Recently, the inflow of funds in the Bitcoin ecosystem has increased significantly, which may indicate that there may be a breakthrough before and after the Bitcoin halving, but it may be followed by further adjustments.
On-chain data shows that Bitcoin whales have recently begun to show signs of selling. At the same time, the US Bitcoin ETF's holdings of Bitcoin have also slowed down.
Recent bitcoin sales in the United States have sparked market concerns. Although the amount is small, it has caused panic in the market. Scopescan data shows that after transferring bitcoins related to Silk Road, the US government has moved more than 600 related bitcoins (worth more than $40 million) to new addresses in the past three days.
According to data from Santiment, the number of wallets holding 100 to 1,000 bitcoins has remained relatively stable since March 24, fluctuating between 13,872 and 13,841. This stability suggests that these important holders are not currently accumulating more bitcoins.
In the current bull market, Bitcoin ETF has become the main driving force, but according to recent data observations, its growth rate is also slowing down. From the data, from January to mid-March, the inflow of funds into Bitcoin ETF showed a continuous growth trend; but from mid-March, the inflow of funds began to decline.
From March 18 to March 22, Bitcoin ETFs continued to experience a net outflow of funds. Although there is a net inflow at present, the net inflow of funds in Bitcoin ETFs has obviously declined from the trend. Overall, Bitcoin is facing greater upward pressure, and the signs of continued capital accumulation have obviously weakened.
How will the US macroeconomic situation affect Bitcoin?
One of the reasons for the strong performance of major markets in March may be the interest rate cut signals from central banks, which also had a relatively strong impact on Bitcoin's trend. According to a Bloomberg survey, all G10 central banks, except the Bank of Japan, expect to cut interest rates in the coming year. Various events in the past month have strengthened this outlook.
For example, at their March 19-20 meeting, Fed officials said they planned to cut rates three times this year despite forecasts of strong GDP growth and rising inflation. Similarly, no Bank of England official supported a rate hike for the first time since September 2021, while the Swiss National Bank unexpectedly cut rates on March 21.
U.S. nonfarm payrolls increased by 303,000 in March, far higher than the expected 200,000 and 270,000 last month, marking the largest increase since May last year. The rebalancing of the labor market is evident in the data on job departures, job openings, employer and worker surveys, and the continued decline in wage growth.
The Federal Reserve Bank of Chicago's federal funds rate monitoring tool shows that the probability of the first federal funds rate cut in June this year has dropped to about 50.8%, and the market has delayed the timing of the first federal funds rate cut from July to September.
In his latest speech, Federal Reserve Chairman Powell said that the latest data did not materially change the overall picture, which is still characterized by solid economic growth, a strong but rebalancing labor market, and inflation on an unstable path downward toward the 2% target.
Crypto V Bitwu.eth (@BTW0205) said: The Federal Reserve's expectations for rate cuts have dropped sharply, and the probability of the first rate cut in June has dropped below 50%. Powell's prospect of "three rate cuts this year" is probably in question. Considering the current huge debt and interest rate levels, in order to ensure that the economy does not collapse in the election year, the United States has only two options this year, either to cut interest rates as expected by the market, or to continue to expand debt, otherwise it will be an epic disaster no matter who the problem is thrown to.
But no matter which method is chosen, it will further promote the bull market of gold and Bitcoin. Unsurprisingly, 2024 will be the year of transition from contraction to expansion of macro liquidity. It is very likely that interest rate cuts will officially begin in 2025, and a new round of hot money will flow in.
In general, expectations for a June rate cut by the Federal Reserve have dropped significantly, with the market now more inclined toward July or later, and even radicals believing that a rate cut may not occur until 2025. For Bitcoin, the market initially viewed the Federal Reserve's rate cut as a core factor driving further gains in Bitcoin, as increased liquidity made it easier for Bitcoin prices to rise.
However, with the delay in the Federal Reserve's expected rate cuts, and considering the weakening signs of whales' accumulation, Bitcoin's consolidation period is expected to be extended. In addition, geopolitical tensions have also become an important factor affecting Bitcoin price fluctuations, such as the Russian-Ukrainian conflict and the Israeli-Palestinian conflict.
Cyclical perspective: There are many differences in the current bull market cycle, such as the meme hype that started this round first; but Bitcoin still has reference points in terms of its trend.
Judging from the on-chain data, the top and bottom cycles of Bitcoin constructed based on coin-day destruction, total circulation and realized prices show that BTC has been in stage ③ for about 4 months; in 2012-2013, BTC lasted for about 7 months in stage ③; in 2016-2017, BTC lasted for about 11 months in stage ③; in 2020, BTC lasted for about 4.5 months in stage ③.
In addition, the current distribution of chips to veterans on the BTC chain is 40.6%. At the peak of the historical bull market, veterans distributed chips to a minimum of 10.4% or even below.
In summary, Bitcoin is currently facing upward pressure, but it will stand above short-term moving averages such as M5 and MA13 in the short term. Considering the slowdown in the inflow of funds into Bitcoin ETFs, the Federal Reserve may delay the time of interest rate cuts, and it is expected that Bitcoin will continue to maintain a volatile wash trend in the short term.
However, as the Bitcoin halving approaches, funds continue to flow into the Bitcoin ecosystem, especially in the past week, when the inflow of funds is relatively high. According to data from Deflama, the inflow of funds into the Bitcoin ecosystem in the past week reached 66.58%. Many well-known projects in the Bitcoin ecosystem also chose to go online after the halving.
In summary, Bitcoin shows certain signs of strength in the short term and is expected to achieve a breakthrough before and after the Bitcoin halving; but in the medium term, with Bitcoin whales showing signs of selling, Bitcoin ETF inflows slowing, and the Federal Reserve's expected delay in cutting interest rates, Bitcoin is likely to experience a period of consolidation before and after the halving.
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