Weekly Review

This week, from May 19 to May 26, the highest price of BTC was around $111,980 and the lowest price was close to $102,000, with a fluctuation range of about 9.78%. Observing the chip distribution chart, there are a large number of chips traded around 99,000, which will have a certain support or pressure.

• analyze:

1. 60000-68000, about 1.22 million pieces;

2. 76000-89000, about 1.25 million pieces;

3. 90,000-100,000: about 1.43 million pieces;

• The probability of not falling below 95,000~100,000 in the short term is 80%;

Important news

Economic News

1. Core event: Trump’s tariff policy reversals and uncertainties

◦ Content: Trump's tariff policy towards the EU has been jumping back and forth between "imposing 50%" and "90-day negotiation window extended to July 9". The fourth round of tariff negotiations between Japan and the United States is scheduled to be held on the 30th.

2. Federal Reserve monetary policy expectations and official statements

◦ Expectations for rate cuts are divided:

▪ Goolsby: Rate cuts are still possible in the next 10-16 months (more dovish). ▪ Bostic: Need to wait 3-6 months to observe the uncertainty (more neutral).

▪ Williams: It won’t be completely clear in June or July (cautious).

▪ Morgan Stanley: The Federal Reserve will not cut interest rates this year, but will start cutting interest rates in March 2026 (slightly hawkish and very different from mainstream market expectations).

◦ Key data: Friday’s PCE data is an important basis for the Federal Reserve’s monetary strategy.

3. Other macro indicators and asset prices

◦ US stock index futures rose (Nasdaq futures 1.5%, S&P 500 1.2%).

◦ The U.S. dollar index fell 0.1%.

◦ Citigroup raised its gold price target to $3,500/oz (due to expectations of escalating tariffs).

◦ The US Treasury Secretary stated that the sovereign wealth fund plan has been suspended.

Encrypted Eco-Messages

1. Bitcoin (BTC) market performance and driving factors

◦ BTC price rebounded to $110,000 (after Trump’s tariff policy was eased).

◦ Coindesk analyst: BTC’s record high is mainly driven by institutions, the retail meme craze has subsided, and market sentiment has shifted to more sustainable behavior, which may pave the way for the long term.
◦ Analyst Eugene Ng Ah Sio: BTC maintains a clear upward trend. If it is maintained, there will be opportunities in the Shanzhai market.

◦ Interpretation:

▪ Institutional-led “ongoing narrative”: The success of the ETF is one of the core driving forces of BTC’s current bull market, which is a typical “ongoing narrative”.

2. ETF Fund Flows (Core “Ongoing Narrative”)

◦ Last week, the US BTC spot ETF received inflows of $2.75 billion, and the ETH spot ETF received inflows of approximately $250 million (the highest since early February).

◦ The U.S. BTC spot ETF has a cumulative net inflow of US$44.499 billion, setting a new record high.

◦ Belaid IBIT has no net outflow for 30 consecutive days, with net assets exceeding US$71 billion.

3. Companies and institutions increase their holdings of BTC (strengthening institutional narratives)

◦ Bitwise data: By 2025, the amount of BTC purchased by companies in the United States and other countries has exceeded 3 times the amount of new BTC supply.

◦ Semler Scientific increased its holdings by 455 BTC.

◦ Strategy increased its holdings by 4,020 BTC last week.

4. Regulatory dynamics and industry conferences (key variables affecting the “expected narrative”)

◦ SEC’s Hester Peirce supports providing clearer securities law jurisdiction guidance for activities such as PoS/DPoS, which is seen as positive information for US institutions to participate in staking. ◦ Bitcoin 2025 conference (May 27-29), White House cryptocurrency and AI director, US Senator, and Vice President Pence are expected to participate.

◦ Analysis:

▪ “Expected narrative” of regulatory clarity: Peirce’s statement is very important, as it points to the possibility that the regulatory environment may develop in a clearer and friendlier direction, which is crucial to the long-term healthy development of the industry, especially in emerging areas such as staking.

Long-term insights: used to observe our long-term situation; bull market/bear market/structural changes/neutral state

Mid-term exploration: used to analyze what stage we are currently in, how long this stage will last, and what situations we will face

Short-term observation: used to analyze short-term market conditions; the possibility of certain directions and certain events occurring under certain conditions

Long-term insights

• Non-liquid long-term whale

• Total on-chain spot selling pressure

• US ETF for BTC

• The holding structure of long-term participants of different years

• Net position of large inflows and outflows on trading platforms

• Long- and short-term holder cost line

• A sustained upward trend since the end of 2023, indicating that these entities are accumulating.

• The overall trend shows that long-term holders and whale are firm in their conviction and continue to withdraw BTC from the liquid market, which constitutes a strong supply-side support. The long-term bullish structure remains unchanged, but the new accumulation momentum may weaken marginally in the short term.

