Over the past week, affected by short positions, BTC experienced significant volatility, with a maximum intraday range of 11.69%. On February 3, the BTC price fell to $91,231, hitting the lowest level since mid-January, and the volatile market caused spot short positions to lose over $800 million. At 0 o'clock the next day, the BTC price rebounded to $98,842 and fluctuated around $97,000. Recently, the short positions of ETH have reached a historical high, and the spot ETH touched a low of $2,125.01 on February 4, but has since rebounded to around $2,700, with a maximum weekly volatility of 10.22% (the above data is the real-time data of Binance spot 15:00).
Due to the tariff policy announced on February 3 and the non-farm data released on February 10, the US dollar strengthened, with the US dollar index rising to 108.31 on the 10th, and gold as an inflation hedge broke through $2,900, setting a new high. BTC and ETH experienced significant volatility in the short term, and the market sentiment is relatively cautious. Although they have stabilized after the violent fluctuations, their future trends will continue to be affected by macroeconomic data and market sentiment.
Market Review
BTC activity drops to a one-year low, but long-term holder demand increases
On February 7, CryptoQuant reported that BTC network activity has dropped to a one-year low, but some indicators show bullish potential. The BTC network activity index has fallen 15% from its historical high in November 2024, currently at 3,760, the lowest level since February 2024. Meanwhile, the number of BTC transactions and the volume of mempool transactions have also declined significantly.
However, the data shows that the demand from long-term holders has increased recently. The growth of long-term holders often accompanies the rebound of BTC prices. Therefore, although the BTC network activity is weak in the short term, the increased demand from long-term holders may have a positive impact on the BTC price.
ETH short positions reach a historical high, facing volatility risks
On February 10, the trading price of ETH was $2,636, with a market capitalization of $317 billion and a daily trading volume of $19.5 billion. Over the past week, ETH's short positions have surged to 40%, reaching a historical high. According to Coinglass data, the 24-hour liquidation amount has reached $44.65 million, indicating increased market volatility. In addition, the Ethereum Foundation recently transferred 50,000 ETH, further triggering cautious sentiment among investors.
Since November 2024, ETH's short positions have increased by 500%. Especially on February 2, due to concerns about the trade war, the ETH price plummeted 37% in just three days. Although the market trading volume is strong, the ETH price has not recovered, and its recent gains have lagged behind other Altcoins.
Despite the increase in short positions, ETH still attracts capital inflows. In December 2024, ETH attracted over $2 billion in new funds, and the inflow of ETH spot ETFs exceeded that of BTC spot ETFs, indicating that investors still have some confidence in ETH. Recently, ETH prices have faced strong selling pressure, and short positions have not weakened. Investors are advised to pay attention to whether ETH will fall further or experience a short squeeze against the backdrop of accumulated short positions.
Trump announces "reciprocal tariffs", significantly raising steel and aluminum tariffs, causing market turmoil
On February 10, the White House announced a 25% tariff on all imported steel and aluminum, and canceled the exemption and exemption policies for some trade partners. This measure means that the originally planned 25% tariff on Canada and Mexico will now be implemented, causing market sentiment to fluctuate. Although BTC and US stocks have rebounded after the plunge, the market sentiment remains cautious.
The three major US stock indexes fell more than 1% during the session, wiping out the weekly gains. US bond yields rebounded due to inflation expectations, with the 1-year Treasury yield rising to 4.23% and the 10-year yield rebounding to 4.49%, putting pressure on the stock market. Gold, on the other hand, rose due to increased demand for safe-haven assets, with London gold achieving six consecutive weeks of gains, up 2.18%.
Hong Kong investment immigration first acknowledges BTC and ETH as asset proof
On February 7, 2025, the Hong Kong Investment Promotion Agency approved a client's use of HK$30 million worth of ETH as asset proof to apply for investment immigration. Previously, in October 2024, another client successfully used BTC to apply and was approved, becoming the first case in Hong Kong to use cryptocurrency for investment immigration application.
