US macro data pressures Bitcoin, and the market worries about the prospect of 'stagflation'.
The US macroeconomic report released on Wednesday put pressure on Bitcoin and the entire cryptocurrency market. The 'stagflationary' data combined with shrinking GDP and weak private sector employment growth raised widespread market concerns.
According to the ADP employment report, the US private sector added only 62,000 jobs in April, far below the expected 108,000, and significantly lower than March's 147,000.
Meanwhile, the US GDP decreased by 0.3% in the first quarter, marking the first negative growth since 2022, while the market had previously expected a growth of 0.2%. However, from the perspective of the Personal Consumption Expenditures (PCE) index, inflation has shown signs of slowing down. PCE is a highly watched indicator by the Federal Reserve during decision-making. Data shows that the PCE in March rose by 2.3% year-on-year, slightly above the expected 2.2%; excluding food and energy, the core PCE rose by 2.6% year-on-year, in line with economists' forecasts, but below the revised February data (3.0%).
Affected by this news, Bitcoin briefly fell below $94,000, down 1% during the day. Mainstream altcoins like Ethereum and Solana also fell simultaneously, causing the overall crypto market to drop nearly 4%. However, by the time of publication, the market had shown some recovery.
In traditional financial markets, the S&P 500, Nasdaq Composite, Dow Jones Industrial Average, and NYSE Composite Index all closed lower that day.
The May policy meeting may become a key turning point.
The economic signals released on Wednesday were mixed, bringing new uncertainties to the market. The Federal Reserve may lean towards cutting interest rates to provide financial relief and support.
Federal funds rate futures currently reflect a rising expectation in the market for more than four interest rate cuts this year, as the Federal Reserve tries to find a balance between falling inflation and clear signs of economic slowdown. This delicate policy balance will become the core driving force of the market trend in the coming weeks.
Interest rate cuts may benefit Bitcoin and other risk assets. A weaker dollar, improved liquidity from loose monetary policy, and declining US Treasury yields together create a 'more supportive macro environment' for Bitcoin and the crypto market.
If we add the unexpected 0.3% GDP contraction and Trump's pressure on the Federal Reserve to adopt looser policies, the possibility of a dovish turn will be greater. As tariff risks in certain areas ease and Bitcoin liquidity remains thin, even moderate capital inflows could lead to significant increases in Bitcoin. Although the current market has upward potential, it is also extremely sensitive to macro changes.
The US Federal Reserve is scheduled to hold a meeting from May 6 to 7 to decide whether to cut interest rates, maintain the current rate, or raise rates.
Recently, there has been a large inflow of nearly $3 billion, and open interest in futures has also increased. Interestingly, the funding rate remains at a low level.
It can be seen that the current new capital inflows mainly come from genuine long-term holding demand. Compared to the ETF buying driven by arbitrage funds at the beginning of the year, the overall bullish signals are more positive.
Despite a series of negative news in the market recently, including uncertainties in tariff negotiations, weakened BTC purchasing power of MicroStrategy (MSTR), and escalating India-Pakistan conflicts, BTC prices remain stable at high levels around $95,000. This indicates that the structural change in the market remains solid, and corrections become buying opportunities.
US macro data pressures Bitcoin, and the market worries about the prospect of 'stagflation'.
The US macroeconomic report released on Wednesday put pressure on Bitcoin and the entire cryptocurrency market. The 'stagflationary' data combined with shrinking GDP and weak private sector employment growth raised widespread market concerns.
According to the ADP employment report, the US private sector added only 62,000 jobs in April, far below the expected 108,000, and significantly lower than March's 147,000.
Meanwhile, the US GDP decreased by 0.3% in the first quarter, marking the first negative growth since 2022, while the market had previously expected a growth of 0.2%. However, from the perspective of the Personal Consumption Expenditures (PCE) index, inflation has shown signs of slowing down. PCE is a highly watched indicator by the Federal Reserve during decision-making. Data shows that the PCE in March rose by 2.3% year-on-year, slightly above the expected 2.2%; excluding food and energy, the core PCE rose by 2.6% year-on-year, in line with economists' forecasts, but below the revised February data (3.0%).
Affected by this news, Bitcoin briefly fell below $94,000, down 1% during the day. Mainstream altcoins like Ethereum and Solana also fell simultaneously, causing the overall crypto market to drop nearly 4%. However, by the time of publication, the market had shown some recovery.
In traditional financial markets, the S&P 500, Nasdaq Composite, Dow Jones Industrial Average, and NYSE Composite Index all closed lower that day.
The May policy meeting may become a key turning point.
The economic signals released on Wednesday were mixed, bringing new uncertainties to the market. The Federal Reserve may lean towards cutting interest rates to provide financial relief and support.
Federal funds rate futures currently reflect a rising expectation in the market for more than four interest rate cuts this year, as the Federal Reserve tries to find a balance between falling inflation and clear signs of economic slowdown. This delicate policy balance will become the core driving force of the market trend in the coming weeks.
Interest rate cuts may benefit Bitcoin and other risk assets. A weaker dollar, improved liquidity from loose monetary policy, and declining US Treasury yields together create a 'more supportive macro environment' for Bitcoin and the crypto market.
If we add the unexpected 0.3% GDP contraction and Trump's pressure on the Federal Reserve to adopt looser policies, the possibility of a dovish turn will be greater. As tariff risks in certain areas ease and Bitcoin liquidity remains thin, even moderate capital inflows could lead to significant increases in Bitcoin. Although the current market has upward potential, it is also extremely sensitive to macro changes.
The US Federal Reserve is scheduled to hold a meeting from May 6 to 7 to decide whether to cut interest rates, maintain the current rate, or raise rates.
Recently, there has been a large inflow of nearly $3 billion, and open interest in futures has also increased. Interestingly, the funding rate remains at a low level.
It can be seen that the current new capital inflows mainly come from genuine long-term holding demand. Compared to the ETF buying driven by arbitrage funds at the beginning of the year, the overall bullish signals are more positive.
Despite a series of negative news in the market recently, including uncertainties in tariff negotiations, weakened BTC purchasing power of MicroStrategy (MSTR), and escalating India-Pakistan conflicts, BTC prices remain stable at high levels around $95,000. This indicates that the structural change in the market remains solid, and corrections become buying opportunities.