EMC Labs June Report: The US dollar’s ​​high interest rate environment is about to end, and BTC will most likely start its autumn market

The market, project, currency and other information, opinions and judgments mentioned in this report are for reference only and do not constitute any investment advice.

After the COVID-19 crisis, the "story" of the United States taking advantage of the US dollar's status as the world's largest reserve currency to harvest other economies in a "dollar tide" seems to be becoming a fact. Economies are under pressure, and the yen has fallen to 1986 lows against the dollar.

——On June 5, Canada cut interest rates, and on June 6, the euro cut interest rates. Why hasn’t the Fed cut interest rates yet?

– Because only the yen exchange rate has collapsed, it’s not full yet.

Europe can’t hold on, Canada can’t hold on, only the United States can hold on. The U.S. dollar index continues to rise, causing the equity market to come under tremendous pressure.

Under the huge macro-financial pressure, the crypto asset market in June ended the rebound in May and fell by 7.12%, continuing the in-depth consolidation after BTC hit a record high. This consolidation has lasted for nearly 4 months. There are few sectors in the crypto market that have independent trends.

Although stablecoin inflows on the capital side have recovered somewhat from May and reached US$856 million, they still remain at a low level. ETF channel funds were 641 million, far lower than last month’s 1.9 billion.

The activities on the chain are divided into two levels. On the one hand, BTC data continues to deteriorate, on the other hand, public chains such as Ethereum and Solana are still active. These data make people believe that the bull market is still there and the blood is not cold yet.

Macro Finance

On June 12, the United States released the May CPI, which fell another percentage point from April to 3.3%, lower than the expected value of 3.4%. So far, the U.S. CPI has fallen for two consecutive months in a high interest rate environment. At the same time, the PMI data on the corporate side fell from 49.2% to 48.7%, accelerating the contraction, which also provided support for the downward trend of CPI.

The decline in economic data exceeded market expectations and increased interest rate cut expectations, causing the Nasdaq to continue to price in on interest rate cut expectations. In the end, the Nasdaq closed up 5.69% in June, achieving two consecutive months of gains. Although the S&P 500 index did not hit a record high as strongly as the Nasdaq, it also maintained its monthly upward trend.

In June , the Nasdaq rose strongly 5.96%, hitting another record high

while the new non-farm employment data released on June 7th. It greatly exceeded the forecast value (182,000) and reached 272,000. The market pointed out that this data has major problems in terms of statistical caliber, and is suspected of suppressing expectations of interest rate cuts.

The market is choosing the direction it wants to believe in, such as interest rate cuts. There are still funds in the interest rate swap market betting on two interest rate cuts in 2024. UBS claims that the market has underestimated the extent of this round of interest rate cuts, and even predicts that the "first cut" will still be in September. In the context of the U.S. dollar index breaking through 106, the Nasdaq continues to hit new highs. This is because these long funds are placing bets based on their own judgment.

The "hawkish" remarks released by the U.S. government and the Federal Reserve in June may have reached the largest dose this year. U.S. Treasury Secretary Yellen said "there are no signs that the U.S. is about to enter a recession," while Federal Reserve Governor Bowman emphasized that "there are still upward risks to inflation, and there may be no interest rate cut in 2024."

Although the CPI has been declining for two consecutive months, the strong employment data allows the Federal Reserve to buy more time to maintain high interest rates and wait for the CPI to move closer to 2%.

The high interest rate environment of the US dollar has put global capital markets under tremendous pressure, and the crypto market is no exception.

EMC Labs believes that as BTC reaches a record high, some investors lock in profits and continue to sell, while high U.S. dollar interest rates have significantly reduced the flow of funds into the crypto asset market, ultimately resulting in the selling pressure being unable to be absorbed by sufficient purchasing power. This is the fundamental reason why the current encryption market cannot effectively break through, and even constantly challenges the adjustment of the lower edge of the box.

Crypto market

In June, BTC opened at US$67,473.07 and closed at US$62,668.26. It fell by US$4,804.15 or 7.12% for the whole month, with an amplitude of 20.10%. The trading volume shrank for three consecutive months.

BTC monthly trend

In June, BTC diverged from the trend of the Nasdaq, falling 7.12% for the whole month against the background of the Nasdaq's strong rise of 5.69%, losing a lot of money in the May rebound. department.