Hong Kong's investment immigration requires applicants to prove they have HK$30 million in assets and make an equivalent investment within six months. It is not yet determined whether investing in crypto ETFs or directly in cryptocurrencies can meet the requirements. Crypto assets need to be stored in cold wallets or mainstream exchanges like Binance.
Macroeconomic Dynamics
Gold price hits new high, driven by risk aversion and central bank gold purchases
On February 10, COMEX gold futures broke through $2,900 per ounce and hit a new high, approaching the $3,000 mark. The recent surge in gold prices is driven by the surge in risk aversion, especially after Trump's announcement of additional tariffs on imported steel and aluminum, as well as the increased uncertainty in global trade and inflation. Gold, as a traditional safe-haven asset, is supported by strong demand.
Central bank gold purchases also provide support for gold prices. Global central bank gold purchases reached 1,045 tons in 2024, particularly with the Chinese central bank continuously increasing its gold holdings and announcing that insurance funds will be allowed to invest in gold, which is expected to bring additional market liquidity. In addition, geopolitical risks and global economic uncertainty have also made gold continuously favored by investors.
With the changing global economic situation, analysts predict that gold prices may continue to rise. In the short term, gold will serve as a tool to hedge against inflation and trade risks due to the impact of Trump's tariff policy, while in the long term, it will be supported by the trend of anti-globalization and US dollar credit risk, which may drive gold prices to continue strong growth in 2025.
Weak non-farm data and falling unemployment rate drive the US dollar to rebound
On February 7, the US Bureau of Labor Statistics released the January non-farm employment data, which was mixed. The number of new jobs added was 143,000, and the unemployment rate fell to 4.0%, both far below market expectations. The year-over-year wage growth rate was 4.1%, higher than the expected 3.8%, and the monthly wage growth rate unexpectedly reached 0.5%, far exceeding the expected 0.3%. The University of Michigan consumer confidence index showed that consumer confidence fell to the lowest level in seven months due to concerns about inflation, further increasing market uncertainty.
On February 10, the US dollar index fluctuated upwards to 108.31, reflecting the market's renewed concerns about rising inflation and interest rate hike expectations. Although the job creation performance was weak, the strong wage data and the decline in the unemployment rate provided the market with an optimistic expectation of the Federal Reserve's interest rate hike path, driving the US dollar to rebound after a decline earlier this week.
In the coming week, the US will release the January CPI data and hold a monetary policy hearing with Fed Chair Powell, which is expected to be a key factor affecting the BTC trend.
The 2025 stock market faces the risk of high valuation, and the crypto market may become a new destination for risk assets
The stock market performance in 2025 is strong, with the S&P 500 expected to rise 11%, but high valuations and excessive market concentration pose hidden risks. Although the growth in corporate earnings and interest rate cuts have boosted market sentiment, the current stock market valuation is close to the historical high, especially in the US stock market and technology stocks. The concentration of the US stock market is unusually high, with the top 10 stocks accounting for more than 20% of the global market value, which means that the performance of a single stock may have a significant impact on the overall market.
The risk capital of the traditional financial market is likely to flow into the cryptocurrency industry, especially BTC, as a "digital gold" to hedge against stock market volatility and inflation. Although in the past the crypto market has suffered from a lack of liquidity due to the bloodsucking phenomenon of projects like $TRUMP and $MELANIA, with the influx of capital, this situation is expected to improve. The increased activity and enhanced liquidity in the crypto market will attract more investors seeking opportunities.
Disclaimer: The above content does not constitute investment advice, offer to sell or invitation to purchase for residents of Hong Kong Special Administrative Region, the United States, Singapore, or other countries or regions where such offer or invitation may be prohibited by law. Digital asset trading may involve great risk and volatility. Investment decisions should be made after careful consideration of personal circumstances and consultation with financial professionals. Matrixport is not responsible for any investment decisions based on the information provided in this content.
