Weekly BTC Market Review: Searching for Breakthrough Direction Amid Low Fluctuation Oscillation

This week, the opening price of Bitcoin was $96481.47, and the closing price was $96119.88, down 0.37% for the week. The price fluctuation narrowed to 5%, and trading volume significantly shrank. BTC price still remains within the range of $89000 to $110000.

Despite several important events this week, such as the release of the U.S. January CPI data, adjustments to U.S. tariff policies, and the Congressional testimony of the Federal Reserve Chairman, these factors have not had a significant impact on the cryptocurrency market. The market seems to have already reacted to these events in advance.

As the Russia-Ukraine conflict may develop towards a peaceful direction, market sentiment is gradually turning optimistic. The US dollar index has fallen sharply, US Treasury yields continue to decline, and US stock indices are rising and once again approaching historical highs. Factors that previously had a negative impact on the market seem to be fading, but further observation of market reactions is needed to confirm this trend.

Bitcoin is currently operating within the range of $89,000 to $110,000. After breaking below the second upward trend line, it has been fluctuating narrowly around $97,000. BTC is expected to make a directional choice soon.

Macroeconomic and Financial Data Analysis

The US January CPI data significantly exceeded expectations. The CPI increased by 3% year-on-year and by 0.5% month-on-month, higher than the market expectations of 2.9% and 0.3%. The core CPI rose by 3.3% year-on-year, also above the expected 3.1%.

These data indicate that the economy remains strong, with some rebound in inflation. Market expectations for interest rate cuts this year have been revised down again, currently leaning towards a single cut around December.

The Federal Reserve Chairman stated in his congressional testimony that if the economy continues to grow and inflation does not quickly fall back to the target level of 2%, the Federal Reserve may maintain the current policy for a period of time. Conversely, if the labor market unexpectedly weakens or the decline in inflation exceeds expectations, the Federal Reserve may moderately ease monetary policy.

Considering the tacit understanding between the U.S. government and the Federal Reserve, the likelihood of interest rate cuts is very low in the case of strong economic performance.

In addition, the impact of tariff policies on the market is weakening. Despite the announcement of new tariff policies, the market response has been flat due to the lack of a clear implementation timeline.

What may have a greater impact on the market is the significant progress that the Russia-Ukraine conflict may soon achieve. There are signs that both sides are pushing for dialogue and negotiations, and this development could have a positive impact on the global economy and financial markets.

As a result, the U.S. dollar index fell by 1.22% to 106.813, and the 10-year Treasury yield dropped to 4.48%. The three major U.S. stock indices all recorded gains for the week, with the Nasdaq rising by 2.58%, the S&P 500 up by 1.47%, and the Dow Jones up by 0.55%. Gold prices increased by 0.75%, reaching a new high of 2942.60 USD/ounce during the session.

Market Sentiment and Capital Flow

This week, the selling pressure in the Bitcoin market has significantly eased, with both short-term and long-term holders collectively selling 137,178 BTC, a substantial decrease compared to last week. The trading volume on exchanges has also shrunk, indicating that panic selling in the short term has greatly diminished. Currently, the average profit level for short-term holders has dropped to 6%, and there is little motivation for either profit-taking or stop-loss actions.

Long-term holders stopped selling this week, increasing their positions by 8,000 BTC.

During the week, a total of $252 million flowed out of stablecoins and Bitcoin spot ETFs, as well as Ethereum spot ETFs. Among them, stablecoins saw an inflow of $362 million, while Bitcoin spot ETFs and Ethereum spot ETFs experienced outflows of $584 million and $29 million, respectively.

The outflow of funds from the ETF market is the main reason for Bitcoin's weaker performance compared to U.S. stocks last week.

Cycle Indicators

According to data from a certain analytics engine, the current Bitcoin cycle indicator is 0.75, indicating that the market is in an upward phase.