If the Federal Reserve releases dovish signals and marginal liquidity easing in next week's interest rate meeting, Bitcoin is expected to hold the $60,000 mark and form a volatile range.

Written by: Blockchain Knight

Bitcoin has currently dropped to around $63,000, with a complete restructuring of on-chain profit dynamics and macro liquidity headwinds, and the critical support level of $60,000 is still under significant testing.

On-chain data shows that the circulating profit share of BTC is approaching the historical critical threshold of 45%, which has historically corresponded to the lowest point of market sentiment, with a large number of holdings shifting from paper profits to losses.

Currently, over 95% of short-term holders are in a state of unrealized losses, with only 3.3% of short-term holdings achieving profits, significantly lower than the four-year average of 55%.

The SOPR indicator for short-term holders is nearing -2, a severe capitulation threshold, with retail investors continually releasing selling pressure.

At the same time, all long leverage in the $64,000 - $70,000 range has been liquidated, and the market has completed a large-scale deleveraging, with speculative funds completely cleared out.

However, market demand has weakened significantly in this round of decline, with Coinbase's spot premium continuing to trade at a discount, and the willingness of U.S. institutions to buy the dip has diminished.

The previously supportive behavior of companies making large BTC allocations has slowed significantly, with daily capital inflows plummeting.

The options market is filled with risk-aversion sentiment, with put option positions continuing to rise; both short and long-term volatility are moving up in sync, as traders focus on downside hedging.

Nevertheless, the weak retail investors continue to exit, with chips shifting towards long-term holders, gradually optimizing the long-term market structure.

Macroeconomic data and conditions have become the biggest shackles on the rebound. Glassnode points out that Bitcoin's $60,000 support is completely tied to the U.S. Dollar Index and U.S. Treasury yields. Currently, the Dollar Index is stabilizing at the 100 mark, and the 10-year U.S. Treasury yield remains high at 4.53%, which significantly suppresses risk assets in the liquidity environment.

For the market to stabilize and recover, the Dollar Index needs to drop below 99, and Treasury yields need to fall back to 4.2%.

In the short term, the market is focusing on the FOMC interest rate meeting on June 18, which will directly determine whether the support level can hold.

The classic 400-day bear market cycle rule for Bitcoin continues to be effective; this bear market has already run for 252 days, with 112 to 148 days left until the cycle hits the bottom, and industry estimates suggest the bottom will likely fall in early October.

Some analysts bluntly state that even if institutional funds support a spot ETF, the decade-long cycle pattern remains intact.

In terms of liquidity, there is short liquidity accumulating in the $64,000 - $66,000 range above, while the $58,000 - $60,000 range below is the strongest defensive zone for bulls.

At this stage, Bitcoin's on-chain valuation is deeply discounted, coupled with most of the speculative bubble having been cleared, providing a foundation for bottom formation. However, the three towering obstacles of a strong dollar, high Treasury yields, and weak spot demand are still pressing down on the market.

Of course, if the Federal Reserve releases dovish signals and marginal liquidity easing in next week's interest rate meeting, Bitcoin is expected to hold the $60,000 mark and form a volatile range.

It is worth noting that this is also the first main interest rate meeting for the new Federal Reserve Chairman, Kevin Warsh, and his speech will undoubtedly attract attention and will become the policy signal for the next cycle.

However, if his remarks maintain an hawkish tone, short-term holders may concentrate on capitulating and selling, and Bitcoin will likely break below the current support level, starting a new round of deep bottom exploration.

So the story returns to whether to watch exciting dragon boat races for the Dragon Boat Festival or to watch zongzi thrown into the water to feed the fish, it all depends on Kevin.