Crypto Market Weekly Review: Economic data slightly exceeded expectations, the market takes a breather but the outlook remains unclear.

This week, Bitcoin opened at $80,708.21 and closed at $82,562.57, with a weekly increase of 2.31%, a fluctuation of 10.86%, and a trading volume that continued to decline compared to last week. The price of Bitcoin is operating within a descending channel, showing a slight rebound.

The CPI data released by the US was slightly better than expected, and the news that the Russia-Ukraine conflict is expected to ease provided a brief respite for the US stock market and the Bitcoin market.

However, the U.S. stock market valuation is still in the process of declining, and historical data shows that there is still room for further decline. The fundamental reason driving the drop in valuation—the chaotic tariff policy that may trigger inflation—raises concerns that the U.S. economy may fall into "stagflation," which have not yet been eliminated. Policymakers appear to be unprepared to change their stance, while the Federal Reserve Chairman continues to adhere to a data-driven approach.

This chaos and deadlock make it difficult for concerns about "stagflation" to dissipate. The longer it lasts, the greater the potential for valuation adjustments. This is the reason for our cautious attitude towards the short-term rebound of Bitcoin.

Macroeconomic Data

Last week's employment data released by the United States showed that non-farm payrolls were slightly below expectations, and the unemployment rate rose slightly, indicating signs of a slowdown in the job market, which heightened concerns about a recession in the U.S. economy and led to a significant market decline.

This week, the U.S. released the February CPI data, with the unadjusted CPI rising 2.8% year-on-year, lower than the expected 2.9%, and the previous value was 3%. The seasonally adjusted CPI increased by 0.2% month-on-month, with an expectation of 0.3%, and the previous value was 0.5%. The CPI data was better than expected, which alleviated the panic caused by last week's employment data to some extent, allowing the market to breathe temporarily.

Under the influence of a significant decline last week and favorable CPI data this week, the US stock market has turned from a steep drop to a temporary stabilization, recovering some of the losses, but still shows a downward trend for the week. The Nasdaq index remains below the 250-day line, with a weekly decline narrowing to 2.43%; the S&P 500 index has risen above the 250-day line; the Dow Jones index fell by 3.07%, slightly recovering near the 250-day line.

On March 14, the University of Michigan announced that the preliminary consumer confidence index for March dropped to 57.9, far below the market expectation of 63.1 and the previous value of 64.7. At the same time, the preliminary one-year inflation rate expectation rose to 4.9%, higher than the expected 4.2% and the previous value of 4.3%. This indicates that American consumers' concerns about the economic outlook have intensified.

The University of Michigan's Consumer Confidence Index reflects the impact of tariff policies on the confidence of end consumers. What worries the market and American business owners is that this policy direction may require worse market feedback and a longer period of uncertainty before any change occurs.

On Friday, the US stock market, European stocks, and even the Russian stock market saw a significant rebound, mainly due to news that the Russia-Ukraine conflict may ease — both sides plan to reach a 30-day ceasefire agreement.

Some viewpoints suggest that government layoffs and the tariff war are strategies to achieve an "economic recession" to force the Federal Reserve to change its policy, and this viewpoint is gaining increasing recognition in the market, at least in terms of results.

These are difficult-to-verify speculative motivations; a more objective judgment might be that the essence of this round of adjustments in the US stock market is a valuation adjustment triggered by changes in interest rate cut expectations. The S&P 500 Shiller Price-Earnings Ratio (CAPE) peaked at 37.80 times in December, close to the recent high of 38.71 times reached in November 2021 after the pandemic's massive monetary easing. This high valuation included expectations of improved trade policies and rapid development in the AI industry. Since 2025, AI growth expectations have been thwarted, tariff policies and layoffs have crushed economic growth expectations, making it difficult for the market to bear such high valuations, which have instead been downward revised in search of a new balance.

Currently, the Nasdaq, S&P 500, and Dow Jones indices have experienced maximum declines of 14.59%, 10.36%, and 9.79%, respectively, all near the 250-day line, entering the "market correction" range (10%-20% decline). However, this does not mean that the market has completed the clearing process. Currently, the S&P 500 Shiller P/E ratio is at 34.75 times, down about 8.07% from its high. According to historical patterns over the past 20 years, if it continues to dip, it may return to 32.89 times, representing a further decline of over 5%; if it returns to the mean of 27.25 times, there is still more than 21% of retracement space. Of course, we assess the probability of such a deep adjustment occurring as extremely low, unless policymakers completely ignore the risk of the U.S. economy truly falling into recession.

In the midst of market turmoil, risk aversion sentiment has intensified, pushing gold prices to briefly break through the $3000/ounce mark. The US dollar index has slightly rebounded after hitting a new low, with the 2-year Treasury yield rising by 0.7% and the 10-year Treasury yield increasing by 0.37%, indicating that some funds are beginning to withdraw from US Treasuries to buy into the stock market.

In summary, the US stock market has entered a correction phase, but the outlook for inflation and interest rate cuts remains unclear, especially as the effects of tariffs and layoffs have not yet faded, which may cause the market to continue to correct downwards to adjust asset valuations in a chaotic environment. Considering the correlation between Bitcoin spot ETFs and US stocks, we maintain the judgment that Bitcoin will continue to be constrained by the adjustments in the US stock market. Although Bitcoin has rebounded for several consecutive days and returned to the $83,000 level, it may still dip to $73,000 in the next two months.

Stablecoins and Bitcoin Spot ETF

Compared to last week's net inflow of $1.282 billion for the dual-channel, this week's dual-channel supply inflow is $237 million, significantly reduced in scale. Specifically, Bitcoin spot ETFs saw an outflow of $842 million, Ethereum spot ETFs had an outflow of $184 million, while stablecoins experienced an inflow of $1.264 billion.

Although the inflow of stablecoins is decreasing and the outflow through ETFs is increasing, the existing funds entering the exchanges are being converted back into buying power, allowing the price of Bitcoin to return to $83,000. Currently, the existing funds on the exchanges have slightly rebounded, but this rebound can only be viewed as a small amount of funds engaging in bottom-fishing behavior, which is not sufficient to become a force to drive the market reversal.

Selling Pressure and Sell-off

According to the data, short-term holders continued to cut losses during the decline last week, with the largest loss day occurring on March 13, but the scale was lower than on March 10.

In terms of unrealized gains and losses, short-term holders are currently bearing an average loss of 9%, which includes a large number of ETF holders. In this round of decline, the short-term holders are both a driving force and the main bearers of losses, and they will continue to be under pressure in the future market fluctuations, possibly becoming a source of selling pressure for further declines.

In the recent drop over the past three weeks, long-term holders have shifted from reducing their holdings to increasing them, adding approximately 100,000 bitcoins. Another notable large holder group has also increased its holdings by nearly 60,000, with costs below 80,000 USD. In the long run, these two groups typically manage to achieve good returns while also acting as stabilizers in the market.

Cycle Indicator

According to a certain indicator, the Bitcoin cycle indicator is 0.375, indicating that the market is in an upward continuation phase.