USA stocks and the crypto market continue to rebound, with Bitcoin accumulating strength below $0.06 million and altcoins following suit. StarEx exchange analysts believe that the market remains relatively cautious in terms of capital flow. After a slight uptrend, funds have started to take profits. This indicates that without institutional-level funds participating, small funds cannot significantly boost the market. Currently, it is still a recovery rebound after the oversold situation. The extent of the rebound will depend on macro bullish stimuli from the Federal Reserve.
There is no clear hot spot in the recent market. The decline in meme coin speculation has weakened the performance of SOL ecosystem tokens. After the Fractal Bitcoin gained attention, funds poured into the market, possibly triggering speculation in the Bitcoin ecosystem. In this wave of rebound, Bitcoin is highly likely to break the $0.06 million barrier once again.
StarEx exchange analysts believe that the focus of the global traditional financial markets and the crypto markets is on the USA. Major institutions are facing too much uncertainty, hence they are cautious and taking a wait-and-see approach.
How will the Federal Reserve respond to the current situation? Will they cut interest rates or expand the balance sheet? Will the economy fall into recession? These questions are becoming increasingly complicated. Improper interest rate cuts could trigger leveraged trading of "yen-dollar" carry trade funds, leading to a liquidity crisis and subsequent collapse in asset prices; if rates are not cut, the economy will face sustained high interest rates and debt pressure, increasing the risk of a recession. If the Federal Reserve injects liquidity into the financial system through balance sheet expansion, pressure for dollar depreciation will increase, possibly reigniting inflation, shaking the credit foundation of the dollar, and impacting its core interests.
In this context, the risks of a US economic recession are escalating, and the Federal Reserve needs to choose between a "soft landing with dollar depreciation" and a "strong dollar with economic hard landing". Whichever path is chosen will face tremendous risks: the former may shake the global credit of the dollar, while the latter may trigger an economic recession.
In the coming months, the growth of the US economy and the policy direction of the Federal Reserve will be key driving factors for market trends. Against this backdrop, funds are gradually concentrating in Bitcoin to mitigate risks. Currently, Bitcoin's market dominance has reached a new high in the cycle, demonstrating a strong market preference. This situation is unlikely to change until new industry ecosystems and narratives emerge.
From a technical perspective, since Bitcoin hit a historical high of $0.073 million in March of this year, the market has experienced three waves of corrections, with high points of $0.073 million, $0.072 million, and $0.07 million, and low points of $0.057 million, $0.054 million, and $49,000, displaying a typical downward trend. Trading volume and market enthusiasm are gradually declining, even ETF funds are starting to "stagnate". Currently, the market is still in a downtrend.
StarEx exchange analysts believe that in the short term, the probability of a breakthrough in industry narratives or ecosystems is low, and the market urgently needs significant macroeconomic events to break this deadlock. The ideal market expectation is for a soft landing of the US economy and a gradual rate cut by the Federal Reserve. However, the news of a slight rate hike by the yen in early August triggered severe volatility in the global financial markets, leading to a meltdown in Japanese stocks, a sharp decline in the crypto market, and institutions feeling apprehensive about their funds.
Currently, the inventory of bitcoin on CEX is at a low level, while the market cap of stablecoins has reached a new high of $170 billion. Despite the decrease in supply, the funds waiting to enter the market have reached a historical high. If market confidence becomes clear and an upward breakthrough trend forms, we can expect the start of another bull market.
StarEx exchange analyst believes that after the meme coin frenzy subsides, there will definitely be a new ecological narrative leading the cryptocurrency market into a true ecological situation.