Author: 0xBrooker

BTC Daily Trend

BTC opened this week at $119,309.37 and closed at $117,488.60, with a low of $116,859.32 and a high of $124,533.00, down 1.53%, with a volatility of 6.43% and an increase in trading volume.

This week, the U.S. released the CPI and PPI data for July. The CPI data was generally in line with expectations, but the PPI data significantly exceeded expectations, leading to a sudden increase in the expectation that "inflation remains sticky or even rises." Federal Reserve officials began to temper expectations for a significant rate cut in September. The market had previously fully priced in a 25 basis point cut in September, with some pricing in a 50 basis point cut, but the unexpectedly high PPI data this week raised inflation concerns, leading the market to quickly eliminate the pricing for a 50 basis point cut.

As a result of this expectation, the U.S. dollar index experienced a slight rebound, but still declined over the week. The U.S. stock market and BTC, which had been driven upward by the prospect of significant rate cuts, saw a slight decline due to the data, but still recorded gains over the week.

Currently, a 25 basis point rate cut in September remains a high probability event, with both the U.S. stock market and BTC showing a gradual upward trend. Looking ahead, EMC Labs believes a cautiously optimistic approach is advisable, closely monitoring economic and employment data, especially inflation-related data, as poor data could lead to continued market fluctuations.

Policy, Macroeconomic Finance, and Economic Data

In last week's report, we mentioned, "It is important to be cautious, as the market's pricing of three rate cuts will still face challenges, such as whether CPI will be significantly impacted by tariffs. This major uncertainty will still make the market's optimistic pricing seem precarious."

The U.S. CPI and PPI data released this week indeed had a certain impact on the market.

The PCI data released on Tuesday showed that the seasonally adjusted CPI year-on-year rate at the end of July was 2.7%, lower than the expected 2.8%, but the seasonally adjusted core CPI year-on-year rate was 3.1%, higher than the expected 2.00%, indicating that inflation remains sticky but relatively mild. This data strengthened the market's expectations for significant rate cuts, pushing the Nasdaq and BTC to reach historical highs.

However, the PPI data released on Thursday showed a month-on-month increase of 0.9%, significantly higher than the expected 0.2%, with a year-on-year rate of 3.3%, also well above the expected 2.5%. The PPI data is likely to transmit to the CPI data in the future, making it possible for inflation data to rise in the coming months.

The unexpectedly high PPI data led to a certain decline in the U.S. stock market, causing BTC, which had just reached historical highs and returned to an upward trend, to drop significantly on Thursday, also leading to a sharp sell-off in Altcoins that had been rising after the Altseason opened.

The U.S. dollar index and both long and short-term government bonds experienced some fluctuations. FedWatch data showed that traders quickly cleared the pricing for a 50 basis point cut in September on Thursday, with the probability of a 25 basis point cut in September now exceeding 90%.

Based on expectations for the restart of the rate cut cycle, the previously surging Nasdaq saw a slowdown in its gains, while the Dow Jones and Russell 2000 indices caught up, with gains exceeding those of the S&P 500.

From the data, the market still judges that the rate cut cycle will open in September, just adjusting down the expected magnitude of the cut. Based on this judgment, the upward trend in the U.S. stock and cryptocurrency markets remains relatively intact, and a cautiously optimistic attitude can still be maintained.

Cryptocurrency Market: Fund Inflows and Sell-offs

After fluctuating around the $120,000 mark for four weeks, BTC attempted to break through this week, reaching a high of $124,533, but fell back below $120,000 amid market fluctuations triggered by the PPI data.

However, the risk appetite driven by rate cut expectations has led to a strong influx of funds into the cryptocurrency market.

According to eMerge Engine statistics, the cryptocurrency market saw inflows exceeding $19.8 billion throughout the week, including $6.145 billion in stablecoins, $0.38 billion in BTC Spot ETF channels, $2.394 billion in ETH Spot ETF, $0.509 billion in corporate BTC purchases, and $2.394 billion in corporate ETH purchases.

With strong fund inflows, the adjustment in BTC is due to a shift in funds, with the scale of inflows into the ETH market far exceeding that of BTC.

Cryptocurrency Market Fund Inflow and Outflow Statistics (Weekly)

During BTC's adjustment this week, ETH continued to rise, with a weekly increase of over 5.22%. Meanwhile, Ethereum ecosystem projects also recorded significant gains.

In terms of BTC sell-offs, the characteristics of large increases followed by large sell-offs continue, and compared to the strong fund inflows, the selling pressure is not significant.

Cycle Indicators

According to eMerge Engine, the EMC BTC Cycle Metrics indicator is at 0.75, indicating an upward phase.

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