Macroeconomic Interpretation: The current global financial market is undergoing multiple transformations, with the recalibration of the Federal Reserve's monetary policy path, rising expectations for U.S. fiscal expansion, and asset form innovations amid geopolitical games, constituting the core variables driving structural changes in the crypto market. The price has approached the $100,000 mark for the first time since February, and cryptocurrency-related stocks have strengthened in tandem. This phenomenon is intertwined with three driving forces: macroeconomic policy, the reconstruction of sovereign credit systems, and breakthroughs in the practical application of on-chain assets.
During the May interest rate meeting, rates were kept unchanged for the third consecutive time, and for the first time in the policy statement, it was clearly acknowledged that "tariffs exacerbate inflation and unemployment risks," marking a subtle shift in the monetary policy framework. Powell mentioned "waiting" 22 times at the press conference, emphasizing that the current interest rate level is sufficiently restrictive. However, the impact of the tariff policies implemented by the Trump administration on the economy far exceeds expectations. Calculations suggest that if the current tariff levels persist, it could result in a further increase of 0.3-0.5 percentage points in the U.S. core PCE inflation rate, forcing the Federal Reserve to delay the interest rate cut to the first quarter of 2025. This policy dilemma is quite rare in history—when fiscal stimulus (like the tax cuts 2.0 proposed by the Trump team) runs parallel to trade protectionism, monetary authorities must address both inflationary pressures and prevent the risk of an economic hard landing. This "stagflationary balance" objectively reinforces Bitcoin's strategic value as a non-sovereign asset.
It is noteworthy that the latest policy from the Office of the Comptroller of the Currency (OCC) has cleared obstacles for traditional financial institutions to deeply participate in the crypto market. National banks are not only allowed to directly conduct crypto asset custody and trading services but can also outsource related services to specialized institutions through risk isolation mechanisms. This regulatory breakthrough resonates with the continued buying by publicly traded companies like MicroStrategy: data shows that the Bitcoin ETF positions held by the top ten banks in the U.S. increased by $720 million within 24 hours of the policy announcement, with BlackRock's IBIT seeing a single-day net inflow reaching a new high since March. This large-scale entry of institutional funds is changing the market structure of Bitcoin—on-chain data shows that the number of addresses holding over 1000 BTC has increased by 18% year-on-year, while exchange reserves have dropped to the lowest level since 2018, fundamentally reversing the supply-demand relationship, which has become the core logic supporting coin prices.
The dual catalytic effect of the political cycle and technological innovation cannot be ignored. The "most significant announcement in history" that the Trump team is about to release is interpreted by the market as a prelude to a new round of fiscal stimulus. According to calculations from JPMorgan's derivatives strategy department, if the policy involves infrastructure investment or capital gains tax cuts, it could push the S&P 500 volatility index (VIX) down by 15-20 basis points. This increase in risk appetite often forms a positive correlation with crypto assets. More significantly, the DJT utility token launched by the Trump Media Technology Group (TMTG) represents a milestone, achieving a deep integration of listed U.S. companies and the on-chain ecosystem for the first time. Its social platform, Truth Social, combines user points with a token economic model, creating a business paradigm of "traffic-data-finance" in the Web 3.0 era. The market shows great enthusiasm for such crypto assets with real application scenarios, and institutional subscriptions during the DJT presale stage exceeded 23 times, indicating a trend of capital shifting from purely speculative meme tokens to utility tokens with clear value support.
From a more macro perspective, Bitcoin is completing a cognitive leap from "digital gold" to "sovereign alternative assets." The strong stance of the Chinese Embassy in the U.S. on U.S.-China trade negotiations, along with the trend of multiple central banks increasing their BTC holdings as a substitute for foreign exchange reserves, reflects the deep trust crisis facing the traditional fiat currency system. The yield on the U.S. 10-year Treasury bond may hit the historic high of 6% within 18 months, contrasting sharply with the ongoing increase in Bitcoin network hash rate security (current network hash rate has grown by 41% compared to the peak in 2023). As institutional investors begin to reassess the allocation value of crypto assets using the Sharpe ratio, Bitcoin's volatility premium is becoming an effective hedge against fiat currency depreciation.
Looking ahead, three key variables will dominate the direction of the crypto market: first, the dynamic interplay between the Federal Reserve's policy path and inflation data. If the June CPI growth rate falls below 0.2%, it may open a window for interest rate cuts in the third quarter; second, the timing and scale of the specific fiscal expansion plan in the U.S., with a stimulus plan exceeding $500 billion potentially triggering concerns about "monetization of fiscal deficits," accelerating capital shifts toward anti-inflation assets; finally, the compliance process of on-chain infrastructure, as the SEC's approval process for Ethereum ETFs enters the countdown, the integration of traditional finance and the crypto ecosystem will enter a transformative phase. Under the combined influence of these factors, Bitcoin breaking through $100,000 could mark the starting point for a new round of value reassessment, but one must remain cautious of the volatility amplification risk brought by short-term liquidity disturbances. Historical experience shows that when the cracks in the sovereign credit system meet waves of technological innovation, it often gives rise to a paradigm revolution in asset classes, and we may currently be at the critical point of this transformation.
BTC Data Analysis:
According to Coinank data, $294 million in liquidations occurred across the network in the past 24 hours, with long positions liquidated at $73.49 million and short positions liquidated at $222 million. Among these, Bitcoin saw liquidations of $107 million, while Ethereum saw $70.15 million.
We believe that among the $294 million in liquidations across the network, short positions accounted for 75.5%. Bitcoin and Ethereum contributed $107 million and $70.15 million to the liquidation amounts, respectively, reflecting that the current market is primarily driven by short squeezes. This phenomenon exposes three major market characteristics:
1. Weakness in Leverage Structure: Bitcoin's price is approaching the critical psychological level of $100,000, triggering concentrated liquidations of high-leverage short positions. CME Bitcoin futures open interest has reached a historical peak of $12 billion, but funding rates remain low (0.01%), indicating that market makers are suppressing volatility through delta hedging, and the actual leverage risk in the market is underestimated.
2. Divergence in Institutional and Retail Behavior: Bitcoin spot ETFs have seen a net inflow for eight consecutive days (with a single-day inflow of $142 million), and institutions like BlackRock continue to increase their holdings, while retail investors participate in short-term speculation through high leverage, exacerbating the difference in risk exposure management strategies and increasing market volatility.
3. Derivatives Dominating Pricing: The liquidation amount for Ethereum reached 23.8%, significantly higher than its market cap share (17.2%), reflecting ETH's characteristic as the highest leveraged target among mainstream coins, strengthening the transmission effect of the derivatives market on spot prices.
In the short term, large-scale short liquidations may accelerate price breakthroughs at key resistance levels. If Bitcoin stabilizes at $100,000, it may trigger a short squeeze of about $1.17 billion, forming a positive feedback loop for price increases. However, caution is needed regarding the risk of insufficient market depth—exchange BTC reserves have dropped to the lowest level since 2018, and a 5% price movement in extreme market conditions could lead to $2 billion in cascading liquidations. In the medium to long term, institutional funds' continued accumulation through ETFs (totaling over $40.7 billion) is reshaping the microstructure of the market, and Bitcoin's volatility center may gradually move down from the historical average of 80% to 50%, aligning more closely with mature assets like gold. Investors should focus on the Federal Reserve's policy expectations and the evolution of geopolitical conflicts, as these two variables may become key catalysts for breaking the current long-short balance.