Technically, affected by the news of the issuance of BTC on the Mt.GOX exchange and the German government's selling of BTC, the price of BTC stepped back on the upward trend line since October last year on June 24 and bottomed out. On the same day, BTC price also completed the push back to the lower edge of the new high consolidation range (i.e. $58,000). The support of these two major technical trend lines was relatively strong. Afterwards, the BTC price rebounded to above $63,000. There was no danger in the short term, but the midline was still confused.

BTC daily trend

Affected by expectations that the ETF will be approved soon, the trend of ETH is slightly stronger than that of BTC. This month's ETH/BTC trading pair has basically preserved the results of ETH's rebound in May and has not retreated significantly, indicating that industry capital on the market is still betting on the online trading of ETH ETFs.

The ETH/BTC trading pair has basically preserved the results of the ETH rebound in May

ETH ETF has a high probability of being approved for trading in July. However, under the current background of serious lack of funds , once the good news is realized, ETH may face greater selling pressure in the short term. After the official transaction, can the ETH ETF bring a considerable net inflow of funds like the BTC ETF? The current situation is not optimistic.

Fund flow

The bull market is first and foremost a capital phenomenon.

According to the source of funds, we can divide the trend of BTC since last year into 4 stages -

2023.01~2024.06 BTC market 4 stages

2023.01~09: Stablecoin Net Outflow, purchasing power came from funds that escaped from the market to cover positions, and the BTC price rose from 16,000 to 32,000 US dollars;

2023.10~2024.01: Driven by the approval of the BTC ETF and the expectation of production reduction, the net inflow of stablecoins turned positive and continued to rise thereafter. Pushing the price of BTC from US$32,000 to US$49,000;

2024.02~04: After the BTC ETF approved the withdrawal of speculative funds, the ETF channel legal currency funds and stablecoin channel funds continued to flow in, pushing BTC to a new high of US$73,000. Because ETF channel funds exceeded expectations, BTC hit a new high before the production cut for the first time. Beginning in January, long and short-term profit-taking began to sell huge amounts to lock in profits. The selling reached its peak in early March, and then the BTC price peaked on March 18 and started a correction.

Statistics of long-term investors and short-term investors selling BTC

Although in March and April, only the stablecoin channel had a net inflow of more than 8.9 billion and 7 billion US dollars respectively, the huge sell-off will All purchasing power was consumed, and the BTC price stopped at $73,000.

2024.05~06: The price of BTC entered a new high consolidation area after March. The previous clearing caused the market’s enthusiasm for long positions to be completely extinguished. Under the pressure of high interest rates on the US dollar, the inflow of funds into the stablecoin channel and fiat currency channel was in the five-month period. , quickly shrunk to $341 and $856 million in June. BTC established a new high between 58,000 and 73,000 US dollars, then consolidated the box and waited for new funds to enter.

Monthly changes in the supply of major stablecoins (Chart by EMC Labs)

A bull market is when new money pours in on an optimistic backdrop, revaluations push asset prices higher, and long-term holders in prices The process of selling to lock in profits after a rise. During the development of a bull market, selling often occurs in several waves. What happened not long ago is just the first wave. The next selling will happen again after higher prices are realized.

6Monthly 11 BTC ETFs Fund inflow and outflow statistics (EMC LabsCharts)

Since its approval for operation in January, BTC ETF has been regarded as an important new capital inflow channel for the crypto asset market. Since January, the total inflow from all channels has been US$13.882 billion. However, since March, as the price of BTC stopped at US$73,000, the inflow scale has gradually declined.

The fund inflow of the ETF channel in June was US$641 million, which is quite close to the US$856 million of the stablecoin channel. In the May report, we proposed that “ETF channel funds are expected to become an independent force in pricing BTC.” With the growth of scale and the gradual independence of decision-making will, the funds of this channel are expected to take on this important task. Its scale and behavior deserve continued attention, but it is currently unable to bear this responsibility.

Market supply

In the bull market, long-term investors and short-term investor groups adopt different valuation systems for BTC targets. After the final price rises, BTC flows from long-term investors to the short-term investor group, and the value also follows. transfer.

According to this, two phenomena will inevitably occur in the bull market, "capital inflow" and "BTC holder group transfer". The two phenomena interact with each other and jointly shape the market trend. In the previous section we analyzed capital inflows, and in this section we focus on the changes in the BTC holder group.