The overall "total selling pressure" in the market has been on a slightly upward trend recently. There is a small amount of inflow, but it is a normal rotation of trading activities, not panic selling. From the perspective of "potential selling pressure", there are no worrying signs of large-scale concentration of chips on trading platforms recently, and the market is not willing to sell.

The recent inflow of funds into ETFs has indeed dropped significantly compared to the previous peak, and even approached the zero axis or showed a small net outflow on some trading days.

•The “ongoing narrative” is challenged: The slowdown in ETF inflows is a direct test of one of the core drivers of this bull market.

• Current ETF flows are a key window for observing institutional attitudes and new sources of funds. Their continued weakness will put pressure on market confidence.

• The marginal weakening of ETF-driven buying power is a notable change facing the current market.

The market needs to find new demand growth points or wait for ETF demand to recover under new conditions.

The percentage representing long-term holders of more than 6 months (green to purple area superposition) has recently rebounded slightly to 0.449. Analysis: The increase in the percentage of long-term holders (usually considered to be "smart money" or investors with strong convictions) and the maintenance of high levels are signs of a healthy market structure, reducing short-term speculative selling pressure.

• Synergy with Figure 1: This is consistent with the increasing trend of illiquid supply in Figure 1, together depicting the picture of chips shifting from short-term traders to long-term holders, and from ample liquidity to tight supply. The microstructure of the market remains solid, and the "ballast stone" effect of long-term holders is significant.

Represents net outflows of large transfers ($1-10 million in yellow, $10 million+ in red). Although not as continuous and intense as in some previous phases, net outflows are still the dominant trend overall, and large-scale net inflows have not appeared. Although ETF flows have slowed down, large amounts of funds continue to flow out of trading platforms, indicating that there are still big players or institutions accumulating BTC and self-custodying, or withdrawing after trading in the OTC market. The potential selling pressure on trading platforms continues to decrease, and the accumulation behavior of big players continues, although its intensity may fluctuate with the market environment.

The short-term investor cost line (orange-yellow) is currently at $95,411. The current price (about $109,000) is still significantly above this cost line.

• As long as the price remains above the average cost of short-term holders, the risk of large-scale panic selling in the short term is low, as most short-term participants are in profit. Key Support Level: $95,411 is an important psychological and technical support area. If the price pulls back to this level and obtains effective support, it will strengthen market confidence; if it falls below, it may trigger stop-loss orders, increasing short-term downward pressure.

• Gaming point between new and old funds: This price level is also a key area for the game between new entrants and short-term funds seeking to take profits.

• The short-term market structure is still healthy, but the effectiveness of the support at $95,411 needs to be closely monitored.

Overall analysis:

1. Cornerstone: The supply side continues to tighten, and long-term holders are firm in their conviction. Although the momentum of short-term fund accumulation has slowed down marginally, the illiquid supply continues to increase, the proportion of long-term holders is stable at a high level and has slightly rebounded, large amounts of funds continue to flow out of trading platforms, and large transfers to trading platforms (potential selling pressure) are not active. Together, they constitute a strong supply-side support for the market, which is a core feature that distinguishes it from previous cycles.

2. Current challenges: ETF driving force weakens, and the market faces a demand test (Figure 3). The significant decline in ETF capital inflows is the most direct challenge facing the current market. This means that the previous main source of incremental funds has become weak, and the market needs new demand stories or the recovery of existing demand to maintain upward momentum.

3. Short-term market sentiment and key levels (Figure 6). The current price is higher than the short-term holder cost line (US$95,411), providing a "safety cushion" for the market. This price is a key dividing line for judging the strength of the short-term market.

4. The superposition effect of macro uncertainty and narrative vacuum. Against the backdrop of weakening ETF inflows, the negative impact of macro uncertainty (Trump tariffs, Fed policy fog) on ​​market sentiment may be amplified. At the same time, as discussed below (news analysis and summary), new "expected narratives" that can attract large-scale funds (such as stablecoin channels and substantial regulatory breakthroughs) have not yet formed an effective relay, and the market may be in a short "narrative vacuum" or "narrative fatigue period."

5. Pressure from “attention competition”. With its own driving force weakening and the macro environment uncertain, the crypto market (especially assets other than BTC) may be more passive in the “attention competition” with stronger narratives such as AI.

Future Outlook:

Short to medium term:

Main theme: high-level fluctuations are possible, and the direction selection is a critical period. The market may fluctuate and consolidate for a period of time in the current price range (for example, with $95,411 as the lower track and the previous high as the upper track). The choice of direction will depend on:

1. Can ETF flows recover? This is the most important indicator to observe.

2. Will there be any positive catalysts on the macro news front? (e.g. PCE data is better than expected, the Fed sends a dovish signal, trade frictions ease).

