Investors are waiting for the Federal Reserve and its upcoming interest rate decision as well as the May Consumer Price Index (CPI). The cryptocurrency market opened lower this week. According to Bybit data, Bitcoin briefly broke through the $70,000 mark in early trading, reaching a high of $70,195, before falling back in the afternoon to around $69,600 support level. Altcoins saw more declines than gains, with Polymesh (POLYX) leading the top 200 tokens with a 9.7% increase, followed by Gnosis (GNO) with an 8.6% increase and Livepeer (LPT) with a 5.5% increase. Wormhole (W) led the declines with an 18% decrease, followed by Biconomy (BICO) with a 17.1% decrease and Echelon Prime (PRIME) with a 10% decrease. The overall cryptocurrency market capitalization is currently at $2.53 trillion, with Bitcoin holding a 54.1% share.
As of the close of Monday, the S&P, Dow, and Nasdaq indices all rose by 0.26%, 0.18%, and 0.35%, respectively. The FedWatch tool from the Chicago Mercantile Exchange shows that traders now expect a 49% chance of a Fed rate cut in September, down from 60% a week ago. Inflows into ETFs continue, with $131 million flowing into ETF products on Friday, marking the 19th consecutive day of inflows. According to CoinShares, $1.83 billion flowed into US-listed spot BTC ETFs last week, and global listed digital asset investment products saw net inflows of $2 billion, totaling $4.3 billion in the last five weeks. CoinShares research director James Butterfill stated, “We believe this shift in sentiment is a direct response to weaker-than-expected U.S. macroeconomic data, which has brought about expectations of interest rate cuts. Positive price action has allowed the total assets under management (AuM) to surpass the $100 billion mark for the first time since March.”
Cryptocurrency analyst Timothy Peterson on X platform indicated that at the current pace, the inflow rate of spot BTC ETF funds could lead to a new all-time high for BTC on July 31. Additionally, if liquidity continues at its current pace, the price of BTC is expected to reach $135,000 by the end of the year. Short-term leverage spikes Bitfinex analysts hold the opposite view and state, “In the past 20 trading days, the significant inflows into ETFs have helped offset the pressure on BTC, but in fact, this cannot further drive price increases or push BTC above the range high points, which is unfavorable in the short term. On the contrary, traders are executing basis arbitrage trades, holding long spot positions and short perpetual futures for hedging.”
BTC and altcoin open interest (OI) have remained high. Coinglass data shows that major exchanges’ BTC OI hit a record high of $36.8 billion on June 6. Although prices retreated on Friday, OI remains above $36 billion. Analysts stated, “We believe Friday’s drop was more like a ‘leverage cleanse,’ where a large number of leveraged longs in altcoins (and to some extent major coins) were liquidated, and funding rates were neutralized. However, while the leverage clearing in altcoins was quite severe, we do not expect a significant drop immediately.”
On June 7, liquidations in the cryptocurrency market exceeded $360 million, with a total liquidation amount surpassing $410 million, the highest level since April 14, surpassing the level when BTC fell below $57,000, with only $50 million in long liquidations coming from BTC. Analysts explained, “Most of these were altcoins, which explains the large drop in altcoins compared to major coins last week. Such liquidation events typically do not trigger further significant declines, so this week will be crucial, as the Consumer Price Index report expected to be released on June 12 may serve as a major market catalyst, with derivative positions increasing again, prices are expected to continue to fluctuate in a tense environment.”
Bitfinex believes that in the current environment, maintaining BTC around $68,000-68,500 as a local low point is crucial for the bulls, and failing to break above the range high points will further pressure the bulls. Regarding the Federal Reserve’s monetary policy, Bitfinex analysts stated that long-term high-interest rates are a double-edged sword that needs to be handled carefully: On the one hand, the strength and adaptability of the U.S. economy allow it to thrive even in a high-interest rate environment, thanks to strong labor demand and rising wages. This situation will support continued economic growth, steady consumer spending, and overall economic resilience. On the other hand, maintaining high-interest rates for too long carries significant risks, which could suppress economic activity, lead to reduced investment, slower job growth, and potentially lead to an economic downturn. The analysts also stated that recent rate cuts by the European Central Bank and the Bank of Canada to promote economic growth indicate that the Federal Reserve may need to reassess its monetary policy. The actions of its global peers may impact its decisions in the coming months, especially if inflation trends and economic conditions require a change.
