Coin World Report:
Author: 0xWeilan
Source: EMC Labs
The information, opinions, and judgments regarding markets, projects, currencies, and other matters mentioned in this report are for reference only and do not constitute any investment advice.
Post the COVID-19 crisis, the United States, utilizing the position of the US dollar as the world’s largest reserve currency, appears to be turning the “story” of harvesting other economies through “dollar tides” into reality. Pressure mounts on various economies, with the yen-to-dollar exchange rate plummeting to its lowest level since 1986.
On June 5th, Canada cut interest rates, followed by the euro on June 6th. Why hasn’t the Federal Reserve cut rates yet? Simply put, because the yen exchange rate hasn’t collapsed enough—it hasn’t had its fill yet.
Europe and Canada are struggling, while only the United States remains resilient. The US dollar index continues to rise, exerting immense pressure on equity markets.
Under the immense financial pressures, the cryptocurrency market ended June with a 7.12% decline after rebounding in May, continuing Bitcoin’s deep consolidation phase following its historic highs. This consolidation has persisted for nearly four months, with few sectors in the crypto market showing independent trends.
Despite a slight recovery to $856 million compared to May, stablecoin inflows remain low. ETF channel funds totaled $641 million, significantly lower than the previous month’s $1.9 billion.
On-chain activities are showing a divergence: while BTC data continues to deteriorate, public chains like Ethereum and Solana remain active. These data points suggest that the bull market persists, and the enthusiasm has not waned.
Macro Finance:
On June 12th, the US released its May CPI, which fell to 3.3% from April’s 3.4%, below the expected 3.4%. This marks the CPI’s second consecutive monthly decline in a high-interest-rate environment. Meanwhile, PMI data for businesses fell from 49.2% to 48.7%, accelerating contraction and supporting the CPI’s downward trend.
The unexpected decline in economic data has heightened rate cut expectations, driving the Nasdaq to continue pricing in rate cuts. Ultimately, the Nasdaq rose by 5.69% in June, achieving two consecutive months of gains. While the S&P 500 did not hit new historical highs like the Nasdaq, it maintained its upward monthly trend.
June saw the Nasdaq’s strong rise of 5.96%, reaching new historical highs.
On June 7th, the release of significantly higher-than-expected non-farm payroll data (272,000 new jobs) raised suspicions of statistical method issues that could suppress rate cut expectations.
Market sentiment leans towards expectations of rate cuts. The interest rate swap market continues to bet on two rate cuts in 2024, with Credit Suisse suggesting that markets underestimate the magnitude of this cycle’s rate cuts, predicting a “first cut” as early as September. With the US dollar index surpassing 106, the Nasdaq continues to set new highs, driven by these bullish bets based on their own assessments.
The US government and Federal Reserve released notably “hawkish” remarks in June, possibly their most significant of the year. Treasury Secretary Yellen stated she “sees no signs of a US recession looming,” while Fed Governor Bowman emphasized that “inflation still poses upside risks, with zero rate cuts possible in 2024.”
While CPI has declined for two consecutive months, robust employment data allows the Fed more time to maintain high rates, waiting for CPI to approach 2%.
The high-interest-rate environment of the US dollar places enormous pressure on global capital markets, including the cryptocurrency market.
EMC Labs believes that with Bitcoin hitting historic highs, some investors are locking in profits, and the high US dollar rates have significantly reduced inflows into the cryptocurrency market, ultimately causing selling pressure that cannot be absorbed by sufficient buying power. This is the fundamental reason why the cryptocurrency market is currently unable to effectively break out, even challenging the lower limits of its consolidation range.
Cryptocurrency Market:
In June, BTC opened at $67,473.07 and closed at $62,668.26, marking a monthly decline of $4,804.15, or 7.12%, with a fluctuation of 20.10%. Trading volume has shrunk for three consecutive months.
BTC’s performance diverged from the Nasdaq’s strong 5.69% rise, falling 7.12% for the month, mostly erasing gains from May’s rebound.
Technically, influenced by news of BTC releases from Mt. Gox and BTC sales by the German government, BTC prices retraced on June 24th to test and rebound from the uptrend line since October last year. On the same day, BTC also rebounded from the lower end of the new high consolidation range ($58,000). These strong supports suggest BTC’s short-term security above $63,000, though medium-term prospects remain uncertain.
Due to expectations of imminent ETF approval, ETH’s trend slightly outperformed BTC’s. The ETH/BTC trading pair in June largely preserved the gains from May’s ETH rebound, indicating that industry capital remains focused on ETH ETF trading.
ETH ETF is likely to be approved for trading in July. However, with current severe funding shortages, ETH may face significant selling pressure shortly after positive news. Post-approval, whether ETH ETF can attract substantial net inflows like BTC ETF remains uncertain.
Capital Flow:
A bull market is primarily a phenomenon of capital movement.
Based on funding sources, BTC’s trend since last year can be divided into four stages—
