In the continued questioning of the Federal Reserve's pause in interest rate cuts last week, a series of negative non-farm employment data has emerged, showing the strong resilience of the US economy. The US dollar index has hit new highs in a row, and the employment issue seems to have eased, and the Federal Reserve's demand for interest rate cuts does not seem to be as strong. From large financial institutions like Citigroup and Goldman Sachs to individual traders, they are all reducing their bets on the Federal Reserve's interest rate cuts in 2025.
The price of BTC has also shown a huge "sweeping" state, fluctuating up and down by 10,000 points. Many people in the market jokingly say "the price doesn't change, but the position is gone." The market sentiment has also shown huge volatility, quickly turning from greed to panic and then back to greed. And yesterday's PPI data was positive, but the inflation problem has not been well alleviated, which has also increased expectations of interest rate cuts by the Federal Reserve.
In less than a week since Trump took office, the US CPI data will be released again at 21:30 tonight in the UTC+8 time zone. Will the interest rate cut in 2025 be put on the agenda? Has the Trump narrative already been priced in, or is there still huge potential? Let's see what the traders think.
Macro Analysis
Today, the focus of the market data is on the trading volume of BTC. Referring to the C-wave third wave mentioned on the screen, the third wave is often accompanied by a sharp decline and market panic selling, which will lead to a sharp increase in short-term trading volume. So look at the increase in BTC trading volume to see if the third wave has been completed!
The overall market decline, BTC occupies a large proportion and sucks blood from altcoins, the market risk appetite accelerates the decline.
The increase in BTC trading volume is 25%, which is not obvious compared to the overall market trading volume increase of 150%, so it does not meet the stage of the third wave completion. The increase in altcoin trading volume is 277%, and today BTC broke through the key level, causing ETH and many mainstream altcoins to break through key support, so the altcoin market should have experienced a large-scale liquidation, leading to a surge in trading volume.
In terms of funds, the market's existing and incremental funds are 4 billion, currently 212.5 billion.
USDT: According to the official website data, it is 137.449 billion, an increase of 0.03 billion compared to last Saturday. Although the market has fallen sharply, the funds in the Asia-Europe market have temporarily stopped net outflows, which is a small positive data. At the same time, the activity of USDT funds has increased by 1 time, which should be due to the large-scale liquidation leading to an increase in trading volume.
Overall, the funds that have finished trading in the decline have not shown a large-scale exodus, but have chosen to stay in the market or return to trading again. This situation does not belong to the panic expansion stage for the time being.
On Monday, the US market funds did not show FOMO, with net outflows for four consecutive days. Even though it went from 89,000 to 97,000. This is also an important reason why I don't think 89,200 is the bottom. 89,000 consumed a lot of retail funds from non-US regions, which can be seen from the URPD data that there are a large number of short-term holders who have taken profits.
According to SoSoValue data, on January 14 (Eastern Time), the total net outflow of Bitcoin spot ETFs was $210 million, with net outflows for 4 consecutive days. The Bitcoin spot ETF with the largest single-day net inflow yesterday was the WisdomTree ETF BTCW, with a net inflow of $10.2372 million, and its total historical net inflow has reached $239 million. The second is the VanEck ETF HODL, with a single-day net inflow of $5.4596 million. The current total net asset value of Bitcoin spot ETFs is $108.981 billion, and the ETF net asset ratio (market value to Bitcoin total market value) has reached 5.7%, with a cumulative historical net inflow of $35.722 billion.
Since there was no second wave of risk aversion on Tuesday, it either means that investors have already had enough expectations for the CPI, or that investors have enough positive sentiment to offset the potential negative sentiment from the CPI. To be honest, I don't think this CPI data is that important.
Because the Federal Reserve not raising interest rates in January is already close to 100% certain, so the actual inflation in December will not change the Federal Reserve's decision, and it is even likely that the Federal Reserve will not raise interest rates in March either. According to the dot plot, there are only two interest rate cuts in 2025, and they are most likely to be in the second half of the year, and there may not be any interest rate cuts in the first half.
So a single CPI data is not as important as the non-farm data, after all, the current inflation has already been expected by the Federal Reserve. Of course, if the inflation data is lower, it will be more positive for the market, but even if the inflation in December drops to 2%, the Federal Reserve may still not immediately cut interest rates.
Coming back to the BTC data, although the turnover rate has increased, with the rebound in BTC price, panic has not yet appeared. Currently, the ones leaving the market are still more short-term profit-taking investors, and the early investors including the loss-making investors have not shown obvious signs of reduction, indicating that at least until now, the sentiment of investors is relatively stable.
Technical Analysis
BTC has broken through the first trend line, and I expect it to break through the second one. In the short term, I'm waiting for the moving averages to catch up with the price, and then it can rest and continue to rise.
I have added more long BTC positions here.
Reviewing history, history is the teacher. This kind of structure has a high probability of occurrence, and the subsequent is a large-scale correction, at least 50% to 0.618% of the previous major wave. The more brutal one is the 5.19 that year, returning to the starting point of the rise, which is an extreme case that requires various factors to support. We only talk about the normal situation, and the 85,000 mentioned last week is based on this calculation.
Data Analysis
The probability of ETH price exceeding $4,000 by the end of January is only 10.62%.
The price continues to rise, and the premium is still recovering towards 0, indicating that the spot demand is still entering the market. When the premium fully recovers to a positive value and reaches a relatively high level, the entire BTC market will be considered to have entered a safe mode.
So the current price increase and the synchronous recovery of the premium actually represent that the spot demand is entering the market, while the futures long positions are gradually taking profits, and the futures short positions are gradually increasing their positions.
When the premium returns to around 0, it means that the futures long positions have basically finished taking profits, and if the short positions do not further increase their positions, the premium will not go up again. Otherwise, if the short positions continue to increase their positions, the premium will turn positive.
In general, when the premium returns to zero, it is easy to see a reversal or continuation of the short-term trend;
In a bullish trend, the premium returning to zero is either a pullback or a sign of a shift to a bearish trend, and vice versa in a bearish trend, the premium approaching 0 is often a sign of a rebound or a shift to a bullish structure;
According to the needle drop below $90,000, it can be seen that market demand has weakened, which is why the key support was broken by the needle drop. The current price range already has the conditions to become a "distribution range"; just like the volatile market in 2024, the presence of distribution signs does not mean that the market will ultimately turn bearish, as stronger demand can also drive the market up;
On-chain whale dynamics
The "whale who bought low and sold high $ETH for a profit of $33.67 million" withdrew 10,000 ETH worth $30.76 million from Binance on January 13, with a cost of about $3,075.57; he currently holds 55,166.12 ETH worth a staggering $169 million
A month later, the "new address that built a position of 3,669 ETH on 12.13" added another 4,817 ETH worth $14.92 million during the crash on Monday; since 2024.12.05, this address has accumulated a total position of 13,479 ETH worth $42.78 million, with a cost of $3,622, and is currently underwater by $5.9 million
The ETH swing trading whale with an 83.3% win rate reduced his position by 5,872.63 ETH (the part he added during the crash last night) at an average price of $3,106.53, with a small loss of $530,000; he still has 11,252.98 ETH (about $35.39 million) in the two addresses, with a cost of $3,196.85
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