Macroeconomic interpretation: The ongoing turmoil in U.S. fiscal policy is becoming a catalyst for the rise of Bitcoin. Recently, Musk fiercely criticized the 'Beautiful Bill' supported by Trump on social media, calling it 'absurd and filled with political manipulation,' and warned that the bill would cause the budget deficit to soar to $2.5 trillion, burdening American citizens with unbearable debt. He even pointed out that interest payments already account for 25% of government revenue, and if deficit spending continues, fiscal revenues will only be enough to pay interest, leaving no resources for other areas such as Social Security, healthcare, and national defense. The rapid opposition between Musk and Trump, former allies, reflects the increasing internal policy divisions. Although the White House denies that the bill will increase the deficit, Coinbase CEO's warning is more thought-provoking: if Congress fails to address the $37 trillion debt issue, Bitcoin may replace the dollar as the global reserve currency. In fact, states like New Hampshire and Arizona have started to reserve Bitcoin to hedge against the risk of dollar depreciation, and six Nobel laureates in economics have also expressed concern that this bill will exacerbate debt and inequality. These events are not isolated; combined with the unexpected surge in job openings in the U.S. in April to 7.39 million (far exceeding the expected 7.1 million), it superficially supports the Federal Reserve's claim of a 'good job market,' but economists generally warn that Trump's tariff policy may lead to a soft labor market in the coming months. This fiscal pressure and debt risk are driving institutional investors to view Bitcoin as a safe haven, similar to gold's role during inflationary periods, thereby enhancing the long-term demand base.
The Bitcoin market itself is undergoing a critical turning point, with short-term volatility coexisting with long-term potential. CoinAnk data indicates that after Bitcoin broke its historical high, investor profit-taking activities significantly increased, with an average profit of about 16% per BTC, and less than 8% of trading days yielding higher returns, marking a distinct cash-out phase for the market. Meanwhile, BTC prices dipped to a low of $103,000 in early June amidst fierce competition between bulls and bears; currently, BTC is in a range-bound oscillation, but the market is closely watching the non-farm payroll data released this Friday. Economists predict that new non-farm jobs will only add 125,000, below the 'breakeven growth rate' of 153,000, and if the data is weak, it may push up the unemployment rate and strengthen the Fed's expectations for interest rate cuts within the year. Rate cuts typically favor risk assets, including the cryptocurrency market, but short-term uncertainties still bring volatility. Notably, the rise of tokenized Bitcoin is expanding the utility of BTC: WBTC and cbBTC together lock up over 172,000 BTC (valued at approximately $18 billion), with WBTC accounting for 81%, dominating Ethereum DeFi transactions, while Coinbase's cbBTC has performed outstandingly on the Base chain, with an average of 7,000 daily active addresses. Although these innovations carry centralized risks, they connect Bitcoin's store of value function with programmable economics, potentially attracting more institutional funds.
The overall cryptocurrency market is not without challenges, as regulatory uncertainty and weak altcoins are creating divergent investment opportunities. Political manipulation surrounding the SEC's CLARITY Act has raised concerns, with Democrats accusing it of refusing to provide key technical analyses while leaking information to Republicans. The bill aims to create a regulatory framework for the cryptocurrency industry but may impact the traditional securities market and create technical loopholes. Maxine Waters plans to write to the SEC chair requesting transparency in handling the bill, which will enter the committee marking phase on June 10. If the regulatory framework becomes clearer, it may boost market confidence, but the current uncertainty has already suppressed support from some pro-crypto Democratic lawmakers, increasing market volatility risks. At the same time, altcoin performance has been disappointing, with institutional reports indicating that, despite BTC reaching new highs, altcoins are constrained by token unlocks and a lack of new narratives. The old hype model has failed under a 4.5% U.S. Treasury yield, and Ethereum has shifted to a 'staking for moderate returns' phase. It only takes a few large buy orders to drive altcoin surges, but maintaining upward momentum requires widespread participation from retail investors—over the past year, the narrative of an 'altcoin explosion season' has repeatedly fallen short, highlighting that funds are concentrating towards core assets like BTC. The divisions within Trump-related crypto companies add to the chaos: Magic Eden launched a digital wallet named after Trump, but it was denied association by his eldest son, who stated that WLFI would launch an official wallet. Such infighting may undermine market trust in celebrity-backed projects, highlighting the need for a more mature foundation in the crypto space.
Overall, the impact of these events on the cryptocurrency market and BTC can be summarized as 'short-term pressure, long-term bullish.' On one hand, the expansion of the U.S. fiscal deficit and intensified debt risks are accelerating the narrative of Bitcoin as a 'safe haven,' attracting state-level reserves and institutional allocations, which may drive BTC to challenge the $120,000 high by the end of 2024. The rise of tokenized Bitcoin further reinforces demand, and if the expectations of Federal Reserve interest rate cuts materialize, it will reduce financing costs, benefiting the entire cryptocurrency market. On the other hand, regulatory uncertainty (such as the SEC bill controversy) and infighting within Trump's camp may stifle innovation and trigger short-term selling pressure, particularly affecting altcoins and emerging projects. Investors need to be cautious: if employment reports fall short of expectations, it may exacerbate BTC volatility; altcoins, lacking new narratives, may see funds further concentrate on BTC, leading to increased market fragmentation. In terms of operations, it is suggested to accumulate BTC on dips at key support levels, while paying attention to regulatory developments and tokenization progress (such as the expansion of cbBTC on the Base chain), and avoiding altcoins with high unlocking pressure. In summary, Bitcoin is moving from the margins to the mainstream, but this financial storm reminds us that the maturation of the cryptocurrency market still requires time, and the rise of BTC will be the most worthwhile turning point in the era of debt.
BTC data analysis: CoinAnk data shows that Bitcoin's breakout above historical peaks has triggered a significant profit-taking wave, with on-chain data indicating that the average profit per BTC realized is $16,800 (approximately 16%), surpassing 92% of historical trading day performance, reflecting that investors are making rational position adjustments. This round of profit-taking displays structural characteristics—long-term holders (LTH) account for only 3.2% of the holding volume being realized, while short-term holders (STH) account for 67% of the selling pressure, indicating that the market is not experiencing panic selling.
Current profit-taking is having some impact on the cryptocurrency market, with technical support levels (corresponding to $2.8 billion in open options contracts) suppressing the risk of deep corrections; secondly, the miner position index (MPI) has rebounded to -0.35, combined with ETF net inflows, to build a new funding balance; finally, the growth rate of stablecoin market capitalization is positively correlated with the scale of selling pressure (correlation coefficient of 0.78), indicating that profit funds may be returning to the crypto ecosystem. Historical data shows that the probability of reaching new highs within 60 days after similar moderate profit-taking phases is 73%, but caution is needed regarding the risks in the derivatives market—a divergence between open futures contracts and a funding rate of -0.02% may amplify short-term volatility to ±8%. Given the current context where Bitcoin's market capitalization is significant, small and mid-cap tokens may seize the opportunity to initiate a rotational rebound.
