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

1. Macro Economy and Traditional Financial Markets

1. CPI Exceeds Expectations, Fed Turns Hawkish: End of Rate Cut Expectations, Growing Speculation of Hikes

The US CPI for May came in higher than expected this week, primarily driven by rising energy prices due to the Middle East conflict. The May CPI rose to 4.2% year-over-year, hitting a new high since 2023; the core CPI stood at 2.9% YoY, in line with expectations. This indicates that the current inflation is more of a supply-side shock from energy and other factors, rather than overheating demand. The Fed maintained its interest rate at 3.5%–3.75% this week, but its policy stance notably turned hawkish. The latest dot plot shows officials expect the median interest rate to remain around 5.1% by the end of 2026, implying a significant narrowing of room for rate cuts. More importantly, some officials have started including rate hikes in their forecasts for this year, whereas in March, no official had predicted a hike.

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

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

A major geopolitical shift occurred this week. Trump announced a comprehensive ceasefire between Israel and Iran, with markets expecting shipping through the Strait of Hormuz to resume normal operations. As a result, the war risk premium in the energy market rapidly dissipated, with Brent crude oil falling over 6% for the week to around $87. The ceasefire news drove a strong rebound in US stocks, which largely recovered the losses incurred from the higher-than-expected CPI data. The S&P 500 ended the week only 0.12% lower. This suggests that the market decline was more due to geopolitical risks and inflation concerns than a significant deterioration in the US economic fundamentals.

The easing of geopolitical risks also helps reduce future energy-related inflationary pressures, creating conditions for the Fed to reopen its accommodative policy space later. 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 fall this week, mainly due to the fading war risk premium.

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

New Fed Chair Kevin Warsh chaired his first FOMC meeting. The market had anticipated he would significantly reform the Fed's communication mechanisms, but actual changes were rather limited. Warsh has previously criticized the Fed for "saying too much" and questioned the usefulness 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 the press conference saw no disruptive changes.

The current market assessment is that Warsh wants to gradually restore the Fed's credibility, but inflationary pressures constrain his room for reform. 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 a substitute for rate hikes."

2. Cryptocurrency Market

1. Market Overview: BTC Bounces from Lows, Sentiment Initially Stabilizes

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

This rebound is mainly driven by two external factors: first, the Israel-Iran ceasefire boosting global risk appetite; second, after the SpaceX IPO was confirmed, concerns about a large-scale liquidity drain eased. However, given that market sentiment remains fragile, the sustainability of the rebound needs monitoring if macroeconomic or geopolitical risks worsen again.

2. ETF Flows: Continued Outflows Overall, But Signs of Recovery Towards End of Week

US 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 an overall capital withdrawal state. 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, suggesting some institutions are starting to re-allocate at lower levels.

Strategy continued buying BTC this week, purchasing 1,550 BTC at an average price of about $65,332, spending approximately $101 million. Its total holdings have increased to 845,256 BTC. Although it continues to accumulate BTC, its buying momentum has significantly decreased compared to 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 it will adjust the dividend rate at the end of the month to push STRC back to par. This uncertainty continues to suppress STRC's performance.

3. On-Chain Data: Stablecoin Supply Shrinks, Japanese Carry Trade Risk Needs Attention

The stablecoin market remained in a wait-and-see state this week. The total market cap of all stablecoins is approximately $315 billion, with a net outflow of about $987 million over the past seven days. Both USDT and USDC saw slight outflows, indicating that new buying power within the market remains relatively weak.

Another potential risk originates from Japan. Despite market concerns about a potential BOJ rate hike, speculative funds are still heavily shorting the Japanese Yen, with net short positions hitting a nine-year high. If the BOJ tightens policy more than expected, the Yen could rebound sharply, triggering a unwinding of carry trades, which could impact global liquidity and the crypto market. This risk is similar to the trigger mechanism for the global market flash crash in August 2024.

4. Industry Narrative: SpaceX Spurs Tokenized Equity Discussions

SpaceX completed its IPO priced at $135, closing its first trading day at $160.95, pushing its market cap above $2 trillion and becoming a focal point for both traditional capital markets and the crypto RWA narrative. Multiple crypto platforms, including Kraken, Bybit, Binance Wallet, Bitget Wallet, MEXC, and Gate, launched tokenized or Pre-IPO subscription products around SpaceX stock. However, due to the limited supply of actual stock allocation, some platforms ultimately could not secure sufficient underlying assets and were forced to cancel subscriptions or issue refunds. This highlights the dual nature of tokenized equity: on one hand, it can lower participation barriers and quickly aggregate global demand; on the other hand, it cannot bypass the supply constraints of the underlying assets in a traditional IPO. The future competitive focus for tokenized equity will not just be "who lists faster," but "who can deliver asset exposure in a real, stable, and transparent manner."

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