The token price of Highstreet ($HIGH) has dropped significantly in the past week. $HIGH experienced a strong bull run after March 20. $HIGH's price rose from $1.7 to a high of $9.8 in less than three months before falling 70% to $2.8 in just five days. Highstreet developers investigated the recent sharp drop and concluded that it was caused by a malicious attack that resulted in the sale of 20 million tokens.
The Filecoin Network ($FIL), which was launched in 2017, aims to incentivize a global network of computer operators to provide file-sharing and storage services. The recent discussions about DePIN innovation drew the market's attention to this project, as information storage is a critical component in DePIN innovation. The high demand for $FIL resulted in an 11% increase in 5 hours last Friday. However, the gain was quickly reversed following a sell-off.
The Injective ($INJ) price has risen by more than 22% in the last 24 hours, because of lower-than-expected US CPI inflation and the burning of more than 6 million INJ tokens through the burn auction. The price's strong performance drew a lot of interest, and our desk saw the trading volume of $INJ double on Convert last week.
Overall Market
The above chart shows the BTC price movement in the last four months.
The price of Bitcoin fell sharply last Friday in response to the unexpectedly strong nonfarm payroll change in the United States. The strong nonfarm payrolls suggest that the Federal Reserve has no reason to cut interest rates in such a strong labour market. The higher-than-expected average hourly earnings growth puts more pressure on the production side, implying sticky inflation due to higher labour costs.
BTC found support at $69,000, the previous cycle high. Over the weekend, liquidity decreased, and Bitcoin recovered to $70k.
This week, we have CPI data and the FOMC announcement on Wednesday. On Tuesday, our desk saw some risk offloading, which caused a sell-off on altcoins. BTC fell below the $69k support level and sold off to $66k before demand came in. Such risk-averse behaviour could be a hedging strategy to avoid a possible high CPI reading and a hawkish Fed on Wednesday.
The US CPI reading came in lower than expected, causing the US dollar to fall and risk assets to rise. BTC soared more than 2% following the news, trading above the $69k support level in the US early session.
However, it lost all of its gains following the FOMC press conference, as Fed Chair Powell did not provide any specific information on a potential rate cut and emphasised that the Federal Reserve was in a good position to wait for more clarity on a disinflation trend rather than making decisions based on a single piece of good data.
Without another catalyst in the near term, our desk believes the Bitcoin price will remain below $71k to $73k (the green bar on the chart). In the longer term, we believe Bitcoin's upward trend will continue, with the price breaking above the green bar and reaching $85k before the US presidential election.
Macro at a glance
Last Thursday (24-06-06)
The European Central Bank (ECB) cut interest rates for the first time in five years, setting the rate at 3.75%. According to ECB President Christine Lagarde, this rate cut will most likely mark the beginning of rate-cutting progress. She did, however, emphasise that future rate cuts will be contingent on inflationary pressures. The announcement boosted the European stock market.
US initial jobless claims increased to 229k from 221k last week, exceeding the estimated 220k. The rise in initial jobless claims suggests that the tightening situation in the US labour market is improving.
Last Friday (24-06-07)
US nonfarm payrolls increased by 272k in May, far exceeding the expected 182k and April's 165k. Average hourly earnings increased by 0.4% month on month. The growth rate exceeded the estimated 0.3% and April's 0.2%. The stronger-than-expected nonfarm payroll and faster growth in average hourly earnings indicate a strong US labour market, with inflation pressure remaining high as labour costs continue to rise.
However, the US unemployment rate increased to 4.0%, up from 3.9% last month.
The strong hourly earnings growth boosted the US dollar index (DXY) to 105, while all risk assets experienced some selloff pressure as the market anticipated a more hawkish Federal Reserve rate cut decision later this year.
On Wednesday (24-06-12)
The US CPI showed signs of softening in May. The monthly CPI was unchanged, lower than the estimated 0.1% and 0.3% in April. The annualised CPI increase is 3.3%, lower than the estimated 3.4% and April's 3.4%. Core CPI also came in lower than expected, with a monthly change of 0.2% and an annualised change of 3.4%. The US dollar fell sharply from 105.03 to 104.5, while Bitcoin rose from $68,005 to $69,500 following the news.
The Federal Reserve announced that the interest rate will remain at 5.50%, unchanged. The dot plot indicates that FOMC members expect only one rate cut this year, not three as shown in March. Chair Powell emphasised that the Federal Reserve needs more data to show a downward trend in inflation before lowering rates. The Fed would wait a few months to see if the trend of cooling inflation continues before considering a looser policy.
The US dollar recovered its losses following the cooling CPI news, while Bitcoin lost all of its gains and traded below $68,000 before the US market closed.
Convert Portal Volume Change
The above table shows the volume change on our Convert Portal by zone.
This week, the broader market experienced a selloff, with Bitcoin failing to break through the $72k mark. Our Convert found that the Storage zone had the greatest volume increase.
Last week, our desk noticed a high demand for Filecoin ($FIL), which became the primary driver of the volume change in the Storage zone.
Last week, trading volume in the Launchpad zone increased by 9.7% on Convert. Injective ($INJ) and Fetch.ai ($FET) are the two tokens driving volume growth in this zone.
During the same period, the volume in the Layer 1/ Layer 2 zone decreased by 16.8%. Following the strong demand for ETH the week before, our desk observed a retracement in demand for ETH in the last seven days, which is the primary reason for the volume decline in this zone.
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