The market is in recovery; if there is a pullback, stand on the buy side.
Last week's economic data was decent, with April consumer confidence exceeding expectations and one-year inflation expectations declining. The market is slowly recovering from the panic of an economic recession. However, due to seasonal factors, a slight correction may occur in early May. Overall, BTC is still expected to rise steadily in the medium term.
Investors should now pay more attention to the performance of employment data. As shown in Figure 1, there are signs of a rebound in initial unemployment claims. If employment data continues to perform poorly, the Federal Reserve will accelerate interest rate cuts, which is not a good signal (especially for the stock market). Trump's tariffs and the regular tax season have brought abundant income to the U.S. Treasury (see Figure 2), which can alleviate the upward pressure on the ten-year interest rate and can also be invested in the real economy. In the past week, RRP/TGA has also rebounded (as shown in Figure 3), so we need to pay attention to whether this will continue to decline.
Here, I would like to supplement my recent observations with data from blave.org. This data further confirms why the market is not currently in a bear market, but rather in a 'mid-term bear market trap' at the beginning of the next bull market.
Market sentiment has always been the most important observation indicator. According to Blave's historical market sentiment data (Figure 4, Market Sentiment History), even though $BTC rose from $74,000 to $95,000 (an increase of about 26%), traders' behavior has become more bearish (with more short positions added). This situation is very similar to October 2023, when everyone was also bearish on the cryptocurrency market. In my view, this is just a mid-term reset, preparing for the next larger leap. Currently, market pessimism has reached extremes, making a reversal hard to avoid. Moreover, true peak signals usually appear when market sentiment turns to a high optimism level (green bars).
Additionally, the holder concentration of BTC (Figure 5, Holder Concentration History) has surged to a near one-year high, which is a strong signal indicating that whales have quickly turned bullish within a few days, while retail investors have not kept up (possibly shorting). Whales always seem to have some certain information?!🐳
Coincidentally, the current holder concentration value is similar to the situation in October 2023. In the past two years, whenever similar data states appeared, subsequent price increases followed. However, it should be noted that there may be a slight washout in the short term due to adjustments in holder concentration.
On the momentum front (Figure 6, Squeeze Momentum), the trend is also showing the same pattern, providing healthy support for a mid-term bull market.
From a micro perspective in the crypto market, the situation is stable; from a macro perspective, the situation is also still good. Please see Figure 7!🫡
HYG/DXY (the ratio of high-yield bonds to the dollar index) is typically used to measure market risk appetite. Recently, this indicator has rebounded sharply and is showing an upward trend, indicating a return to risk appetite among investors.
Meanwhile, the spread between the 10-year and 2-year Treasury bonds (10Y-2Y) has also rebounded rapidly, indicating a reduction in market concerns about economic recession. Over the past two years, the inverted yield curve has triggered panic about economic recession. Now, the 10Y-2Y spread is approaching equilibrium and may even turn positive, indicating a decrease in economic risk and also suggesting that the Federal Reserve's interest rate cuts to stimulate the economy are not far away.
Recently, many people have discussed liquidity issues. Liquidity has been mentioned many times; currently, the growth in liquidity mainly comes from countries outside the U.S. To truly see a bull market, we still need liquidity release from the U.S.
In summary, I remain bullish for the second quarter and will continue to position quality tokens (especially those benefiting from financial deregulation) during pullbacks. There are not many key points this week; the European Central Bank is expected to continue its dovish stance, and U.S. PMI and initial unemployment claims data can be monitored!
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