest rates, complete the layout before the easing policy begins, and wait for the market price to take off. The recent capital flow of U.S. technology stocks further confirms this idea. Although market panic is spread in traditional media, in reality it is slowly There are not many people buying technology stocks and cryptocurrencies.
Excluding those investors who bought secretly, Bitcoin believer MicroStrategy announced that it purchased approximately 18,300 BTC between August 6 and September 12, worth approximately US$1.11 billion, with an average cost of US$60,408. The current accumulated position reaches Approximately 244,800 BTC, with a total value of approximately $14.14 billion, and an average purchase price of $38,585.
Even if funds are slowly flowing back, large investors continue to buy Bitcoin. However, the growth rate of the market value of the crypto market is affected by the atmosphere of Trump’s declining victory rate. The rate is much slower than that of other assets. Originally, we believed that cryptocurrencies were growing in price index ( CPI) should have a stronger increase after opening an annual growth rate of 2.5%. It happened that Trump lost the debate, otherwise the increase should have been better. Assuming that Trump won the debate, then another scenario for the Bitcoin price is to go to the $64,000 range, but unfortunately that didn’t happen.
But we are still optimistic about the long-term prospects of cryptocurrency. Trump polls have been in the doldrums for a long time. This is reflected in the stock price of Trump Media Group, which has fallen by nearly 65% from its highest point in July. This negative impact is almost over. , the impact will not expand if it continues. When the Fed FOMC decides to cut interest rates, the era of easing will reopen. This growth momentum will far exceed the negative impact of the current presidential election. As long as the subsequent overall economic data does not show a significant recession, Bitcoin The price will have the opportunity to sprint upward, and the short-term rebound range will be $65,000. The reasonable price this year will still remain at $70,000.
Review of last week [MICA RESEARCH] Negative trading sentiment shrouded, Bitcoin is under short-term pressure
[MICA RESEARCH] Negative trading sentiment is shrouded, and Bitcoin is under short-term pressure
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〈[MICA RESEARCH] The FED interest rate cut cycle is about to begin, and the cryptocurrency market is expected to improve〉 This article was first published on "Block Guest".
