For several consecutive days, the analysis has emphasized whether the market is experiencing a rebound or a reversal. Currently, from the perspective of liquidity, macroeconomic factors, and even data analysis, the market has not met the criteria for a reversal. The simplest indicator is the Federal Reserve's monetary policy; since the dot plot in March, several Fed officials have indicated that there are no plans to continue lowering interest rates in the short term.
This means that high interest rates will need to be maintained for a while, and Trump's tariff policy has made both inflation and recession a looming sword of Damocles. The longer this drags on, the greater the risk.
It's not just cryptocurrencies; even the U.S. stock market is maintaining this state. However, this does not mean that we are in a bear market. From a liquidity perspective, we have indeed entered a bear market, but Bitcoin and U.S. stocks have not seen significant declines, which does not align with typical bear market trends. Therefore, it is likely that we are still in a period of speculation. The key factor may be the trend of inflation after the tariffs are implemented.
Today's decline should be seen as a precaution ahead of tomorrow's core PCE and University of Michigan inflation index, especially the core PCE, which is the data the Federal Reserve cares about the most. The previous value was 2.6%, and the market expectation is 2.7%, indicating that even without the implementation of tariffs, there is a possibility of a slight increase in inflation. This is even more concerning with the new tariffs.
Moreover, the University of Michigan's one-year inflation expectation is still at 4.9%. The political implications of this data are significant, to the extent that the Federal Reserve has publicly commented on it. Another important data point to note is personal spending and monthly income. An increase in spending often indicates a high consumer willingness to spend, but a decrease in income could lead to unfavorable data of high spending with low income.
Therefore, it is entirely normal for investors to choose to hedge.
Looking at Bitcoin's own data, the shrinking trading volume is also reflected in the turnover rate, with the number of investors participating in trading continuing to decrease. This data aligns with the conclusions drawn from ETFs, indicating that more investors are unwilling to buy or sell, likely waiting for a clearer entry point.
We have encountered this situation in both 2023 and 2024, with both instances lasting eight months of stagnation. However, the current trading volume is even lower than during those two periods, indicating that current liquidity is worse than before, and more investors are unwilling to invest in Bitcoin. If $BTC is in such a state, one can only imagine the situation for other assets.
The only data that seems somewhat acceptable is the concentrated area of chips between $93,000 and $98,000, where the selling pressure continues to decrease. The sentiment of loss-making investors remains quite stable, but this is primarily because there has not yet been any significant negative news.
The variables in April may be greater.
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