Structural risks emerge, the Bitcoin market may enter a period of high volatility.

Structural risks are emerging, and the market may enter a period of high-level fluctuations

Macroeconomic environment warming: Credit rating downgrades, tariff and tax reform policies have caused market fluctuations, with increased risk aversion and a surge in gold prices.

Capital flow: The inflow of stablecoins and funds indicates strong buying interest, but the market's risk-averse tendency is increasing, and sustainability remains to be observed.

Price and capital flow divergence: Bitcoin is rising, capital inflow, off-exchange premium, and fund activity are heating up, increasing the risk of a pullback.

Investment advice: Focus on defense, pay attention to Bitcoin's support level at $103,000 and the movements of related companies, as well as the price trends of Ethereum and other cryptocurrencies compared to Bitcoin.

Macroeconomic and Market Environment Analysis

The downgrade in credit ratings, tariffs, and tax reform policies have pushed up US Treasury yields, triggering fluctuations in the stock and cryptocurrency markets.

US stocks may correct, with the technology sector under pressure, while finance and defense remain relatively resilient; cryptocurrencies may fall towards support levels, requiring attention to central bank easing signals.

Fiscal stimulus and interest rate cuts are beneficial for the stock market and cryptocurrencies, but caution is needed regarding the expansion of deficits and the risks to the dollar's status.

If the central bank relaxes and the dollar hegemony remains solid, the market will continue to rise; otherwise, it is necessary to increase the allocation of non-dollar assets.

Suggestion: Increase holdings in mainstream cryptocurrencies and dynamically adjust global asset allocation.

Fund Flow Analysis and Major Cryptocurrency Market Structure

External capital flow:

• The fund saw an inflow of 2.8 billion dollars this week, a significant increase.
• The issuance of stablecoins increased by 2.3 billion this week, with an average of 321 million per day, which is at a relatively high level.

Market Sentiment Indicator:

• The premium on off-exchange stablecoins continues to rise

Bitcoin:

• The technical aspect shows a fluctuating upward trend
• Chips enhanced above $103,000

Ethereum:

• Performance weaker than Bitcoin, Ethereum/Bitcoin exchange rate fluctuates, funds continuously flow into Bitcoin.
• The increase in active addresses on the chain may indicate that a phase of bottoming out has been completed.

Macroeconomic Impact Analysis

Impact of Credit Rating Downgrade on the Market:

Background: In May 2025, a rating agency downgraded the United States' credit rating from the highest level by one notch, citing a surge in debt levels and high interest burdens. This marks the loss of the highest rating from all three major rating agencies for the U.S. following downgrades by two other agencies earlier. The downgraded rating, combined with tariffs and tax reduction policies, has intensified volatility in the bond market in the short term.

Historical Review:

• 2011: Risk aversion drives up bond demand, leading to a decline in yields.
• 2023: Increased bond issuance leads to selling pressure, with yields rising and then oscillating.
• 2025: Similar to 2023, downgrades and policy uncertainty drive up yields, with continued short-term selling pressure.

Supply Side:

• Low expiry pressure: High proportion of short-term government bonds, high yields attract buyers, low rollover risk.
• Pressure to issue bonds is high: New policies will expand bond issuance, increase supply, and yields may rise further.

Demand side:

• Short term: The central bank's interest rate cuts and halting of balance sheet reduction can boost demand and lower yields.
• Long-term: Bond demand relies on the status of the US dollar, which must be maintained to ensure rigid buying.

Impact on the Stock Market and Bitcoin

Short-term impact ( until July 2025 )

Stock market:

• Increased volatility: Downgrades exacerbate concerns over fiscal sustainability, coupled with policy uncertainty, which heightens risk aversion. The increase in the debt ceiling leads to higher bond supply, pushing up yields and raising corporate financing costs.
• Sector divergence: Technology stocks and high-valuation growth stocks are under pressure; financial, defense, and energy sectors may benefit.
• Central Bank Policy: If signals of interest rate cuts or a halt in balance sheet reduction are released in July, it may alleviate market pressures.

