Source: EMC Labs
*The information, opinions, and judgments regarding markets, projects, and currencies mentioned in this report 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 recognized that it is currently in the phase of a risky asset, especially due to the direct impact of US dollar macro policies. Last week, BTC rebounded to $63,000 due to Federal Reserve Chairman Powell’s relatively mild remarks. However, just a few days later, it fell to the $60,000 mark as another member of the Federal Reserve emphasized the 2% inflation rate bottom line.
The 5% amplitude and the significant decline in trading volume compared to March indicate that the market is in a boring phase.
Since late October last year, we have observed a net outflow of US dollar stablecoins for the first time. The US ETF market has also temporarily shown a significant decline, both in terms of net outflows and net inflows, compared to the severe contraction in March and April.
As we mentioned before, once it reaches $60,000, it will enter a strong support zone of $55,000 to $60,000. This zone represents the mining cost, the average cost of ETFs, and the breakeven point for short-term profits and losses. However, due to the lack of breakthrough power and the absence of positive macro news, this support zone has turned into a trampling zone, increasing the probability of the market breaking through to $55,000.
For investors who lamented the rapid rise of BTC in March and missed the opportunity to buy, this is a delicate test: If the market gives a good entry window by lowering the price by another 10% from the current level, would you take advantage of it?
Market sentiment often chases gains and sells off during long periods of weak consolidation, continuously accumulating fear. If you can see high certainty in things that will happen in the next two years, this may be an opportunity worth considering. Firstly, the delay in interest rate cuts but the emergence of stagnation indicates that a recession seems to have arrived, which is the strongest driving force for interest rate cuts. Secondly, the US presidential election is often a catalyst for market stimulation. Thirdly, BTC’s first three halvings (which led to a bull market within 18 months after each halving) have not yet been reflected.
Supply and Demand Structure:
On average, the on-chain profit rate for BTC investors is about 1.1 times. This number reached 1.7 times in March. Short-term investors’ profits have decreased from 40% to 1%, and losses are only 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-term profit and loss indicator only shows a -10% phenomenon during extreme bear markets (at the end of the 22-year).
Last week, the funds of US ETFs reversed the significant outflow of the previous week and had a net inflow of $117 million, which increased compared to the net outflow of $434 million in the previous week. However, we expect that it will return to a weak net outflow trend this week.
Last week, stablecoins saw a net outflow of $460 million, marking the first significant outflow since late October last year. Of course, this is only the first net outflow after stablecoin net inflows stagnated since April 20, and whether it will continue remains to be seen. Compared to the cumulative net inflow of $15 billion in March and April, this is still a weak signal.
As of April 28, the total balance of BTC held by centralized exchanges was 2.33 million coins, a decrease of 3,000 coins compared to the previous week. Overall, the change in exchange-held BTC has been at a low level in the past month. The buying volume of exchanges also increased slightly from $5 billion in the previous week to $7.1 billion.
Overall, the market sentiment is strong, and the pace of new funds entering the market has significantly slowed down, leaving the market in a fragile balance.
EMC BTC Cycle Indicator:
Due to the decline in BTC’s new addresses, vitality indicators, and exchange liquidity, the EMC BTC Cycle engine shows that our bull market acceleration phase has temporarily entered a gap, with the overall indicator dropping from 0.75 to 0.37.