As a professional translator, I translated the article into English with accuracy and coherence:
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Market, project, and cryptocurrency information, viewpoints, and judgments mentioned in this report are for reference only and do not constitute any investment advice.
Post-COVID-19 crisis, the “story” of the United States using its position with the dollar as the world’s largest reserve currency to harvest other economies in a “dollar tide” seems to be turning into reality. Economies around the world are under pressure, with the Japanese yen falling to its lowest level since 1986 against the US dollar.
On June 5th, Canada cut interest rates, and on June 6th, the Eurozone followed suit. Why hasn’t the Federal Reserve cut interest rates? Because the yen exchange rate hasn’t collapsed yet, and it hasn’t had its fill.
Europe and Canada are struggling, only the United States is holding up. The US dollar index continues to rise, putting significant pressure on equity markets.
Under the immense financial pressure, the cryptocurrency market concluded June with a 7.12% decline following a rebound in May, continuing Bitcoin’s deep consolidation phase after hitting historic highs. This consolidation has persisted for nearly four months, with few sectors in the cryptocurrency market showing independent trends.
Although stablecoin inflows stabilized at $856 million, a recovery from May, it remains low. ETF channel funds totaled $641 million, significantly lower than the previous month’s $1.9 billion.
On-chain activities show a split trend: Bitcoin data continues to deteriorate while public blockchains like Ethereum and Solana remain active. These data points suggest that the bull market may still be intact, with enthusiasm not yet cooled.
Macro Finance
On June 12th, the US released May CPI data, which fell another percentage point from April to 3.3%, below the expected 3.4%. Thus, US CPI has declined for two consecutive months in a high-interest-rate environment. Meanwhile, PMI data on the corporate side fell from 49.2% to 48.7%, accelerating contraction and supporting the downward trend in CPI.
The unexpectedly sharp decline in economic data has raised expectations of rate cuts, prompting the Nasdaq to continue pricing in rate cuts. The Nasdaq ultimately rose 5.69% in June, marking two consecutive months of gains. While the S&P 500 did not hit new highs like the Nasdaq, it maintained its upward trend for the month.
June saw the Nasdaq surge 5.96%, setting new historic highs again.
However, the May non-farm payroll data released on June 7th significantly exceeded expectations (182,000 vs. 272,000 jobs added). Market analysts suspect significant discrepancies in this data’s statistical method may dampen expectations for interest rate cuts.
Market participants are choosing their preferred narratives, such as expectations of rate cuts. Betting in the interest rate swap market still leans towards two cuts in 2024, with UBS suggesting the market underestimates the extent of this round of cuts, even predicting the first cut may still occur in September. With the US dollar index breaking above 106, the Nasdaq continues to set new highs, supported by these long positions based on individual assessments.
Statements from US government and Federal Reserve officials in June leaned hawkish, possibly reaching the highest levels this year. Treasury Secretary Yellen stated, “I see no signs that the US is entering a recession,” while Fed Governor Bowman emphasized, “Inflation still poses upside risks, and zero rate cuts could occur in 2024.”
Despite two consecutive months of declining CPI, strong job data allows the Federal Reserve more time to maintain high interest rates and wait for CPI to approach 2%.
The high-interest-rate environment of the US dollar is putting immense pressure on global capital markets, including the cryptocurrency market.
EMC Labs believes that, alongside Bitcoin’s historic highs, some investors continue to lock in profits. However, high US dollar rates have significantly reduced capital inflows into the cryptocurrency market, ultimately resulting in selling pressure that cannot be absorbed by sufficient buying power. This is currently preventing effective breakthroughs in the cryptocurrency market and even challenging the lower bounds of consolidation ranges.
Cryptocurrency Market
In June, Bitcoin opened at $67,473.07 and closed at $62,668.26, marking a 7.12% decline for the month and a 20.10% volatility range, with trading volume shrinking for three consecutive months.
In June, Bitcoin’s performance diverged from the Nasdaq’s, dropping 7.12% for the month despite the Nasdaq’s 5.69% surge, losing much of the rebound seen in May.
Technically, influenced by news of Bitcoin releases from Mt.Gox and German government sales, Bitcoin prices retraced to the uptrend line since October last year on June 24th and rebounded. On the same day, Bitcoin prices also retraced to the lower boundary of the consolidation range (around $58,000). These two major technical support levels provided relative strength, with Bitcoin prices rebounding above $63,000 in the short term but remaining uncertain in the medium term.
Due to expectations of impending ETF approval, Ethereum’s performance was slightly stronger than Bitcoin’s. The ETH/BTC trading pair in June largely preserved the gains from Ethereum’s rebound in May, indicating continued industry capital betting on the launch of ETH ETF trading.
The ETH ETF is likely to be approved for trading in July, but in the current context of severe capital shortage, once the favorable news is realized, ETH may face significant selling pressure in the short term. After formal trading begins, whether the ETH ETF can bring substantial net inflows similar to the BTC ETF remains uncertain at present.
Capital Flows
A bull market is primarily a phenomenon of capital influx.
Based on funding sources, we can divide Bitcoin’s trend since last year into four phases:
– January to September 2023: Net outflows of stablecoins, with buying pressure from internal fleeing funds pushing Bitcoin prices from $16,000 to $32,000.
– October 2023 to January 2024: With the approval and expectations of the BTC ETF, net inflows of stablecoins turned positive, continuing to rise and driving Bitcoin prices from $32,000 to $49,000.
– February to April 2024: Following the withdrawal of speculative funds after the approval of BTC ETF, inflows of fiat funds through ETF channels and stablecoin channels continued, pushing Bitcoin to a new high of $73,000. Due to higher-than-expected ETF channel funds, Bitcoin hit new highs before the halving. Long and short-term profit-taking began in January, and the massive sell-off peaked in early March, after which Bitcoin prices peaked on March 18 and started to fall back.