3. Can a new industry narrative emerge and attract funding?

Downside risks: If ETFs continue to experience net outflows and the macro environment becomes bearish, and the price falls below the short-term holder cost line of $95,411, it may trigger a deeper correction and the market will retest the lower long-term support.

Upside potential: If the ETF regains its upward momentum, or other major positive factors emerge, coupled with the already tight supply side, prices still have the momentum to challenge and break new highs, but the process may be more tortuous than before.

•Expectations for a “summer boom” face a test: Judging from market news, the market is looking forward to breaking the calm and returning another boom to the market this summer. However, given the current weakening of ETF flows, it is becoming more difficult to achieve this, and it requires strong catalysis at the macro level or within the industry.

Mid-term:

The foundation of the structural bull market is still there, but the path is more dependent on the realization of fundamentals. The supply structure dominated by long-term holders is the core logic of long-term optimism. However, the magnitude and sustainability of the future bull market will be more dependent on:

1. Can the crypto industry truly generate sustainable economic value and large-scale applications? (Whether the expected narratives such as "stablecoin/trading platform channel" can be implemented is the key (higher difficulty)).

2. Can the regulatory environment develop in a clearer and friendlier direction? This will determine whether institutional funds can flow in on a larger scale and more sustainably.

3. Can BTC consolidate and expand its value proposition in the competition with traditional assets and emerging technologies? Are there other widely recognized narratives other than "digital gold"? Differentiation will intensify: • In a more challenging market environment, only projects with core technologies, a strong ecosystem, and a clear value proposition will stand out.

Mid-term exploration

• Liquidity Supply

• Analysis of price structure

• Futures clearing structure

• WTR risk factor 1

• USDC purchasing power score

• Whale overall score

The liquidity supply is still growing significantly, and it is possible that the current market changes are not exposed to liquidity risks. Ample liquidity can allow the market to maintain its amplitude in the current pricing structure.

The current stock top price is around 108,000, and the short-term cost line price is around 95,000. It is possible that the current pricing will hover around these two price levels.

The current liquidation structure of derivatives has switched from short liquidation to long liquidation structure. It is possible that in the current environment, the risks faced by longs are higher than those faced by shorts. After the short trend turned to the long trend, the market briefly went sideways at a high level. In order to make up for the comprehensiveness of the observation, the risk factors of spot are taken into account.

The WTR risk factor of 1 shows that BTC and ETH are not currently exposed to significant spot risks, and the preconditions for a large-scale correction may not yet be formed.

USDC purchasing power has a slight rating fluctuation, and currently still maintains a relatively high rating. It is possible that there is still liquidity support provided by USDC purchasing power in the market.

The ratings of the whale remain high and have not dropped. The market may still tend to be hesitant.

Short-term observation

• Derivatives risk factor

• Option intention transaction ratio

• Derivatives trading volume

• Option implied volatility

• Profit and loss transfer volume

• New addresses and active addresses

• Net position of BTC Trading Platform

• Net position of ETH trading platform

• High-weight selling pressure

• Global purchasing power status

• Stablecoin trading platform net position

Derivatives Rating: The risk factor is in the red area, and the derivatives risk is relatively high.

The risk factor is still in the red zone, and the current liquidation volume for both long and short positions is relatively small. As expected last week, the derivatives market will experience greater volatility this week, and derivatives participants will be liquidated.

Put options ratio is medium-high and trading volume is medium.

Derivatives trading volume was moderate.

Option implied volatility fluctuates only slightly in the short term.

Emotional state rating: Neutral

Last week we mentioned that the market's positive sentiment (blue line) and price were in a divergence, and then market sentiment climbed to a short-term high, breaking this divergence.

Newly added active addresses are at a low level. Spot and selling pressure structure rating: BTC and ETH are in a state of continuous large outflow.

Currently, BTC continues to flow out in large quantities.

Currently, ETH as a whole continues to outflow in large quantities, with only a small amount of inflow.

ETH has a lot of high-weight selling pressure, but it has eased.
Purchasing Power Rating: Global purchasing power and stablecoin purchasing power are flat compared to last week.

Global purchasing power was flat compared to last week.

Stablecoin purchasing power remained flat compared to last week.

This week’s summary:

News analysis and summary:

1. The current market’s “division” and “dependence”:

◦ Macro level: The market is swayed by the high uncertainty of Trump's trade policy and the vague expectations of the Federal Reserve's monetary policy, and risk sentiment fluctuates violently. As part of risky assets, the short-term trend of the crypto market is highly linked to these macro factors. ◦ Crypto internal: BTC relies on the inflow of institutional funds from ETFs and the "digital gold" narrative, showing a certain degree of resilience and "maturity" (QCP's view), becoming the "stabilizer" of the market. However, this strength is largely a short-term realization of the "ongoing narrative."

