US Non-farm Payrolls (NFP) slightly exceeded expectations, leading to a wave of profit-taking, and BTC consolidated at a high level (06.02~06.08)

The information, opinions, and judgments regarding the market, projects, coins, etc. mentioned in this report are for reference only and do not constitute any investment advice.

Since the low point in April, BTC has rebounded by as much as 50%, outperforming the Nasdaq and setting a new historical high.

However, the significant increase in the short term has also accumulated some selling pressure. Since May 22, a large-scale sell-off has begun to appear in the BTC market. This has put certain pressure on BTC, which is at a high level and leading the US stock market, becoming a driving force for the decline in BTC prices.

The upward movement is uncertain. BTC dipped this Thursday due to market panic stemming from the conflict between Trump and Musk, testing the support level of 100,000 USD. The price subsequently rebounded, returning above the “first upward trend line.”

With the adjustment of the US stock market, the buying power of the BTC Spot ETF channel has converged, making it difficult for BTC to absorb selling pressure and continue to rise in the short term. However, it is worth noting that along with the price correction, the outflow scale from exchanges has also increased significantly this week, indicating that new funds are taking the opportunity of the correction to absorb chips.

The positive impact from the non-farm employment data has created a favorable atmosphere for BTC’s stabilization and rebound, but a real breakthrough to a new level may still require greater progress on “reciprocal tariff wars,” “cryptocurrency policies,” or the Federal Reserve’s interest rate cuts.

Policy, macro finance, and economic data

This week, the US released non-farm employment data, showing an increase of 139,000 jobs in May. Although it is the lowest since February, it is slightly above the market expectation of 126,000. The unemployment rate in the US for May stands at 4.2%, in line with expectations of 4.2% and the previous value of 4.2%, and has not worsened.

Data performance slightly exceeded expectations, driving the three major U.S. stock indices up, while gold fell.

In recent reports, we emphasized that trading in the US stock market revolves around two main lines:

1. According to the hard data of the economy and employment, the “soft landing” and “hard landing” of the US economy are still in recession. The market is now pricing in a near-“soft landing”, where the economy is gradually slowing to sustainable growth levels after the rapid growth and high inflation of the past few years, without a severe recession or mass unemployment. The current economic and employment data are in line with this characteristic, although the GDP growth rate has declined to a certain extent, but it is due to the Fed’s initiative to cool down, the inflation data has fallen in an orderly manner, the unemployment rate is stable, and the number of new jobs has not fallen significantly. Of course, this also makes the Fed’s interest rate cut inevitably delayed.

2. Predict the possible changes in the medium and long-term economy and market caused by “reciprocal tariffs” and other government policies, and set prices in advance through forward-looking transactions. The market plunge in early March ~ early April was a forward-looking pricing of “reciprocal tariffs” that exceeded expectations and the possible deterioration of inflation and employment, while the market rebound after April 7 was a forward-looking pricing of a “soft landing” of the economy after Trump’s “softening” attitude. This forward-looking pricing includes a relatively mild end to a “reciprocal tariff war” that will not trigger a worsening of U.S. inflation, less impact on U.S. corporate earnings, and two 50bp rate cuts in the second half of the year.

In the May report, we pointed out that the current market pricing is leaning towards optimism, and the short-term pricing is overly optimistic. In fact, there are still many uncertainties regarding the tariff battle.

In the past week, the leaders of the US and China held their first call since the start of the tariff war. Although their subsequent statement emphasized respect and equality, and both sides agreed that representatives would soon consult in the UK, it is clear that they are still in the negotiation phase and that it will take some time before a agreement is signed.

As Trump raised the steel and aluminum tariffs from 25% to 50%, the Canadian government also threatened to retaliate.

In addition, this week’s events that have a greater impact on the market include Musk’s public opinion attacks on the “Beautiful Big Bill” and Trump. Musk called the bill “disgusting” and called on the public to pressure senators to block its passage, while Trump threatened to cancel federal contracts with Musk’s companies. The brawl led to Tesla’s biggest one-day drop ever on Thursday and triggered a sharp drop in U.S. stock indices and BTC. However, this conflict is still an episodic event and is unlikely to affect the market for a long time.

Overall, driven by non-farm data that slightly exceeded expectations and the slow but advancing “reciprocal tariff” negotiations, US stocks, bonds, and the dollar maintained a fragile balance and tilted slightly towards optimism in the past week.

crypto market

In the rebound since April, BTC’s trend has led the Nasdaq. The U.S. stock market is gaining momentum to challenge previous highs, while BTC reached a new historical high on May 22.

From a technical indicator perspective, after rebounding to a new high, BTC has undergone a two-week correction, retracting by 3.07% last week and experiencing a significant fluctuation with a slight increase of 0.08% this week, showing a long lower shadow on the weekly chart. During this adjustment process, trading volume has been in a state of contraction.

The highest correction in two weeks is around 10%, and overall it is within the “Trump bottom”, with the lowest day also retracing to the “first upward trend line” this Thursday.

In the absence of new highs in the US stock market, this adjustment after BTC reaches a new high is foreseeable and also healthy. A period of oscillation is inevitable, and for the market to reach new highs and advance further, greater progress may be needed in areas such as “reciprocal tariff wars,” “cryptocurrency policies,” or Fed interest rate cuts.

selling pressure and selling

Since April, rebounding from the depths of despair, BTC has recorded a maximum increase of 50%.

With the refresh of historical highs, both short-term bottom-fishing funds and long-term funds in a state of panic have shown some selling. This selling pressure reached a phase peak on May 22 and has since gradually decreased.

On-chain realized profits have been on a downward trend since May 22.

It is important to note that while the sell-off has decreased, the outflow from centralized exchanges has increased significantly, reaching 76,520.72 coins this week. This outflow is far higher than the typical weekly outflow of 10,000 to 20,000 coins. This substantial outflow can be seen as a strong recognition of the current price by long-term funds.

Capital In and Out

After the emergence of phased floating profits, the phenomenon of realizing profits also occurs in the funds of the ETF channel.

In the past two weeks, there has been a slight outflow of funds from the BTC Spot ETF channel, with 135 million last week and 128 million this week. This outflow occurred during a significant rise in BTC and amidst fluctuations in the U.S. stock market.

Stablecoin and ETF channel fund inflow and outflow statistics (weekly)

Isolated, it is difficult to estimate when the funds in this channel will return to inflow. However, considering the overall trend of the US stock market, we believe there is no need for great concern about a significant downturn. Although there is technically a possibility of continuing to retest the $100,000 level, it is quite challenging to grasp. In a weak balance of supply and demand, a breakout rally could occur within a day or two.

cycle indicator

According to eMerge Engine, the EMC BTC Cycle Metrics indicator is 0.625, in an upward phase.

EMC Labs

EMC Labs (Yongxian Labs) was established in April 2023 by cryptocurrency asset investors and data scientists. It focuses on blockchain industry research and investments in the Crypto secondary market, with core competencies in industry foresight, insights, and data mining. It is committed to participating in the thriving blockchain industry through research and investment, promoting blockchain and cryptocurrency assets to bring benefits to humanity.

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