Strategy:

• Reduce holdings in overvalued technology stocks and focus on the financial, defense, and energy sectors.
• Pay attention to central bank policy signals and prepare to seize rebound opportunities.
• Configure defensive assets to hedge against volatility.

Cryptocurrency:

• Interest rate pressure: Rising yields reduce the attractiveness of non-yielding assets, and funds may flow into high-yield bonds.
• Potential benefits: If the central bank hints at interest rate cuts, the crypto market may rebound in advance. Decentralized finance projects may attract some capital due to risk-averse demand.

Strategy:

• If the central bank signals easing, consider increasing holdings of mainstream cryptocurrencies or decentralized finance tokens.

Long-term impact ( after 2025 )

Stock Market:

• Fiscal policy driven: Tax cuts and increased spending will stimulate economic growth, benefiting the overall performance of the stock market.
• Interest rates and valuations: Lowering interest rates can reduce financing costs and boost high-growth sectors. However, if the deficit expands and high interest rates are maintained, valuations will be under pressure.
• Dollar Impact: The long-term performance of the stock market relies on the international status of the dollar.

Cryptocurrency:

• Loose monetary policy benefits: Continued interest rate cuts and halting the tapering will drive prices up, and Bitcoin may surpass $150,000.
• Regulation and Adoption: Friendly policies may drive institutional adoption. In the event of a crisis of trust in the US dollar, cryptocurrencies could become a safe-haven asset.
• Risk Factors: If there is a delay in interest rate cuts or if the status of the US dollar is challenged, market volatility may increase.

Strategy:

• Hold mainstream cryptocurrencies for the long term and pay attention to on-chain data to determine trends.
• Diversify investment in potential projects to avoid risks associated with single assets.
• If the status of the US dollar is shaken, increase Bitcoin allocation as a hedge.

On-chain data analysis

Stablecoin capital flow: This week, the total amount of stablecoins slightly increased to 213.6 billion, with an issuance of 2.34 billion, showing a significant rebound compared to the previous period, mainly from the second half of this week. The increase of about 1.1% relative to the total amount is a positive change for small market cap coins. The issuance means that more "purchasing power ready to enter the market" is being created.

Fund capital flow: This week, Bitcoin funds saw a significant inflow of $2.8 billion, indicating that institutional investors are turning bullish again. Although the estimated purchase volume is slightly lower than the peak in late April, it is significantly higher than in recent weeks, suggesting substantial buying activity, and the price trend is in good alignment with the flow of funds.

Premium on the OTC market: This week, the off-exchange premiums of major stablecoins have both slightly rebounded to 100%, indicating a resurgence in market demand. Combined with stablecoin data, both on-chain and off-chain capital inflows show a warming trend.

A company purchases: Since the beginning of this round of increase, the company has purchased 48,000 bitcoins, amounting to approximately $4.55 billion, becoming a significant driving force for capital. The purchase frequency has significantly increased, with the cost rising to $69,726. The company has become an important force influencing the market, and related monitoring needs to be strengthened.

Exchange Balance: In the later stage of this round of increase, Bitcoin and Ethereum continue to be withdrawn from exchanges, indicating that investors are unwilling to sell. After a rapid rise, a large amount of funds were withdrawn from exchanges for Ethereum, showing a strong "locking intention," which supported the subsequent rise. However, the rate of balance reduction has slowed down, so it is necessary to closely monitor whether the liquidity of exchanges continues to contract.

Holding address and price distribution: There has been little change in the relevant data this week, with no significant accumulation of addresses holding 100-1000 coins. The price distribution shows a healthy structure and does not indicate any abnormal signals.

In summary, this week the funding situation and on-chain data performed well, with a smooth trend, and overall remains strong. Even if there is a correction, it should not be assumed that the adjustment will be too large. It is recommended to remain cautiously optimistic and pay attention to potential risks.