Analyzing the positions held by long-term investors, short-term investors, exchanges and miners since last year, we found that in the first 11 months of 2023, long-term investors are increasing their positions, while short-term investors are reducing their positions. The turning point occurred in December. In this month, the price of BTC approached the previous high. Long-term investor groups began to distribute chips, while short-term investors began to increase their holdings. As the price of BTC hit a record high in March, this chip exchange game reached its peak. After that, the price began to collapse, and the scale of selling by long-term investors in April shrank rapidly. In May and June, this selling completely ended, and long-term investors began to increase their holdings again.

Analysis of position changes of long-term investors, short-term investors, exchanges and miners (Charts by EMC Labs)

From March to May, market parties made chips around BTC’s previous high price of $69,000 Exchange is one of the main activities in the market cycle, and its occurrence means the first stage of the bull market. The chips held by low-frequency traders (long-term investors) flow into the hands of high-frequency traders (short-term investors). Market liquidity suddenly floods, new funds are exhausted by hard work, prices fall, speculation freezes, and the market resumes after the passion. Back to the hesitation stage.

Will the bull market come to an abrupt end? We set our sights on previous bull markets.

Long-term investor BTC distribution statistics

As marked by the green box in the picture above, we have observed in the past three bull markets that long-term investors will make two moves after taking advantage of the price increase. A large amount of chips are sold to complete the profit locking. The first wave of selling will put a pause on the price rise, and the second wave of selling will destroy the market. The first wave of selling in history lasted for 3 months, 9 months and 4 months respectively in chronological order. The current round from December to March last year also happened to be 4 months, which is the same as the previous cycle.

According to historical rules, after the first batch of selling, the long-term group returns to the accumulation state and waits for the price to rise. As shown in the red box in the picture above, when the price continues to hit record highs, it returns to the reduction state and sells ruthlessly. This method of selling in batches to lock in profits is in line with the behavior pattern of long-term investors and the laws of market movements. Therefore, we believe that this selling law is still applicable to the current crypto asset market.

According to this, EMC Labs determines that the big sell-off that occurred not long ago is just the first wave of sell-offs in the bull market. As the long-term investor group returns to the accumulation state, the market selling pressure decreases, and the market will resume its upward trend after funds return to inflow. Upward. At that time, the market will usher in the second and most fertile stage of the bull market. The end of the U.S. dollar's high interest rate environment is likely to happen in the second half of this year. Therefore, although market confidence is currently low and trading is light, we are still optimistic that BTC is likely to start its market early in the fall.

Conclusion

Market movement is the process of interaction between internal and external factors.

In the first half of 2024, long-term investors on the market carried out the first round of selling, locking in tens of billions of dollars in profits, and have now returned to accumulation.

After the approval and operation of 11 BTC spot ETFs in the United States, nearly 14 billion US dollars have flowed into the ETF channel, and 240,000 new BTC positions have been added, and the cumulative positions have reached 860,000 US dollars, totaling 53.1 billion US dollars.

この記録が米ドル高金利の環境下で達成されたことを考慮すると、この市場パフォーマンスは傑出したものであると考えられます。

米ドルはいまだ利下げを開始しておらず、世界の資本市場に対する金融圧力は前例のないレベルに達しています

強気相場の第1段階は終わりつつあり、第2段階はまだ始まっていません。変動は秋に発生しやすいと判断しています。

最大のリスクは、連邦準備制度による予期せぬ利上げと米国国債の売却の増加、マウントゴックスBTCの発行と米国政府による保有BTCの売却です。

大雨が降る前は今が一番憂鬱で辛い瞬間のはずです。

EMC Labs（EMC Labs）は、暗号資産投資家とデータサイエンティストによって2023年4月に設立されました。業界の先見性、洞察力、データマイニングを競争力の中核として、ブロックチェーン業界の研究と暗号流通市場への投資に重点を置き、研究と投資を通じて急成長するブロックチェーン業界に参加し、人類への祝福としてブロックチェーンと暗号化資産を促進することに尽力しています。

The above is the detailed content of EMC Labs June Report: The US dollar’s ​​high interest rate environment is about to end, and BTC will most likely start its autumn market. For more information, please follow other related articles on the PHP Chinese website!