Macroeconomic interpretation: From the sharp fluctuations in expectations for Federal Reserve interest rate cuts to the rebalancing of pension funds at the billion-dollar level, from #ETH ETF institutional holding losses to #BTC the massive expiration of options in the derivatives market, these seemingly disparate events conceal a core logical chain that affects market direction. We combine the latest data and market dynamics to deeply analyze how several key variables reshape the underlying logic of the crypto market.
Regarding the shift in monetary policy, there is a dual game between the closure of the interest rate cut window and the weakening of the dollar. The U.S. core PCE price index in April is expected to maintain a high year-on-year growth rate of 2.6%, remaining stuck in the 2.6%-2.8% range for six consecutive months, a figure far exceeding the Federal Reserve's 2% policy target. Although market bets on the probability of a rate cut in September have plummeted from 68% a week ago to 47%, institutions like MUFG believe the Federal Reserve may be forced to initiate rate cuts in the fourth quarter to respond to economic pressures. This policy lag may lead to medium-term pressure on the dollar index, while historical data shows that periods of dollar weakness often exhibit a negative correlation with the prices of non-dollar assets like Bitcoin.
It is worth noting that the U.S. economy is facing new inflationary pressures brought about by tariff policies. Although there have been signs of easing trade friction recently, economists generally predict that core inflation may rebound to 3% in a few months. This 'stagflation risk' has prompted some funds to position themselves in anti-inflation assets ahead of time, and Bitcoin's fixed supply characteristic is causing its proportion in institutional allocations to continue to rise. The latest data from Bank of America shows that weekly inflows into cryptocurrencies reached $2.6 billion, setting a new high since January of this year, in stark contrast to the $9.5 billion capital outflow from global stock markets during the same period.
Goldman Sachs' trading division has disclosed that U.S. pension funds will sell approximately $20 billion in stocks by the end of May to restore stock-bond balance. This large-scale rebalancing operation is driven by rare fluctuations in the bond market—this month, the yield on ten-year U.S. Treasuries has fluctuated by more than 30 basis points, forcing institutional investors to adjust the proportions of traditional 60/40 investment portfolios. Although the exact scale of capital flowing directly into the crypto market is not yet clear, eToro analysts point out that such operations often trigger chain reactions across asset classes: when liquidity in the stock market contracts, high-volatility and independently trending crypto assets may become a short-term safe-haven choice for funds.
At the same time, the institutional holding predicament of Ethereum ETFs exposes the structural contradictions in the crypto derivatives market. The average holding cost for spot Ethereum ETFs from BlackRock and Fidelity Investments is $3,300 and $3,500, respectively, resulting in a floating loss of 21% compared to the current price of $2,600. This phenomenon of 'high-position accumulation' contrasts sharply with the inflow of funds into the Bitcoin market—CryptoQuant data shows that daily new capital inflows into Bitcoin average about $1.8 billion, approaching the peak levels seen during the 2021 bull market, especially when the price broke through $73,000, with a single-day capital inflow peak reaching $4.5 billion. This divergence indicates that institutional investors are more inclined to use Bitcoin rather than altcoins as a macro hedging tool.
Deribit data shows that 93,000 Bitcoin options (with a nominal value of $9.79 billion) and 624,000 Ethereum options are set to expire soon. Among these, the put/call ratio for Bitcoin options is at 0.89, with the maximum pain point concentrated at $100,000, while Ethereum-related data shows a ratio of 0.81 and a pain point of $2,300. From the perspective of the options market's game theory, when the spot price approaches the maximum pain point, market makers have incentives to reduce payout losses through selling pressure or pushing prices up, which may lead to increased short-term price volatility.
It is concerning that the current open interest in Bitcoin contracts is at a historical high, combined with the European Central Bank's warning about the regulatory upgrade of crypto assets (such as advancing the digital euro project), significantly increasing market vulnerability. Officials like Panetta emphasize that 'we cannot rely solely on rules to limit crypto risks', suggesting that technical regulatory measures may be introduced in the future, such as auditing stablecoin reserves or monitoring the liquidity of DeFi protocols. The uncertainty surrounding regulation and the leverage liquidation risks in the derivatives market may resonate, potentially becoming the catalyst for breaking the current sideways market pattern.
Considering the above factors, the Bitcoin market is facing a struggle between three forces: the change in dollar pricing logic brought about by shifts in monetary policy, liquidity redistribution triggered by institutional capital rebalancing, and the potential impacts of high leverage in the derivatives market coupled with regulatory upgrades. In the short term, the expiration of $9.7 billion in options may exacerbate price volatility, but the medium to long-term trend of capital inflow remains unchanged, with Bitcoin still playing a dual role as 'digital gold' and 'risk asset'.
For investors, two major signals need to be closely monitored: first, the clarification of the Federal Reserve's policy path following the release of core PCE data, and second, the cross-market capital flows triggered by pension fund rebalancing operations. If the dollar index falls below key support levels due to heightened expectations of interest rate cuts, Bitcoin is likely to break through the key resistance range of $115,000; conversely, if a large-scale mutual destruction occurs in the derivatives market, prices may pull back to test the psychological levels of $100,000 and $90,000. In this game between institutions and macro policies, increased market volatility may become the new normal.
BTC data analysis:
According to monitoring data from CoinAnk, the well-known whale James Wynn triggered the forced liquidation mechanism due to the decline in Bitcoin prices, with his holding of 949 BTC (approximately $9.93 million) being liquidated when it fell below the $105,000 threshold. This incident not only exposed the immense risks of high-leverage trading but also revealed the liquidity dilemmas faced by institutional investors in extreme market conditions. Notably, this trader frequently adjusted positions over the past week, and although he ultimately suffered a paper loss exceeding $9.9 million for the week, combining his previous operations such as long-short hedging and rapid liquidation, he still retained approximately $845,000 in profit.
From a market impact perspective, such large-scale liquidation events often create a chain reaction. Data shows that there is about $1.135 billion in short liquidation pressure near key price levels (such as $105,000). This 'liquidation threshold effect' can easily trigger accelerated price volatility. Historical experience indicates that when the single-day liquidation amount exceeds $250 million, market sentiment indices (such as the fear and greed index) quickly shift to caution, leading to reduced trading volumes and a downward price spiral. In the current environment, significant movements in whale positions may exacerbate market concerns about liquidity risk, prompting more investors to reduce leverage or shift to defensive strategies. This shift in collective behavior may extend the market adjustment cycle while also creating opportunities for institutions with risk management capabilities to accumulate positions at lower levels.
