Author: Shang2046
The market, project, and cryptocurrency information, opinions and judgments mentioned in this report are for reference only and do not constitute any investment advice.
BTC is expected to end the longest high-volatility period in history, and maintaining patience is the best strategy to welcome the second half of the bull market
Market of the Week
This week, BTC opened at $62,811, and as of the morning of October 14, it hovered around $62,500, recording a weekly Doji with a range of nearly 9%. On Monday afternoon, BTC quickly surged to around $64,500, and then broke through the 66,000 mark in the evening.
Ignoring the rapid movement on Monday, BTC's overall performance this past week has continued the relatively weak trend since the beginning of October. This is consistent with the net outflow of funds from the crypto asset world in October. During the same period, the monetary policies of the two superpowers, China and the United States, have undergone major changes, which has also had a certain impact on BTC.
On September 23, China issued what may be the most intense market rescue policies for the stock market and real estate industry in history. The market tends to believe that this is related to the 50-basis-point rate cut initiated by the US the previous week. Within two weeks of China's market rescue policy, the US subsequently announced strong employment data and relatively neutral inflation data, and the combination of the two quickly changed the market's expectation of the Fed's continued 50-basis-point rate cut to 25 basis points, and some institutions even believe that the possibility of no rate cut cannot be ruled out. This has cast a slight shadow on Bitcoin, which is negatively correlated with the US dollar.
BTC's recent bull market is highly correlated with the US stock market, especially the Nasdaq, and as the spot ETF is directly linked to the two, the recent market trend is also highly related to the inflow and outflow of ETF funds.
A recent article by BlackRock pointed out that the market tends to compare BTC to US tech companies, but this clearly misunderstands the special asset attributes of BTC. In the medium and long term, the situation of BTC being "dragged" by the US stock market must be broken out of.
Looking back to the crypto asset world, after 7 months of high-volatility adjustment, BTC has established solid support in the current range, and the chips have also been fully washed, so once the second half of the bull market is launched, it will see rapid development.
Federal Reserve and Economic Data
On October 10, the US announced a CPI year-on-year rate of 2.4%, slightly higher than the expected 2.3%. On October 14, the US announced that 254,000 new jobs were added in September, higher than the expected 147,000, and significantly revised the employment data for July and August.
The continued escalation of the Middle East conflict has also increased the risk of a rebound in inflation. As Fed officials continue to turn hawkish, the market has ultimately lowered the expected rate cut for this year, and the current FedWatch probability is highest for two 25-basis-point rate cuts.
Accompanying the decline in the annual rate cut, the US dollar index has rebounded strongly, rising to 102.89. Currently, the various parties in the market are gradually pushing the stock index to rise slowly under the expectation of a "soft landing", with the Nasdaq approaching its previous high, and the Dow Jones and S&P 500 reaching new highs. After adjusting, gold has stabilized and rebounded, with London gold rising 0.17% for the week. The bond market has seen a sell-off, with the 2-year yield rising to 3.953 and the 10-year yield rising to 4.073.
Stablecoins and ETFs
This week, funds overall showed an outflow, with a loss of $330 million, mainly due to the withdrawal of funds from the USDC channel. Specifically, USDT saw an inflow of $65 million, while USDC saw an outflow of $750 million, resulting in a net outflow of $687 million from the stablecoin channel. The ETF channel contributed positive fund inflows: there were two days of large inflows in the 5 trading days, with a net inflow of $357 million for the week.
The significant outflow of on-chain funds is the main reason why BTC broke through $60,000 again this week, but with the support of the Nasdaq's rise, the inflow of funds into the ETF channel allowed BTC to recover to the $63,000 level after falling below $60,000. The rapid breakthrough on Monday was also directly related to the $470 million inflow into the ETF on the 14th.
Supply Analysis
After a brief "short-to-long" movement the previous week, this week saw a return to "long-to-short" movement. We previously analyzed that the second round of chip distribution by long-term holders after re-accumulating positions is one of the main signs of the start of the second half of the bull market. The cost basis of short-term investors is currently around $62,500, and the price with the largest chip accumulation is $61,800. The BTC balance held by exchanges remains at a low level, within 3 million.
BTC On-Chain Data
The change in new addresses is not significant, Transactions have increased, active entities and transferred value have risen, and the medium-term is entering an expansionary phase. Bitcoin mining power is operating near historical highs.
Ecosystem Analysis
The active addresses, new addresses, and Transactions in the Ethereum ecosystem have entered an expansionary phase, with Transactions reaching a new high, driven by Layer2 Base.
Solana's new addresses and Transactions have remained at high levels, with the 30-day average reaching a new high, and active addresses remaining at historical highs.
Cycle Indicators
The EMC BTC Cycle Metrics indicator is 0.25, and the bull market signal needs further activation.
EMC Labs (Emerging Labs) was founded in April 2023 by crypto asset investors and data scientists. It focuses on blockchain industry research and Crypto secondary market investment, with industry foresight, insight and data mining as its core competencies, committed to participating in the thriving blockchain industry through research and investment, and promoting blockchain and crypto assets to bring well-being to humanity.
For more information, please visit: https://www.emc.fund
