Authored by: Shang2046
The information, opinions, and judgments regarding markets, projects, currencies, etc. mentioned in this report are for reference only and do not constitute any investment advice.
Market Vulnerable to Supply and Demand, BTC Faces Miner Liquidation
Market Summary:
The Federal Reserve interest rate meeting on June 12th and the US CPI data for May turned out to be the dominant factors influencing BTC’s trend last week. Stimulated by the downward CPI data, BTC once again surged towards the $70,000 mark, but quickly dropped due to the hawkish comments from the Federal Reserve. BTC fell by 4.32% for the whole week with a volatility of 7.44%.
The rate cut matrix shows that the majority of the market expects the rate cut to be postponed until the end of the year, with only one rate cut in 2024.
As a result, the US Dollar Index rebounded strongly to above 105. Influenced by the performance and buybacks of tech stocks, the Nasdaq became a safe haven for long funds, while other markets repriced based on a single rate cut.
If the rate cut is indeed postponed to December as predicted, the volatility in the BTC market may continue. At this moment, $66,000 is a crucial point for the BTC price.
$66,000 is the shutdown price of the median mining machine (S19 XP) in the largest BTC mining market in the world, the United States, which can be seen as the beginning of a global miner liquidation.
In the past few bull markets, each halving cycle has been accompanied by the phenomenon of “killing miners”, where the halving of production revenue leads miners to not only sell all the BTC produced daily to pay for electricity and other fixed costs but also sell off a portion of their inventory BTC. This often leads to the market entering a chain of rapid declines, which is the liquidation.
In this current cycle, influenced by the US BTC spot ETF, it broke the previous cycle’s high before the halving, reaching a historic high of $73,700. The market generally believes that even with reduced income, this cycle will not experience “killing miners”.
However, the market seems to reflect history more accurately. After 13 weeks of oscillation between $60,000 and $70,000, miner liquidation has begun: last week, miners sold approximately $32 million daily, higher than the daily output value of 450 BTC. On-chain data shows that miners’ holdings decreased by around 1,000 coins last week.
If miner sales trigger more selling pressure, a short-term decline may occur. The level of $63,700 – as mentioned in the previous weekly report – is the average holding cost for short-term investors in the last five months and will provide strong support.
Of course, support levels in a bear market may turn into resistance levels, and selling pressure triggered by the lack of confidence from short-term investors may lead to a similar effect as miner liquidation.
Market Structure:
Stablecoins saw a net inflow of $313 million throughout last week, while the US ETF channel experienced a net outflow of $580 million, indicating an overall net outflow of funds in the market.
The profit margin of short-term investors is only 4%, and we emphasize repeatedly that during relatively bullish cycles, approaching the breakeven point for short-term investors often results in a rebound in the market.
The good news is that apart from a small amount of miner selling, both long-term and short-term investors have slightly increased their holdings. Correspondingly, centralized exchanges saw an accumulation of 8,400 coins, showing continued chip accumulation.
It is worth noting that the US BTC major trading platform Coinbase witnessed an outflow of 17,000 coins, indicating optimistic buying sentiment from US investors, especially institutional investors. In contrast, the US spot ETF, which is mainly retail-oriented, saw a net outflow of $5.8 billion last week after creating the second-largest single-week inflow of $1.8 billion, showing characteristics of “buying high and selling low”.
In terms of inflow of USD stablecoins, it continued to maintain a relatively stable status for the past month, with a net inflow of $313 million, showing a slight increase compared to the previous month. However, it remains in a plateau phase of growth slowdown for over a month.
Regarding buying volume on centralized exchanges, there was an accumulation of around $5.8 billion, showing a slight increase compared to the previous period, essentially remaining unchanged.
EMC BTC Cycle Indicator:
The EMC BTC Cycle on-chain data engine shows that the bull market accelerator signal has temporarily entered a dormant phase, with an indicator strength of 0.25.
END
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