Article Rewrite:
Source: EMC Labs
*The market, projects, and cryptocurrencies mentioned in this report, including opinions and judgments, are for reference only and do not constitute any investment advice.
Market Summary:
Although we consider BTC to be the ultimate sovereign safe-haven asset, it must be acknowledged that it is currently in a phase of risk assets, particularly influenced by macro policies of the US dollar. Last week, the relatively moderate remarks by Federal Reserve Chairman Powell caused BTC to rebound to $63,000. However, within a few days, it dropped to the $60,000 mark due to another Federal Reserve member emphasizing the 2% inflation rate threshold.
The 5% fluctuations and the significant decline in trading volume compared to March indicate that the market is in a boring phase.
Since the end of October last year, we have observed net outflows of USD stablecoins for the first time. The US ETF has also temporarily shown a significant shrinkage, with both net outflows and inflows drastically reduced compared to March and April.
As we mentioned before, once it reaches $60,000, it enters a strong support zone of $55,000 to $60,000, which represents the mining cost, ETF average cost, and breakeven point for short positions. However, due to the lack of breakthrough strength and the absence of positive macro news, this support zone has turned into a stomping ground, increasing the probability of the market breaking through the $55,000 mark.
For investors who lamented the rapid rise of BTC in March and missed the opportunity to enter, this is a delicate test: If the market offers a good entry window by further lowering the price by 10% from the current level, would you take advantage of it?
Market sentiment often follows the trend of chasing gains and selling at a loss, while accumulating fear during long-term weak consolidation. If you can see high certainty in the events of the next two years, this may be an opportunity worth considering. Firstly, the delay in interest rate cuts but the emergence of stagnation suggests that a recession may be imminent, which is the strongest motivation for interest rate cuts. Secondly, the US elections often serve as a catalyst to boost the market. Thirdly, BTC has not yet realized the effects of its previous three halvings (leading to a bull market within 18 months after each halving).
Supply and Demand Structure:
On average, BTC investors have an on-chain profit margin of about 1.1 times, reaching 1.7 times in March. Short-term investors’ profits have declined from 40% to 1% and losses are just a 5-minute candlestick away.
We must emphasize that in the past two years, short-term investors’ losses have been a sign of a cyclical bottom. The short position profit and loss index only experiences a -10% phenomenon during extreme bear markets (at the end of 2022).
The funds of the US ETF reversed the significant outflows of the previous week and had a net inflow of $117 million, an increase compared to the net outflow of $434 million the week before. However, we expect a return to a weak net outflow track this week.
Last week, stablecoins had a net outflow of $460 million, marking the first significant outflow since the stagnation of net inflows since October last year. Of course, this is only a weak signal compared to the cumulative net inflow of $15 billion in March and April.
As of April 28th, the centralized exchanges held 2.33 million BTC, a decrease of 3,000 BTC compared to the previous week. Overall, there has been a low change in the inventory of BTC on exchanges in the past month. The buying volume on exchanges has also increased slightly from $5 billion in the previous week to $7.1 billion.
Overall, the market sentiment is cautious, and the pace of new capital entering has significantly slowed down. The market is in a fragile balance.
EMC BTC Cycle Indicator:
Due to the decline in BTC new addresses, vitality indicators, and exchange liquidity, the EMC BTC Cycle engine shows that our bullish acceleration period has temporarily stalled, with the overall indicator dropping from 0.75 to 0.37.
