Crypto Market Weekly Report: Bitcoin May Face Short-Term Adjustments After Hitting Historical Highs

Recently, the global financial market has once again fallen into turmoil. Concerns triggered by changes in domestic policies in the United States have spread, leading to significant fluctuations in major stock indexes, bond markets, and currency markets. However, the crypto market seems to be temporarily independent of this trend, with Bitcoin even reaching a new historical high.

Macroeconomic Situation

Recently, an important bill in the United States was passed in the House of Representatives, which involves reforms in several key areas. However, this bill may lead to a significant increase in the U.S. debt ceiling, causing the proportion of U.S. government debt to GDP to reach a historical high. This has raised concerns in the market about the U.S. government's ability to repay its debts, further reducing the attractiveness of U.S. Treasury bonds.

As a result, the yield on the 10-year U.S. Treasury rose to a high of 4.5%. Elevated Treasury yields may suppress corporate investment and consumer spending, thereby putting pressure on corporate profitability.

This week, the three major U.S. stock indexes all experienced declines, with the Nasdaq index, S&P 500 index, and Dow Jones Industrial Average dropping 2.47%, 2.61%, and 2.47% respectively. The U.S. dollar index ended its previous streak of gains, falling 1.03% to 99.1252. Meanwhile, gold prices rose 1.98% to $3359.90 per ounce.

Crypto market performance

Despite the sluggish performance of traditional financial markets, the crypto market has shown a different trend. Bitcoin has reached a new high this week, breaking the $112,000 barrier and setting a historical record in USD terms. This surge is mainly driven by several factors: continuous inflow of funds into spot ETFs, listed companies increasing their Bitcoin holdings, and the passing of U.S. stablecoin-related legislation.

From a technical perspective, the Bitcoin price has been operating above the 5-week moving average throughout the week, with an increase in trading volume. The weekly MACD indicator has just turned positive. The price is running above the first upward trend line and has tested the upper range of the $90,000 to $110,000 zone.

Although Bitcoin is still in a medium-term upward trend, it is affected by the fluctuations in traditional financial markets, and given the significant increase over several consecutive days, the market's bullish sentiment may experience a correction in the short term.

Policy Trends

The U.S. Senate passed a key stablecoin regulatory framework bill with a vote of 66-32. The bill establishes clear definitions, regulatory requirements, audit standards, and consumer protection measures for dollar stablecoins. While this legislation aims to promote the development of the U.S. blockchain industry and maintain the international status of the dollar, it will also drive the development of stablecoins as the second largest application scenario of blockchain.

At the same time, the Hong Kong Legislative Council also passed the "Stablecoin Regulation Draft," establishing a comprehensive licensing and regulatory framework for fiat-backed stablecoins. These policy developments indicate that, in addition to serving as a store of value, decentralized applications based on smart contract platforms and the Web3 ecosystem are gaining recognition from governments around the world, which is significant for the development of the entire industry.

Capital Flow

Despite the setbacks in traditional financial markets, trading enthusiasm in the crypto market remains high. Over the past 7 trading days, the market has continued to see net inflows of funds, totaling $5.574 billion. Among them, stablecoin inflows were $2.548 billion, Bitcoin spot ETF inflows were $2.775 billion, and Ethereum spot ETF inflows were $250 million.

Since the rebound from the bottom in early April, after a large-scale inflow of funds in the first round, there was a brief hesitation when the price of Bitcoin reached $100,000. This week's significant inflow of funds has propelled Bitcoin to break its historical high.

Market Supply and Demand

As Bitcoin returns to the $100,000 mark, long-term holders have begun to sell again. This week, the inflow of Bitcoin to exchanges reached 159,869.37 coins, reversing the trend of gradually decreasing inflows over the previous five weeks. Nevertheless, the total amount of Bitcoin on centralized exchanges is still declining, down to 2,987,307 coins, but the outflow rate has slowed.

As a market stabilizer, long-term holders have started to reduce their holdings near the new highs, with the scale of reduction this week being 1195.43 coins.

Market Cycle

According to the EMC BTC Cycle Metrics indicator of the eMerge Engine, the current value is 0.75, indicating that the Bitcoin market is still in an upward phase.

Overall, despite the pressures facing the global financial market, the crypto market remains relatively independent in its trajectory. Bitcoin may face short-term adjustments after reaching new highs, but the medium to long-term trend remains positive. Investors should closely monitor the global economic situation and policy changes, and manage risks appropriately.