The information, opinions, and judgments regarding the market, projects, currencies, etc., mentioned in this report are for reference only and do not constitute any investment advice.
Written by 0xBrooker
BTC daily trend
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, down 1.53%, with a fluctuation of 6.43%, and trading volume increased.
This week, the US released July CPI and PPI data. The CPI data was generally in line with expectations, but the PPI data significantly exceeded expectations, suddenly enhancing the expectation that 'inflation remains sticky or even rises', leading Federal Reserve officials to start cooling expectations for significant rate cuts in September. The market had previously fully priced in a 25 basis point cut in September and had some pricing for a 50 basis point cut, but the unexpectedly high PPI data released this week increased inflation concerns, prompting the market to quickly eliminate the pricing for a 50 basis point cut.
As a result of this expectation, the US dollar index experienced a rebound, but still saw a decline during the week. The US stock market and BTC, which were previously driven by significant rate cuts, experienced slight declines due to data impacts but still recorded increases for the week.
At present, a 25 basis point rate cut in September still appears to be a high probability event, with US stocks and BTC both in a gradual upward trend. Regarding the future market, EMC Labs believes that cautious optimism is advisable, closely monitoring economic and employment data, especially inflation-related data, as adverse data may lead to continued market fluctuations.
Policy, macro finance, and economic data
In last week's report, we mentioned that 'it is necessary to be cautious, as the market pricing for three rate cuts will still face challenges, such as whether CPI will significantly rebound due to tariffs. This significant uncertainty will still make the market's optimistic pricing seem precarious.'
The US CPI and PPI data released this week indeed had a certain impact on the market.
Data released on Tuesday showed that the seasonally adjusted CPI year-on-year rate at the end of July was 2.7%, lower than the expected 2.8%, but the seasonally adjusted core CPI year-on-year rate was 3.1%, higher than the expected 2.00%, indicating that inflation remains sticky but is relatively mild. This data strengthened the market's expectations of significant rate cuts, pushing the NASDAQ and BTC to create historical highs.
However, the PPI data released on Thursday showed a monthly rate of 0.9% for July, significantly higher than the expected 0.2%, with an annual rate reaching 3.3%, also well above the expected 2.5%. The PPI data is likely to transmit to the CPI data in the following months, making an increase in inflation data possible.
The significantly higher-than-expected PPI data caused a certain downturn in US stocks, leading to a substantial decline in BTC, which had just returned to an upward trend after reaching historical highs on Thursday, and also significantly impacted the Altcoins that were rising after the Altseason opened.
Both the US dollar index and short- and long-term government bonds experienced some fluctuations. FedWatch data shows that traders rapidly cleared the pricing for a 50 basis point cut in September on Thursday, and currently, the probability of a 25 basis point cut in September exceeds 90%.
Based on the expectation of a restart of the interest rate cut cycle, the previously surging NASDAQ saw a slowdown in its growth, while the Dow Jones and Russell 2000 indices made up for gains, surpassing the S&P 500.
From the data perspective, the market still determines the opening of the September rate cut cycle, only adjusting expectations for the extent of the rate cuts downward. 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.
Cryptocurrency market: capital inflows and sell-offs
After fluctuating around the $120,000 line for four weeks, BTC attempted to break through this week, reaching a high of $124,533, but fell back below $120,000 amid market fluctuations triggered by PPI data.
However, the risk appetite driven by rate cut expectations has led to strong capital still flowing into the cryptocurrency market.
According to statistics from eMerge Engine, the cryptocurrency market saw an inflow of over $19.8 billion for the entire week, including $6.145 billion in stablecoins, $0.38 billion in BTC Spot ETF channels, $2.394 billion in ETH Spot ETF, $0.509 billion in corporate purchases of BTC, and $2.394 billion in corporate purchases of ETH.
With strong capital inflow, the adjustment of BTC is due to a shift in capital, with the scale flowing into the ETH market far exceeding that of BTC.
Cryptocurrency market capital inflow and outflow statistics (weekly)
As BTC adjusts this week, ETH continues to rise, with a weekly increase of over 5.22%. Meanwhile, Ethereum ecological projects also recorded significant increases.
In terms of BTC sell-offs, the characteristics of rising periods with significant increases and sales continue, and compared to the strong capital inflow, the sell-off pressure is not large.
Cycle indicators
According to eMerge Engine, the EMC BTC Cycle Metrics indicator is at 0.75, which is in an upward phase.
EMC Labs was established in April 2023 by cryptocurrency asset investors and data scientists. It focuses on blockchain industry research and investment in the secondary cryptocurrency market, with industry foresight, insights, and data mining as its core competitiveness, dedicated to participating in the thriving blockchain industry through research and investment, and promoting blockchain and cryptocurrency assets for the benefit of humanity.
For more information, please visit: https://www.emc.fund
