BTC hits the second biggest fall in this cycle, reflecting expectations of a U.S. economic recession

This week, BTC opened at $94265.47 and closed at $80699.17, experiencing a big dump of 14.39% over the week, with a volatility of 15.29%. Although the trading volume decreased compared to last week, it still remains high. The BTC price fell below the $89000~110000 range, significantly retracing the previous gains.

The BTC market has experienced significant fluctuations over the past two weeks.

On one hand, with the repeated and chaotic tariff policies in the United States, the US stock market has begun to trade on "recession" expectations, reversing most of its previous gains. This has led to the largest outflow of funds since the inception of the BTC spot ETF.

On the other hand, the U.S. government has released some positive signals regarding cryptocurrency regulation and application. For example, it signed relevant executive orders and hosted the first White House cryptocurrency summit, and Texas has also passed a state-level BTC reserve bill. These initiatives indicate that the application scenarios and policy environment for crypto assets, including BTC, are gradually improving in the U.S.

However, investor sentiment dominated short-term price movements. With the pullback in US stocks, BTC fell sharply by 14.39% this week, marking the second-largest weekly drop of this cycle. Although it did not drop below the lowest point on February 28, it has broken through the 200-day bull-bear boundary. The fear and greed index has fallen back to "extreme fear" at 20 points.

After the release of the non-farm payroll data on Friday, the Federal Reserve Chairman made "dovish" remarks, leading to a rebound in US stock indices which temporarily stabilized. However, the short to medium-term outlook remains pessimistic, and attention must continue to be paid to the trends in US economic data. The BTC trend will still be constrained by the performance of US stocks, lacking the conditions for an independent market.

Macroeconomic Data

The U.S. employment data released on Friday showed signs of economic slowdown. Non-farm payrolls increased by 151,000 in February, slightly below market expectations. The unemployment rate unexpectedly rose from 4% to 4.1%, reaching a new high since November of last year.

The Federal Reserve Chairman then stated that despite uncertainties, the current economic situation in the United States remains good, and the job market is robust and balanced. He believes that the Federal Reserve should remain cautious, and there is no need to rush to adjust policy interest rates at this stage; patience is warranted until the situation becomes clearer.

The Federal Reserve Chairman also pointed out that if the economy continues to remain robust and inflation fails to further decline to the 2% target, the Federal Reserve may maintain the current benchmark interest rate. However, if the labor market unexpectedly weakens or inflation significantly decreases in the future, the Federal Reserve will consider resuming rate cuts.

Based on signs of weakening economic data and adjustments in the US stock market, the market expects the Federal Reserve to cut interest rates 3 times this year, by about 75 basis points.

As a result, the US dollar index fell big dump 3.52% for the week, closing at 103.882. The Nasdaq index rebounded on Friday, closing above the yearly line, while the S&P 500 index closed above the 200-day line. The 2-year US Treasury yield rose slightly, and the 10-year Treasury yield increased by more than 1.89%.

The non-farm data on Friday slightly improved the previously sharply declining expectations of traders. However, concerns about a recession or stagflation in the U.S. economy have not been alleviated; it is at most a correction of the previously significantly downward pricing. Whether the rebound of U.S. stocks and BTC can be sustained still requires more observation, and whether a bottom reversal can occur needs more economic data guidance.

One psychological support for bulls is that the US stock market has completed the pullback of its previous gains. The three major indices have all returned to the levels of November 5 of last year.

Technical Analysis

Compared to the US stock market, BTC has maintained a relatively strong trend, with the current price still about 15% higher than the peak on November 5 last year.

Technically, the trend of BTC remains difficult to say optimistic. It has fallen out of the $89,000~$110,000 range and is operating below the first trend line of the bull market. Moreover, since the historical high point on January 21, BTC has formed a descending channel, which has suppressed several rebounds of BTC.

On Sunday evening, bears attacked the market again, and BTC fell sharply below the 200-day moving average. The intensity of this adjustment and weak performance is similar to the market performance from July to September 2024. The market is currently in an extremely oversold state in the short term, but it may require more external conditions and time to emerge from the downturn.

Selling Pressure and Sell-off

After last week's panic sell-off due to a breakdown, the selling pressure has significantly decreased this week. Both long and short positions sold a total of 147,351 coins, falling back to the previous normal level. However, the exchange inventory increased by over 5,000 coins, indicating that although selling pressure has diminished, buying power is still insufficient.

The overall market floating profit rate is 198%, with long positions at 347% and short positions at a floating loss of 6%. Short positions continue to be under pressure. In a bull market, short positions being in a floating loss often presents a good opportunity for a medium-term entry.

Stablecoins and BTC Spot ETF

Compared to last week's dual-channel net outflow of 4.081 billion in funds, this week's funding pressure has eased somewhat, with a total inflow of 1.295 billion USD, including 21.07 USD in stablecoin inflows and an outflow of 719 million USD from BTC spot ETFs. The fund outflow from BTC spot ETFs is a source of selling pressure that leads to the market's fall.

In February, the 11 BTC spot ETFs in the U.S. experienced the largest outflow since their approval, reaching a scale of 2.3 billion USD. As March begins, the outflow continues but at a reduced scale. The outflow group includes retail and institutional sell-offs, as well as futures arbitrage traders closing their positions. In terms of transmission paths, BTC price stabilization requires stability in the U.S. stock market, and ETF holders need to shift from net outflows to net inflows.

Cycle Indicators

According to a certain data analysis engine, the BTC cycle indicator is 0.375, and the market is in a rising consolidation period.