BTCs upward momentum is weakening as cracks begin to appear in the U.S. macroeconomic backdrop. Two key economic indicators have just fallen to their lowest levels in months, but most investors are still focusing on ETF flows. From the current data, financing dynamics, stablecoin activity, and forward-looking data all indicate that the market may be shifting.
Summer consolidation signs begin to emerge
As of the time of writing, the crypto market has begun to show signs of early consolidation (BTC retracement 3%, ETH retracement 4%, SOL retracement 11%), US macroeconomic data has also begun to weaken, and market uncertainty has increased significantly. The recent strong performance of demand is likely due to a temporary surge in pre-orders on the eve of Trumps expected tariffs - it now seems that this trend is expected to return to normal.
PMI data shows a mild contraction, and it is not ruled out that the economy will slip into a contraction range
Since the service sector accounts for about 80% of US GDP, we can roughly assume that the ISM non-manufacturing PMI (services) index is more relevant to the overall US economy. Although economists had expected the index to rebound from last months data, its actual performance was disappointing, falling to its lowest level since July 2024, indicating a mild economic contraction. Taken together, the weakening of both the manufacturing and services (non-manufacturing) PMIs indicates that the economic data not only failed to meet Wall Street expectations, but is sliding further into contraction territory.
Pay attention to macroeconomic indicators and wait for interest rate cuts to take effect
From a macroeconomic perspective, two key indicators to watch are oil prices and the U.S. dollar. Lower oil prices could signal a weakening overall economy, while a continued weakening dollar could gradually prepare the market for future rate cuts. However, with bond yields still range-bound, the market may have to accept that the Fed may stay on hold for longer than expected. Policymakers may be concerned about the tariff policy reigniting inflationary pressures, so they are reluctant to ease policy too soon.
However, there is an additional risk layer in the market this time - economic data may deteriorate significantly due to the knock-on effects of tariff policies, causing confusion and hesitation among investors. With early signs of weak economic data gradually emerging, we may be heading for more than two months of economic turmoil. In such a market environment, it is unlikely that BTC will continue to rise undisturbed, especially when the Federal Reserve is not ready to cut interest rates and inflation expectations remain high.
Disclaimer: The market is risky and investment should be cautious. This article does not constitute investment advice. Digital asset trading can be extremely risky and unstable. Investment decisions should be made after carefully considering personal circumstances and consulting financial professionals. Matrixport is not responsible for any investment decisions based on the information provided in this content.
