Risk aversion rises as the market awaits guidance from the Federal Reserve on interest rate cuts

Original title: "The market continues to consolidate, waiting for the Fed's interest rate cut guidance"

Original author: Mary Liu, BitpushNews

Investors are waiting for the Federal Reserve and its upcoming interest rate decision and 5 Crypto markets opened the week lower with the Consumer Price Index (CPI) for the month.

Bitcoin data showed that Bitcoin once broke through the US$70,000 mark in early trading and hit a high of US$70,195. It turned lower in the afternoon and returned to the support level near US$69,600.

Altcoins fell more than they rose. Among the top 200 tokens by market capitalization, Polymesh (POLYX) led the gains, reaching 9.7%; followed by Gnosis (GNO), which rose by 8.6%; Livepeer (LPT) rose by 5.5%. Wormhole (W) was the top loser, down 18%; Biconomy (BICO) lost 17.1%; and Echelon Prime (PRIME) lost 10%.

The current overall market value of cryptocurrency is US$2.53 trillion, and Bitcoin’s share is 54.1%.

As of Monday's close, the S&P, Dow Jones and Nasdaq were all higher, up 0.26%, 0.18% and 0.35% respectively.

The CME Group’s FedWatch tool showed traders’ expectations for a rate cut from the Fed in September have fallen to 49% from 60% a week ago.

ETF inflows continue

Spot Bitcoin exchange-traded fund (ETF) inflow data was relatively upbeat, with $131 million flowing into the ETF product on Friday, marking the 19th consecutive day of inflows.

CoinShares’ report shows that a total of US$1.83 billion flowed into US-listed spot BTC ETFs last week, while the net inflow of globally listed digital asset investment products reached US$2 billion, with the total inflow in the past five weeks reaching US$4.3 billion. Dollar.

CoinShares head of research James Butterfill analyzed: "We believe this shift in sentiment is a direct response to weaker-than-expected U.S. macro data, which has brought expectations of monetary policy rate cuts. Positive price action has lifted total assets The scale of management (AuM) has exceeded the $100 billion mark for the first time since March."

##Encryption analyst Timothy Peterson said on the X platform that if the current pace continues. , the rate of capital inflows into the spot BTC ETF will put BTC on track to hit a new all-time high on July 31. Furthermore, if liquidity continues at its current pace, BTC will reach $135,000 by the end of the year.

Short-term leverage rushes higher

Bitfinex analysts took the opposite view and said: “The large inflows into ETFs over the past 20 trading days have helped offset the pressure on BTC, but in fact, This fails to push prices higher and push BTC above the range highs, which is negative in the short term. The counter argument is that traders are executing base arbitrage trades where they hold long spot positions and short perpetual positions. Renew futures for hedging.”

#As shown in the chart above, open interest (OI) for BTC and altcoins has been high. Data from Coinglass shows that BTC OI across major exchanges hit an all-time high of $36.8 billion on June 6. Despite Friday's price correction, OI currently remains above $36 billion. ”

Analysts said: “We believe Friday’s decline was more like a ‘leverage wash’, in which leveraged longs in a large number of altcoins (and to some extent major currencies) were wiped out and funding rates were Neutralizing. However, although the leverage clearing/liquidation of altcoins is quite severe, we do not expect a significant decline immediately”

##The bulls in the crypto market on June 7. Liquidations exceeded $360 million, taking total liquidations to over $410 million, which is the highest level since April 14 and exceeds the level seen when BTC fell below $57,000, but this time only $50 million of long liquidations came from BTC .

The analyst explained: “Most of them are altcoins, which explains the large decline of altcoins relative to mainstream currencies last week. Such liquidation events usually do not trigger further serious declines, so This week will be a critical one as the upcoming Consumer Price Index inflation report on June 12 is expected to be a major market catalyst, with prices expected to continue to fluctuate in a tense environment as derivatives positions increase again."

Bitfinex believes that in the current environment, it is crucial for bulls for BTC to maintain local lows around $68,000-68,500, and failure to break through the range high will further put pressure on bulls.

Regarding the Federal Reserve’s monetary policy, Bitfinex analysts said that maintaining high interest rates for a long time is a double-edged sword and needs to be dealt with skillfully:

On the one hand, the strength and adaptability of the U.S. economy allows it to thrive even in a high-interest-rate environment, thanks to strong labor demand and rising wages. This scenario will support continued economic growth, solid consumer spending, and overall economic resilience.

On the other hand, there is a significant risk in maintaining high interest rates for too long, which may suppress economic activity, leading to reduced investment, slower employment growth, and possibly an economic downturn.

Analysts also said recent interest rate cuts by the European Central Bank and the Bank of Canada were "a shift towards looser monetary policy to boost economic growth, suggesting the Fed may need to reassess its own monetary policy and that actions by its global peers may will affect its decisions in the coming months, especially if inflation trends and economic conditions need to change."

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