According to 10x Research: Bitcoin's liquidity hit a year-to-date high of $61.9 billion, signalling a critical week ahead for the market. After last week's breakout, all eyes are on whether this momentum can push Bitcoin towards $65,000 or if challenges will emerge, shaping its year-end direction.
Breakout Success: Last week, Bitcoin broke out of its symmetrical triangle pattern, aligning with our forecast of a rally toward $65,000. The cryptocurrency has already delivered a 9% return, emphasizing the importance of tactical trades in this dynamic market environment. With Bitcoin trading within a broad sideways range, accurately predicting macroeconomic events is key to capitalizing on opportunities.
FOMC Minutes Boost: The dovish tone of the FOMC minutes, released last Wednesday, played a pivotal role in fueling Bitcoin’s surge, which we had anticipated. Fed Chair Powell’s emphasis on labor market weakness was interpreted as dovish, further supporting the rise in Bitcoin’s price.
NVIDIA and Nasdaq: Bitcoin’s underperformance compared to the flat-trading Nasdaq was highlighted last week. Market attention is now focused on NVIDIA’s upcoming earnings, with options pricing in potential volatility of around 8%. Bitcoin’s recent rally, supported by macroeconomic developments, demonstrates the effectiveness of cross-market analysis.
Liquidity Surge: Total liquidity inflows have reached a new year-to-date high of $61.9 billion, surpassing the previous peak in July. This surge includes significant stablecoin minting, indicating increased fiat-to-crypto conversions, and a rise in leverage through Bitcoin perpetual futures, driving positive price momentum.
Passive Inflows Continue: With key macro data on the horizon, Bitcoin’s upward momentum may persist, supported by ongoing passive inflows. While Bitcoin Spot ETFs have seen modest inflows of $700 million over the past 13 days, stablecoin inflows have been more substantial at $2.7 billion.
Macro Environment Shifts: The macro-environment shifted in early July as the US Dollar peaked and 10-year Treasury bond yields declined, coinciding with a drop in oil prices. The ISM Manufacturing Index fell below 50, signaling potential economic weakness, which, combined with a rising unemployment rate, could influence Bitcoin’s future direction.
Upcoming Data Crucial: The upcoming data points, including the ISM Manufacturing Index, US Unemployment Rate, and Nonfarm Payrolls, will be crucial in setting the market’s tone for the remainder of the year. The market hopes for positive outcomes that suggest a stabilizing US economy, allowing the Fed to lower interest rates without triggering concerns over economic weakness.
Market Narrative Shifts: The market narrative has shifted back to focusing on the economy's strength and resilient consumer spending, reinforced by positive retail data. However, the real test comes next week when economic and employment data will either support or challenge this optimistic outlook.
Nasdaq Decline: Despite the dovish FOMC minutes, the Nasdaq dropped by 1.5% last Thursday, driven by concerns that Powell’s upcoming Jackson Hole speech could take a hawkish tone. This decline also highlighted the market’s sensitivity to economic data, particularly the US Manufacturing PMI.
Crucial Week Ahead: Bitcoin’s impressive 9% rebound last week, fueled by liquidity inflows, sets the stage for a critical week ahead. The upcoming economic data will be key in determining Bitcoin’s trajectory for the remainder of the year, with the potential for significant market movements depending on the outcomes.
