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

1. Macroeconomic & Traditional Financial Markets

1. CPI Exceeds Expectations, Fed Turns Hawkish: Hopes for Rate Cuts Fade, Hikes Loom

This week, the U.S. May CPI came in higher than expected, mainly due to rising energy prices driven by the Middle East conflict. The May CPI rose 4.2% year-over-year, hitting a new high since 2023; the core CPI stood at 2.9% year-over-year, in line with expectations. This suggests that current inflation is more of a supply-side shock from sources like energy, rather than overheated demand. The Fed held rates steady at 3.5%–3.75% this week, but its policy stance has clearly turned hawkish. The latest dot plot indicates that officials expect the median interest rate to remain around 5.1% by the end of 2026, implying a significantly narrowed scope for rate cuts. More importantly, some officials have begun incorporating rate hikes into their forecasts for this year, whereas none had predicted hikes back in March.

Market expectations have quickly shifted from "when will they cut" to "will they hike." Goldman Sachs has abandoned its forecast for rate cuts this year and raised the probability of a hike to 20%; BNP Paribas expects the Fed might hike 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 Drop, Risk Assets Rebound

A major geopolitical turning point occurred this week. Trump announced a comprehensive ceasefire between Israel and Iran, with markets expecting shipping through the Strait of Hormuz to return to normal. As a result, the war risk premium in the energy market rapidly faded. Brent crude oil fell over 6% for the week, dropping to around $87. The ceasefire news fueled a strong rebound in U.S. stocks, largely recovering the losses incurred from the hotter-than-expected CPI data. The S&P 500 ended the week with only a slight decline of 0.12%. This indicates that the prior market decline was more attributable to geopolitical risks and inflation concerns rather than a significant deterioration in the U.S. economic fundamentals.

The easing of geopolitical risks could also help reduce future energy-driven inflationary pressures, potentially creating conditions for the Fed to re-adopt an accommodative stance later. However, this logic still depends on the durability of the ceasefire agreement. If the deal breaks down, oil prices and inflation pressures could rise again. Gold prices continued to decline this week, mainly due to the fading war risk premium.

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

New Fed Chair Kevin Warsh presided over his first FOMC meeting. Markets had hoped he would significantly overhaul the Fed's communication framework, but the actual changes were quite limited. Warsh has previously criticized the Fed for "talking 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 pursue radical reforms. The dot plot was retained, and there were no revolutionary changes to the press conference.

The current market assessment is that Warsh wants to gradually restore the Fed's credibility, but inflationary pressures limit his room for reform. Key points to watch going forward are two-fold: first, whether the frequency of Fed officials' speeches decreases; second, whether Warsh proposes a policy path to "accelerate balance sheet reduction as an alternative to rate hikes."

2. Cryptocurrency Market

1. Market Overview: BTC Bounces from Lows, Sentiment Shows Initial Signs of Stabilization

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 reclaiming the $64,000 level. ETH rose about 2.1% for the week, but the ETH/BTC pair continued to weaken, suggesting funds still prefer large-cap assets like BTC. The total crypto market cap increased by roughly 2.9% this week. Altcoins also saw some rebound, but their strength was weaker than that of 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 state.

This rebound was primarily driven by two external factors: first, the Israel-Iran ceasefire boosting global risk appetite; second, the alleviation of concerns about a large-scale liquidity drain after the SpaceX IPO materialized. However, given that market sentiment remains very fragile, the sustainability of the rebound needs to be monitored, especially if macroeconomic or geopolitical risks deteriorate again.

2. ETF Flows: Net Outflows Continue Overall, but Signs of Recovery Emerge Towards End of Period

U.S. Bitcoin spot ETFs saw net outflows of approximately $316 million this week, and Ethereum spot ETFs had net outflows of about $14.9 million, indicating an overall state of capital withdrawal. 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 approximately $57.69 million of that amount, suggesting some institutions are starting to reposition at lower levels.

Strategy continued its Bitcoin purchases this week, buying 1,550 BTC at an average price of about $65,332, spending around $101 million. Its total holdings have increased to 845,256 BTC. Although it continues to accumulate BTC, the pace of buying has significantly decreased compared to its peak period. 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 the 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 Supply Shrinks, Need to Monitor Japanese Carry Trade Risks

The stablecoin market continued to show a wait-and-see attitude this week. The total market cap of stablecoins across all chains is approximately $315 billion, with net outflows of about $987 million over the past 7 days. Both USDT and USDC experienced minor outflows, indicating that new on-chain purchasing power remains relatively weak.

Another potential risk originates from Japan. Despite market concerns that the Bank of Japan might raise rates, speculative funds are still heavily shorting the Japanese yen, with net short yen positions hitting a nine-year high. If the BOJ tightens policy more than expected, the yen could rally sharply, triggering a wave of carry trade unwinding, which could impact global liquidity and the crypto market. This risk is similar to the trigger mechanism behind the sharp global market decline in August 2024.

4. Industry Narrative: SpaceX Fuels Discussion on Tokenized Equities

SpaceX priced its IPO at $135, closed its first trading day at $160.95, and saw its market cap surpass $2 trillion, becoming a focal point for both traditional capital markets and the crypto RWA narrative. Several crypto platforms, including Kraken, Bybit, Binance Wallet, Bitget Wallet, MEXC, and Gate, launched tokenized or Pre-IPO subscription products related to SpaceX stock. However, due to limited real share allocations, some platforms ultimately could not 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 the barrier to entry and quickly aggregate global demand; on the other hand, they cannot bypass the supply constraints of the underlying assets inherent in traditional IPOs. The future competitive focus of tokenized equities will no longer be just "who lists faster," but "who can deliver asset exposure truly, stably, and transparently."

This article is purely 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 controls before trading.