Dehydration view: Downside expectations converge, rebound may continue

In the previous issue of Dehydration, it was mentioned that the current market is dominated by the internal logic of the industry, that is, Mt. Gox and the German government's dumping. Judging from the market operation last week, the German government's dumping has basically ended. Mt. Gox's actual dumping does not seem to have started. Therefore, the expectation of falling has been converged, and the market has rebounded.

This week, we will continue to pay attention to the actual selling of Mt. Gox. If it can be released to the market slowly and orderly, the current rebound is expected to be maintained. Another positive factor that may maintain the rebound is that the consensus on interest rate cuts has been further strengthened after the release of the June CPI data in the United States. This is conducive to the inflow of external funds into the crypto market.

Last week, the German government's 49,800 BTC took 24 days to clear. They started selling on June 19, a total of 49,858.7 BTC, with an average transfer price of about $58,480, and recovered funds of about $2.915 billion. Although the liquidation is not rigorous, there should not be many coins left in the hands of large traders. The German government's selling can be understood as basically over. A major force that crashed the market has disappeared. As for the selling of Mt. Gox, no abnormal movement has been found yet, so we will wait and see for the time being.

Last Thursday, the U.S. Department of Labor released data showing that the U.S. CPI rose 3% year-on-year in June, slightly lower than the expected 3.1%, further down from the previous value of 3.3%, and down 0.1% month-on-month, the first negative since May 2020. At the same time as the data was released, many Fed officials made dovish remarks. CME predicts that the probability of a rate cut in September has increased to 83%. Generally speaking, with a probability of more than 80%, a rate cut is bound to happen.

At present, the issue that the Fed is considering is no longer whether to cut interest rates, but whether the economy is likely to go into recession. Many voices in the market hope that the Fed will cut interest rates as soon as possible. Based on this situation, we can understand that there is no problem with cutting interest rates. The question is whether to cut interest rates as soon as possible and how fast and how much to cut interest rates. The market's reaction was direct and rapid, and funds began to flow into stocks associated with interest rate cuts.

According to coinglass data, Bitcoin ETF funds continue to see net inflows. From the trend point of view, the scale of fund inflows has greatly expanded after shrinking, and there are certain signs of strengthening of institutional bulls.

According to glassnode data, Bitcoin on-chain transaction fees continue to be sluggish, which indicates that Bitcoin on-chain activity is still relatively weak and market activity is relatively low.

According to Deflama data, the net inflow of funds in the Bitcoin ecosystem in the past month was -33.83%, and the net inflow of funds in the past week was -17.20%. Today, there was a certain net inflow of funds (2.82%), and the market sentiment has improved to a certain extent. This is mainly related to the end of the selling pressure from the German government. In addition, the market speculates that Trump's assassination has made funds optimistic about Bitcoin.

Overall, with the end of the German government's sell-off, the market bulls showed signs of strengthening; in addition, Trump's assassination has increased the market's short-term risk aversion, which seems to have a certain impact on the price of Bitcoin. However, the activity on the Bitcoin chain is relatively low, and the market expects the bulls to be relatively strong this week.

After experiencing wide fluctuations after the release of CPI last week, BTC has temporarily determined the direction of rebound. From the perspective of macro data, there is no important data before August, and the price is likely to maintain a rebound pattern upward, with the target around 68,000. However, for contract users, the resistance in the red box above the current price will gradually increase, and it is necessary to pay attention to the risk of short-term callback.