Crypto Market Weekly Report: Economic Data Mixed, Short-term Outlook Still Unclear

This week, the price of Bitcoin rose from $80,708 to $82,562, with a weekly increase of 2.31% and a fluctuation of 10.86%. The trading volume continued to decline compared to last week, with prices slightly rebounding within a downward channel.

The inflation data released by the United States was slightly better than expected, and the signs of easing in the Russia-Ukraine conflict provided the market with a bit of relief. However, U.S. stock valuations are still in a downward channel, and historical data suggests there is further room for decline. The fundamental reason for this round of adjustment—the tariff policy—could lead to rising inflation and concerns about stagflation have not yet been eliminated. Ongoing policy uncertainty makes it difficult for market worries to subside; the longer the adjustment period lasts, the greater the potential for valuation reductions. This is also why we are cautious about Bitcoin's short-term rebound.

Macroeconomic Data

The US CPI rose 2.8% year-on-year in February, slightly below the expected 2.9%; it rose 0.2% month-on-month, also below the expected 0.3%. This data eased the panic caused by last week's employment figures and temporarily stabilized the market.

However, the preliminary consumer confidence index for March from the University of Michigan dropped significantly to 57.9, well below the expected 63.1. At the same time, one-year inflation expectations rose to 4.9%, higher than the anticipated 4.2%. This indicates that consumers' concerns about the economic outlook have intensified.

Although U.S. stocks rebounded this week, the overall trend is still downward. The Nasdaq index narrowed its decline to 2.43%, the S&P 500 index rose above the 250-day moving average, and the Dow Jones index fell by 3.07%.

Currently, the U.S. stock market has entered a correction phase, but the trends in inflation and the prospects for interest rate cuts remain unclear. In particular, the effects of tariff policies and layoffs have yet to fully materialize, and the market may continue to seek new valuation equilibrium points. We expect that over the next two months, Bitcoin may still dip to around $73,000.

Capital Flow

This week, the inflow of funds in the crypto market has significantly decreased. The net outflow of Bitcoin spot ETFs is $842 million, while the net outflow of Ethereum spot ETFs is $184 million, and the net inflow of stablecoins is $1.264 billion. Nevertheless, the inflow of existing funds into exchanges has provided support for the Bitcoin price to return to $83,000. However, this current inflow of funds resembles more of a small-scale bottom-fishing behavior and is still insufficient to drive a full market reversal.

Position Analysis

Short-term holders continued to stop-loss during the recent decline, with an average loss of about 9%. This group of investors may become a source of selling pressure for future downward moves. In contrast, long-term holders and large investors have increased their holdings by about 160,000 bitcoins over the past three weeks, demonstrating confidence in the long-term outlook of the market.

Market Cycle

According to the cyclical indicators of a certain data platform, the current Bitcoin market is in a rising relay period. However, considering the uncertainty of the macro economy, investors still need to remain vigilant and closely monitor market changes.