EMC Labs Bitcoin Weekly Observation (7.22~7.28): Trump effect plus interest rate cut tide, BTC approaches historical high

Written by: Shang2046

The information, opinions and judgments on markets, projects, currencies, etc. mentioned in this report are for reference only and do not constitute any investment advice.

Market Week

After two consecutive weeks of strong rebound, BTC went through a fierce battle between bulls and bears in the third week, and finally completed a three-week rise with a slight increase of US$84, with an amplitude of 8.81% during the period.

Against the backdrop of the Mt.Gox supply of more than 100,000 coins and the adjustment of the US stock market, the market has shown the confidence that a bull market should have. At present, BTC is expected to break through the $70,000 pressure level in the short term and further approach the historical high.

The direct driving force of the rise is still related to the continuous inflow of funds, but it has slowed down slightly compared with the previous two weeks. The biggest event of crypto assets this week was the attendance of Republican presidential candidate Trump at the US Bitcoin Conference on July 28. At this grand event attended by hundreds of thousands of people, Trump delivered a speech saying that after being elected, he would include BTC in the US national reserves, promote the power supply of BTC mining in the United States, and establish the first cryptocurrency presidential advisory committee in human history.

There is no doubt that Trump is bringing BTC into wider global attention and linking national reserves with cryptocurrencies for the first time. In response, Hong Kong lawmakers and representatives of related industries also called on the Hong Kong government to include BTC in its strategic reserves.

On the other hand, the expectation of interest rate cuts in the United States has become clearer. Affected by the interest rate cut tide, the Nasdaq has seen a significant adjustment in the funds of technology stocks, which have fallen for two consecutive weeks, and last week was a rare drop of more than 2%. It must be emphasized again that BTC, which has a strong negative correlation with the US dollar in history, is one of the biggest beneficiaries of the interest rate cut tide.

Federal Reserve and economic data

U.S. consumer confidence fell to an eight-month low in July, which reinforced expectations of interest rate cuts and the possibility of a mild economic recession. After the CPI inflection point was confirmed and expectations of interest rate cuts became clear, the market began to price in an economic recession.

The Nasdaq fell 2.08% this week, falling for two consecutive weeks. Teslas performance declined, and it fell as much as 20%, which hit the high growth expectations of technology stocks. The Russell 2000 index, which represents small companies, rose 1.74% this week, achieving three consecutive weeks of gains. Institutions in the US stock market continue to shift from technology stocks to small-cap stocks because small-cap stocks have lower valuations, and technology stocks, especially 7 Princess, have reflected higher expectations.

Funding

USD stablecoins continued to flow in, with an inflow of 558 million throughout the week. USDT and USDC had inflows of 455 million and 103 million respectively, lower than last weeks 1.594 billion. In July, a total of 3.5 billion US dollars flowed into stablecoins.

The BTC ETF channel has inflows of 556 million, which is still large in scale. The cumulative inflows this month have reached 3.076 billion US dollars.

Adding the two together, the cumulative net inflow in July was more than 6.5 billion US dollars, completely reversing the downward trend in funds in May and June.

Chip Supply

According to BTC on-chain data, long-term investors increased their holdings by 76,100 coins this week, while short-term investors reduced their holdings by 81,100 coins.

As long holders resume increasing their holdings and short holders’ on-chain profits are less than 4%, there is currently no excessive selling pressure in the market, which will help the continued rise in BTC prices.

The net inflow of BTC into exchanges was approximately 5,000, a sharp drop from more than 30,000 last week, returning to the average range of the past year.

Another good news is that the BTC miners have already overcome the peak of pressure, and the net accumulation of miners this week reached 7,000. On July 20, the Bitcoin network hash rate hit a record high, and the 7-day average computing power also approached the historical high. It can be said that the massacre of miners has ended.

By eliminating old computing power and replacing it with new computing power, the peak of pressure on miners has passed, and the Bitcoin network has returned to the trend of computing power growth. The recovery of computing power indicates that miners, an important community member, are firmly optimistic about the future market, and it also becomes a material support for BTC to hit a new historical high in the future market.

BTC on-chain data

Newly added addresses and active addresses maintained a mild recovery, and the 30-day moving average continued to move upward slowly from last week. Transactions were the same as last week, and Gas revenue remained sluggish.

Ecological analysis

The comprehensive data of Ethereum ecosystem has started to turn upward. New addresses and active addresses have just started to rebound, and Transactions have been consolidating at a high level. Solanas new addresses, active addresses, and Transactions continue to expand, all reaching new historical highs.

EMC BTC Cycle indicator

The EMC BTC Cycle Metrics indicator is 0.5, a bullish signal awaiting further recovery interruption.

EMC Labs was founded by crypto asset investors and data scientists in April 2023. It focuses on blockchain industry research and Crypto secondary market investment, takes industry foresight, insight and data mining as its core competitiveness, and is committed to participating in the booming blockchain industry through research and investment, and promoting blockchain and crypto assets to bring benefits to mankind.

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