Weekly Review of the Cryptocurrency Market: Bitcoin Consolidates at High Levels, Awaiting New Breakthroughs

Since the rebound from the low point in April, Bitcoin has reached a maximum increase of 50%, outperforming the Nasdaq index and setting a new historical high. However, the significant rise in the short term has also accumulated some selling pressure. Starting from May 22, a large-scale sell-off began to appear in the Bitcoin market, which created certain pressure on Bitcoin, which is at a high level and leading U.S. stocks, becoming a driving force for the price decline.

This Thursday, the market experienced panic sentiment, with Bitcoin's price dipping to the support level of 100,000 USD. Subsequently, the price rebounded continuously, returning above the upward trend line. Along with the adjustment of the US stock market, the buying power of Bitcoin spot ETFs weakened, making it difficult to digest the selling pressure for further upward movement in the short term. It is worth noting that with the price correction, the outflow scale from exchanges has significantly increased this week, indicating that new funds are taking the opportunity to accumulate chips.

The positive news from the non-farm payroll data has created a favorable atmosphere for the stabilization and rebound of Bitcoin, but to break through to a new price level, greater progress may still be needed in areas such as tariff policies, encryption currency regulation, or Federal Reserve interest rate cuts.

Macroeconomics and Policy

The U.S. non-farm payroll employment data for May showed an increase of 139,000 jobs, which, although a new low since February, was slightly above the market expectation of 126,000. The unemployment rate remained at 4.2%, showing no signs of deterioration. These data points slightly exceeded expectations, leading to gains in the three major U.S. stock indices and a decline in gold.

Currently, the market has a strong expectation for a "soft landing" of the U.S. economy, meaning the economy gradually slows to a sustainable growth level while avoiding a severe recession or large-scale unemployment. Current economic and employment data generally align with this characteristic; although GDP growth has declined, it is primarily due to the Federal Reserve's proactive cooling measures, inflation is decreasing in an orderly manner, the unemployment rate remains stable, and new job creation has not significantly dropped. This also implies that the Federal Reserve may delay interest rate cuts.

In terms of international trade, the leaders of the U.S. and China held their first conversation since the tariff war began, and representatives from both sides will negotiate in the UK. However, it is still in the negotiation stage, and there is still some time before an agreement is signed. Meanwhile, the U.S. raising steel and aluminum tariffs on Canada has also triggered retaliation threats from the Canadian side.

In addition, the market this week was also affected by some incidental events. The criticism of the "Beautiful Big Bill" by a tech company's CEO sparked a dispute with politicians, leading to a significant drop in related stocks and briefly impacting the US stock indices and Bitcoin prices.

Overall, against the backdrop of non-farm data slightly exceeding expectations and slow progress in tariff negotiations, US stocks, US bonds, and the US dollar have maintained a fragile balance in the past week, slightly tilting towards an optimistic direction.

Encryption Asset Market

Bitcoin's rebound since April has outpaced the Nasdaq index. The US stock market is building momentum to challenge previous highs, while Bitcoin has set a new high on May 22.

From a technical perspective, Bitcoin underwent a two-week adjustment after reaching a new high. Last week it fell by 3.07%, and this week it experienced significant fluctuations with a slight increase of 0.08%. The weekly chart shows a long-legged doji pattern. During the adjustment, trading volume was in a state of contraction.

The maximum retracement in the past two weeks is about 10%, overall maintaining above the previous low points, with the lowest point reaching the rising trend line this Thursday. This adjustment after Bitcoin's new high is foreseeable, especially since the U.S. stock market has not yet broken new highs, and it is also a healthy adjustment. A period of consolidation may be inevitable, and for the market to break new highs and reach a new level, greater progress may still be needed in areas such as tariff policies, cryptocurrency regulation, or Federal Reserve interest rate cuts.

Market Supply and Demand Analysis

Since April, Bitcoin has rebounded from its lows with a maximum increase of 50%. As prices reached new highs, both short-term speculators and long-term holders have seen a certain degree of profit-taking. This selling pressure peaked on May 22 and has gradually weakened since then.

It is worth noting that while the sell-off has decreased, the outflow of Bitcoin from centralized exchanges has been increasing. This week's outflow reached 76,520.72 coins, far higher than the usual weekly outflow of 10,000 to 20,000 coins. This large-scale outflow may indicate that long-term investors recognize the current price level.

Capital Flow

After a significant rise in the price of Bitcoin, there has been a slight outflow of funds even through the ETF channel. In the past two weeks, Bitcoin spot ETFs have seen outflows, with $135 million flowing out last week and $128 million this week. This outflow occurs against the backdrop of a sharp rise in Bitcoin and turbulence in the U.S. stock market.

Looking at it individually, it is difficult to predict when ETF funds will flow back in. However, considering the overall trend of the US stock market, concerns about a significant decline may be unnecessary. Although technically there is a possibility of a continued pullback to 100,000, timing it is quite challenging. In a situation where supply and demand are in a fragile balance, a breakthrough rise could occur in a short period.

Cycle Indicator

According to eMerge Engine data, the EMC BTC Cycle Metrics indicator is 0.625, in an upward phase.