2. The sustainability of the core driving force needs to be questioned:

◦ After the "honeymoon period" of BTC ETF: After the initial institutional allocation is completed, whether the subsequent capital inflow can continue will depend on whether BTC can continue to prove its value in global asset allocation (compared with gold, stocks, etc.) and whether the macro liquidity environment cooperates.

◦ Pressure to deliver on “expected narratives”: Whether it’s the Fed’s rate cuts, a clearer regulatory environment, or the large-scale implementation of crypto applications (such as “stablecoin/trading platform channels”), these “expected narratives” that drive future growth face a long and uncertain path to realization. The market’s patience with these narratives is limited.

3. Narrative rotation and differentiation under attention competition:

◦ Internal rotation: The rapid decline of the meme craze indicates the acceleration of the rotation of hot spots within the market. If BTC can maintain its strength, some funds may flow to ETH (benefiting from ETF expectations and potential regulatory benefits) and other altcoins with real progress. However, it is difficult for a general rise to occur, and the "authenticity" of fundamentals and narratives will be more important.
◦ External competition: The powerful narrative of AI will continue to pose a competition for "attention" and "funding" to the crypto industry. The crypto industry needs to find a way to coexist with AI or demonstrate unique advantages, otherwise it may face the risk of marginalization in the "position war" of the technological wave.

Future: Looking for structural opportunities amid uncertainty, but there is a risk of "expectations" being dashed

Short to medium term:

• The market will continue to struggle between macro uncertainties (trade policy, Fed interest rate decisions) and crypto internal drivers (ETF flows, regulatory signals).
• BTC is expected to maintain relative strength with the support of institutional funds, but overall market volatility remains high. PCE data and the Fed’s statement before July will be key observation points. Whether the summer can “break the calm and bring another upsurge to the market” depends on whether these uncertainties can develop in a positive direction.

Mid-term:

• Optimistic scenario: Macro liquidity improves (interest rate cuts are implemented), the regulatory environment gradually becomes clearer, ETFs continue to attract funds, and some crypto applications with real value (possibly including the initial form of "virtual world channels") begin to show results. The market may usher in a broader structural bull market, but differentiation will intensify.

• Pessimistic scenario: The macro environment continues to be unfavorable (stagflation, intensified geopolitical conflicts), regulation is tightened, ETF capital inflows slow down or even reverse, and the "expected narrative" is delayed. The market may experience a long period of adjustment and revaluation. Other technology fields such as AI continue to be strong, further diverting resources from the crypto market.

• Most likely scenario: big shocks, sometimes upward, but with twists and turns. A few top assets (such as BTC, ETH) and truly valuable niches will be favored by funds, while a large number of projects that lack fundamental support will be eliminated. The market will pay more attention to the actual utility and sustainability of encryption rather than pure speculation.

Long-term insights on the chain:

1. BTC's supply fundamentals remain very strong, which is an important source of market confidence.
2. Of course, the recent weakening of ETF inflows is a warning sign that cannot be ignored, indicating that one of the market’s main demand engines is “cooling down”.
3. The current market is in a critical period of observation and direction selection. The macro environment, the subsequent performance of ETFs and whether new industry narratives can emerge will jointly determine the trend of the next stage.

• Market tone: We need to pay more attention to risks and be patient and cautious about the realization of the "expected narrative". The enthusiasm may need to give way to more fundamental value considerations.

On-chain mid-term exploration:

1. Liquidity continues to expand, temporarily suppressing short-term risks, and the current market is still stable.
2. The market fluctuates around the inventory top of 108,000 and the short-term cost line of 95,000.
3. Derivatives liquidation turns to be dominated by long positions, and short-term long pressure increases.
4. There are no abnormalities in the spot risk indicators of BTC and ETH, and the conditions for a deep correction are not yet sufficient.
5. USDC purchasing power score remains high, and on-site liquidity support is solid.
6. The whale holding score remains high and the market maintains a consolidation structure.

• Market tone: hovering, vigilant. Ample liquidity supports market volatility, but derivatives have turned into a long liquidation structure, and we need to be vigilant about the possibility of a change in the market caused by the turn.

On-chain short-term observations:

1. The risk factor is in the red area, and the risk of derivatives is relatively high.
2. The number of newly added active addresses is relatively low.
3. Market sentiment status rating: Neutral.
4. The net positions of BTC and ETH on the trading platform are in a state of continuous large outflow.
5. Global purchasing power and stablecoin purchasing power remain the same compared to last week.
6. The probability of not falling below 95,000-100,000 in the short term is 80%;

• Market tone: In the short term, there are fewer chips that choose to take profits at the current price, and the buying power is sufficient to support it. The expectations for this week are basically the same as last week. There is still the possibility of further short squeeze, and the probability of a direct large retracement is low.

Risk Warning: The above are market discussions and explorations and do not have any directional opinions on investment; please be cautious and prevent market black swan risks.

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