BitMart Research Weekly Highlight: CPI Fuels Rate Hike Expectations, Geopolitical Easing Stabilizes BTC

1. Macro Economy & Traditional Financial Markets

1. CPI Exceeds Expectations, Fed Turns Hawkish: Rate Cut Expectations End, Rate Hike Expectations Rise

This week, the U.S. May CPI rose above expectations, primarily driven by the Middle East conflict pushing up energy prices. The May CPI increased year-over-year to 4.2%, hitting a new high since 2023; the core CPI was 2.9% year-over-year, in line with expectations. This indicates that the current inflation is more of a supply-side shock from energy, rather than overheating demand. The Fed kept interest rates unchanged at 3.5%-3.75% this week but its policy stance has clearly turned hawkish. The latest dot plot shows that officials project the median interest rate will remain around 5.1% by the end of 2026, suggesting significantly narrowed room for rate cuts. More importantly, some officials have begun incorporating a rate hike this year into their forecasts, whereas in March, no officials had predicted a hike.

Market expectations have quickly shifted from "when will rates be cut?" to "will rates be hiked?". Goldman Sachs has abandoned its forecast for rate cuts this year and raised the probability of a rate hike to 20%; BNP Paribas expects the Fed to potentially hike rates up to three times. The interest rate market has also largely priced in at least one rate hike this year.

2. Israel-Iran Ceasefire: Oil Prices Fall, Risk Assets Rebound

This week saw a major geopolitical shift. Trump announced a comprehensive ceasefire between Israel and Iran, leading market expectations that shipping through the Strait of Hormuz will resume normal operations. Consequently, the war risk premium in the energy market rapidly dissipated; Brent crude oil fell over 6% for the week, dropping to around $87. The ceasefire news fueled a strong rebound in U.S. stocks, essentially recovering the losses incurred earlier due to the higher-than-expected CPI. The S&P 500 was only slightly down 0.12% for the week. This suggests that the earlier market decline was more driven by geopolitical risks and inflation concerns, rather than a significant deterioration in the U.S. economic fundamentals.

The easing of geopolitical risks also helps reduce future energy-driven inflationary pressures, creating conditions for the Fed to potentially reopen easing space in the future. However, this logic still depends on the sustainability of the ceasefire agreement. If the agreement breaks down, oil prices and inflationary pressures could rise again. Gold prices continued to decline this week, mainly due to the fading of war risk premiums.

3. First FOMC Under Warsh: Hawkish Stance, Reforms Slower Than Expected

New Fed Chair Kevin Warsh presided over his first FOMC meeting. The market had hoped for significant reforms to the Fed's communication mechanisms, but the actual changes were rather limited. Warsh has previously criticized the Fed for "saying too much" and questioned the effectiveness of the dot plot. However, in the current complex environment of high CPI, some officials discussing rate hikes, and political pressure for cuts, he did not push aggressive reforms. The dot plot was retained, and there were no groundbreaking changes to the press conference.

The current market assessment is: Warsh aims to gradually restore the Fed's credibility, but inflationary pressures constrain his reform capacity. Key points to watch going forward are: first, whether the frequency of Fed officials' speeches decreases; second, whether Warsh will propose a policy path of "accelerating balance sheet reduction as an alternative to rate hikes."

2. Crypto Market

1. Market Overview: BTC Bounces from Lows; Sentiment Tentatively Stabilizes

After a sharp drop of about 17% the previous week, the crypto market showed signs of stabilization this week. BTC rebounded from around $60,000, gaining approximately 3.8% for the week and briefly touching $64,000. ETH gained about 2.1% for the week, but the ETH/BTC ratio continued to weaken, indicating capital preference for large-cap assets like BTC. Total crypto market cap rose by about 2.9% this week. Altcoins also rebounded, but less strongly than BTC and ETH. The Fear & Greed Index recovered from 8 to 20, still in the "Extreme Fear" zone, but market sentiment has somewhat recovered from its most panicked stage.

This round of rebound is mainly driven by two external factors: first, the Israel-Iran ceasefire boosting global risk appetite; second, after the SpaceX IPO, concerns about a massive liquidity drain in the market have eased. However, with sentiment still fragile, the sustainability of the rebound needs to be monitored if macro or geopolitical risks deteriorate again.

2. ETF Flows: Net Outflows Continue Overall, but Signs of Recovery Emerge Late in the Period

U.S. Bitcoin spot ETFs saw net outflows of approximately $316 million this week, while Ethereum spot ETFs saw net outflows of about $14.9 million, indicating a continued capital withdrawal environment overall. However, on Thursday, Bitcoin spot ETFs recorded net inflows of roughly $85.85 million, the strongest single-day performance since mid-May. BlackRock's IBIT contributed about $57.69 million to this inflow, suggesting some institutions are starting to reposition at lower levels.

Strategy continued to buy BTC this week, purchasing 1,550 BTC at an average price of around $65,332, spending approximately $101 million. Its total holdings have risen to 845,256 BTC. While it continues to accumulate BTC, the pace of buying has notably decreased from its peak. Strategy's related preferred stock, STRC, continues to trade below its par value at a discount of about 5%. The market is watching whether the company will adjust its dividend rate at the end of the month to push STRC back to par value. This uncertainty continues to weigh on STRC's performance.

3. On-Chain Data: Stablecoin Volume Shrinks; Risks from Japanese Carry Trades Need Attention

The stablecoin market showed a wait-and-see stance this week. The total market cap of stablecoins across all networks is approximately $315 billion, with net outflows of about $987 million over the past 7 days. Both USDT and USDC saw minor outflows, indicating weak on-chain fresh purchasing power.

Another potential risk originates from Japan. Despite market concerns that the Bank of Japan (BOJ) might raise rates, speculative funds are still heavily shorting the yen, with net short yen positions hitting a nine-year high. If the BOJ tightens policy more aggressively than expected, the yen could rebound sharply, triggering a unwinding of carry trades and impacting global liquidity and the crypto market. This risk shares a similar trigger mechanism with the global market sell-off in August 2024.

4. Industry Narrative: SpaceX Fuels Tokenized Equity Discussions

SpaceX completed its IPO priced at $135, closing its first day of trading at $160.95, achieving a market cap exceeding $2 trillion. This event has become a focal point for both traditional capital markets and the crypto RWA narrative. Multiple crypto platforms launched tokenized or Pre-IPO subscription products for SpaceX stock, including Kraken, Bybit, Binance Wallet, Bitget Wallet, MEXC, and Gate. However, due to limited actual stock allocations, some platforms ultimately failed to secure sufficient underlying assets and had to cancel subscriptions or issue refunds. This highlights the dual nature of tokenized equities: on one hand, they can lower participation barriers and quickly aggregate global demand; on the other hand, they cannot bypass the supply constraints of underlying assets inherent in traditional IPOs. The future competitive battleground for tokenized equities will likely shift from "who lists faster" to "who can deliver asset exposure reliably, stably, and transparently."

This article is a market analysis and does not constitute any investment advice. Investment carries high risk; please fully assess your own risk tolerance and strictly implement risk management before trading.