Author: 0xBrooker
BTC Daily Chart
BTC opened this week at $119,309.37, closed at $117,488.60, with a low of $116,859.32 and a high of $124,533.00, a decline of 1.53%, a fluctuation of 6.43%, with increased trading volume.
This week, the US released the July CPI and PPI data. The CPI data was basically in line with expectations, but the PPI data significantly exceeded expectations, suddenly increasing the anticipation that "inflation remains sticky or even rises." Federal Reserve board members began to temper expectations for a significant rate cut in September. The market had previously fully priced in a 25 basis point rate cut in September, with some pricing in a 50 basis point cut, but the unexpectedly high PPI data released this week raised inflation concerns, leading the market to quickly eliminate pricing for a 50 basis point cut.
Affected by this expectation, the dollar index experienced a certain rebound, but still saw a decline during the week. Originally driven by significant interest rate cuts and continuing to rise, US stocks and BTC saw slight declines due to the data, but still recorded gains for the week.
Currently, a 25 basis point interest rate cut on September 25 remains a high probability event, with US stocks and BTC both in a gradual upward trend. Regarding the future market, EMC Labs believes a cautiously optimistic approach is appropriate, closely monitoring economic and employment data, especially data related to inflation; if the data worsens, the market may continue to experience fluctuations.
Policies, Macroeconomic Finance, and Economic Data
In last week's report, we mentioned that "what we need to be wary of is that the market's pricing of three rate cuts will still face challenges, such as whether CPI will rebound significantly due to tariffs. This significant uncertainty will still make the market's optimistic pricing seem precarious."
The CPI and PPI data released this week indeed had a certain impact on the market.
The PCI data released on Tuesday showed that the seasonally adjusted annual rate of CPI at the end of July was 2.7%, lower than the expected 2.8%, but the seasonally adjusted core CPI annual rate was 3.1%, higher than the expected 2.00%, indicating that inflation remains sticky but is relatively mild. This data reinforced the market's expectations for a significant interest rate cut, driving the Nasdaq and BTC to reach historic highs.
However, the PPI data released on Thursday showed a monthly rate of 0.9% in July, significantly higher than the expected 0.2%, and an annual rate of 3.3%, also well above the expected 2.5%. The PPI data is likely to transmit to the CPI data in the future, making it possible for inflation data to rise in the coming months.
The much better-than-expected PPI data drove a certain decline in US stocks, leading BTC, which had just hit a historic high and returned to an upward trend, to plummet significantly on Thursday, and also caused a major sell-off in Altcoins that were on the rise after the start of Altseason.
Both the dollar index and long and short-term government bonds experienced certain fluctuations. FedWatch data showed that traders quickly eliminated pricing for a 50 basis point cut in September on Thursday, and the probability of a 25 basis point rate cut in September now exceeds 90%.
Based on expectations for the resumption of the interest rate cut cycle, the previously surging Nasdaq has seen a slowdown in its gains, while the Dow Jones and Russell 2000 indices have caught up, with gains exceeding the S&P 500.
From the data perspective, the market still judges that the interest rate cut cycle in September is opening, just adjusting the expectations for the magnitude of the cuts. Based on this judgment, the upward trend in US stocks and the cryptocurrency market remains relatively intact, and a cautiously optimistic attitude can still be maintained going forward.
Cryptocurrency Market: Capital Inflows and Outflows
After fluctuating around the $120,000 line for four weeks, BTC attempted to break through this week, reaching a high of $124,533, but plummeted back below $120,000 amid market fluctuations triggered by PPI data.
However, the risk appetite driven by interest rate cut expectations has led to strong capital still flowing into the cryptocurrency market.
According to eMerge Engine statistics, the cryptocurrency market saw over $19.8 billion inflow throughout the week, including $6.145 billion in stablecoins, $0.38 billion in BTC Spot ETF, $2.394 billion in ETH Spot ETF, $0.509 billion in corporate purchases of BTC, and $2.394 billion in corporate purchases of ETH.
Strong capital inflows have caused BTC's adjustment due to a shift in capital, with inflows into the ETH market far exceeding those into BTC.
Cryptocurrency Market Capital Inflow and Outflow Statistics (Weekly)
This week, as BTC adjusted, ETH continued to rise, with a weekly increase of over 5.22%. At the same time, Ethereum ecosystem projects also recorded significant increases.
In terms of BTC sell-off, it continues to exhibit characteristics of a rising period with large increases and large sales, and the selling pressure is not significant compared to the strong capital inflow.
Cycle Indicators
According to eMerge Engine, the EMC BTC Cycle Metrics indicator is at 0.75, indicating a rising period.
