Institutions collectively slap in the face how will the future market develop

Original | Odaily Planet Daily
Author | Azuma
Institutions with collective bullish sentiment
Turning the clock back to last week, it was almost the most consistent period of bullish expectations since the market entered a phase of adjustment in March.
On June 3, Bitfinex stated that the decline in Bitcoin since March may be due to long-term holders selling, but on-chain data shows that this trend has stalled, with investors accumulating Bitcoin.
On June 4, CryptoQuant pointed out in a report that 50% of long-term Bitcoin supply is in an “inactive” state. In the wallets tracked by the institution, the amount of Bitcoin held has not changed. This is considered a strong signal of long-term holding, which may indicate further price increases.
On the same day, Matrixport officials posted on X platform that as market sentiment turned bullish, the funding rate for Bitcoin has been positive for the past few weeks. Futures contract trading positions have also increased in the past 24 hours, indicating that quick traders (futures traders) expect Bitcoin to continue to rise.
On June 5, 10x Research boldly predicted in their market analysis that next week (this week) Bitcoin will reach a new all-time high, with prices potentially exceeding $73,500.
On June 7, BitMEX founder Arthur Hayes, with a strong track record, also stated in a post that the cryptocurrency bull market is awakening, and it is time to redeploy excess dollar liquidity into altcoins.
Clearly, the market trends of the past few days once again demonstrate the unpredictability of the market.
Continued market decline
Starting from the evening of June 7, the cryptocurrency market once again suffered a severe setback.
According to OKX market data, BTC has been steadily declining since that evening, reaching a low of 66,870.1 USDT, with a 3.41% decrease in the last 24 hours; ETH also dropped below the $3,500 mark, reaching a low of 3,498 USDT, with a 3.96% decrease in the last 24 hours.
The altcoin market is “bleeding”, with most mainstream coins giving up the gains from the surge triggered by the Ethereum spot ETF expectations about half a month ago, except for a few tokens in certain sectors like Meme (e.g., PEOPLE). As of the time of writing, SOL is currently at 153.52 USDT with a 4.05% drop in the last 24 hours; TON at 6.87 USDT with a 3.37% drop in the last 24 hours; ARB at 0.94 USDT with a 3.3% drop in the last 24 hours; TIA at 8.83 USDT with a 4.06% increase in the last 24 hours, and so on.
Influenced by the overall market decline, the total cryptocurrency market value has rapidly declined. According to CoinGecko data, the current total market value of cryptocurrencies has dropped to $2.58 trillion, a 3.2% decrease in the last 24 hours.
In terms of derivative trading, Coinglass data shows that there were $172 million in liquidations across the entire network in the past 24 hours, with the vast majority being long positions, amounting to $148 million. In terms of coins, ETH, which rarely surpasses BTC, has become a major liquidation field, with a total of $46.33 million in liquidations, while BTC liquidations amounted to $38.92 million.
Macro news affecting the overall situation
Looking back at the market trends of the past period, it can be said that the trends are highly related to macroeconomic news.
Greeks.live macro researcher Adam also mentioned this point in last week’s market summary: “This month, the BTC market is highly likely to be strongly correlated with macro news of the Fed rate cut, while the ETH trend is mainly influenced by news of ETF approvals.”
Especially since last week, consecutive rate cuts by the Bank of Canada and the European Central Bank have raised expectations for a rate cut by the Fed, resulting in overall good performance in the entire risk investment market. This is reflected in the crypto market, where BTC ETFs have seen 19 consecutive days of positive inflows, and market sentiment is generally optimistic.
It is in this context that institutions have made bullish predictions one after another. However, with the unexpected results of the unemployment rate data and nonfarm payrolls announced on the evening of June 7, especially the astonishing increase of 272,000 in nonfarm payrolls, far exceeding the market’s expected value of 185,000, market expectations for a rate cut for the rest of the year have once again decreased, causing a blow to market sentiment in risk markets including cryptocurrencies.
QCP Capital also emphasized this situation in its latest market analysis: “The unexpected and better-than-expected nonfarm data and the rise in the unemployment rate are enough to trigger risk aversion ahead of the US inflation data and FOMC announcement next Wednesday.”
However, QCP Capital also predicted that this decline is a good opportunity to buy on dips, as the market will increasingly digest the impact of the Fed cutting rates at least once from now on. With other countries around the world continuing to cut rates, the US will find it difficult to ignore this.
Focus on rate decisions
In the current market situation, the potential events that will have the greatest impact on the market this week are the CPI data to be released on Wednesday and the expected Fed interest rate decision to be announced on Thursday, especially the latter, which can almost have a directional impact on subsequent market trends.
In addition to QCP Capital mentioned earlier, many institutions have also warned that the results of these events need to be closely watched this week.
Greeks.live researcher Adam stated that in addition to the CPI and Fed interest rate decisions, the Bank of Japan’s interest rate decision on June 14 is also worth paying attention to. Considering that the volatility caused by the ETH ETF has completely subsided, BTC ETF inflows continue, and the overall sentiment in the cryptocurrency market is relatively bullish, it may be a good time to buy call options with low IV in the short term, as the cost-effectiveness remains high.
Lin Chen, Head of Deribit Asia Pacific Business, said, “Early Thursday morning is the US FOMC interest rate meeting, and the subsequent press conference is crucial. A single sentence could increase rate cut expectations, leading to a surge in BTC. However, generally by Tuesday or Wednesday, many institutions may sell assets for safe havens (causing a BTC pullback), fearing that if the Fed’s remarks are particularly dovish, BTC will fall. The clearest opportunity is actually if it falls, bosses should quickly build spot positions, or sell put options. Generally, if the Fed makes a very dovish statement, they will definitely maintain it next time, and the market will rebound.”
Ryan Weeks, an analyst at Bloomberg, emphasized that if there are unfavorable rate results, the market may come under further pressure: “The inflation data and the future of the Fed announced on Wednesday may exacerbate concerns about rates staying high for a longer period, which is a difficult situation for speculative assets like cryptocurrencies.”
In conclusion, based on predictions from various sources, this week’s market focus will be on the two major data releases on Wednesday and Thursday, and it is unlikely that there will be significant changes in market trends before that. Odaily Planet Daily will provide updates on related developments in a timely manner, so please stay tuned.