In 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 point since mid-January. 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 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 weekly maximum 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, and the US dollar index rose to 108.31 on the 10th. Gold, as an inflation hedge tool, broke through $2,900 and hit a new high. BTC and ETH experienced significant volatility in the short term, and the market sentiment was 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 fell to a one-year low, but long-term holder demand increased
On February 7, CryptoQuant reported that BTC network activity fell to a one-year low, but some indicators showed 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 mempool transaction volume 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 investors' cautious sentiment.
Since November 2024, ETH's short positions have increased by 500%. Especially on February 2, due to trade war concerns, ETH prices plummeted 37% in just three days. Although the market trading volume is strong, ETH prices have failed to recover, and the 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 in the context 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 tariff-free quotas and exemption policies for some trade partners. This measure caused the originally planned 25% tariff on Canada and Mexico to be postponed, and the market sentiment was once volatile. 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 cryptocurrencies to apply for investment immigration.
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 a new high, driven by risk aversion sentiment and central bank gold purchases
On February 10, COMEX gold futures broke through $2,900 per ounce and hit a new historical high, approaching the $3,000 mark. The recent surge in gold prices is driven by the surge in risk aversion demand, especially after Trump announced 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 market capital inflows. In addition, geopolitical risks and global economic uncertainties 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, affected by Trump's tariff policy, gold will serve as a tool to hedge against inflation and trade risks, 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 mixed January non-farm employment data, with 143,000 new jobs added and the unemployment rate falling 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 increase surprisingly 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 2025 stock market performance has been 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 historical highs, 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, meaning that the performance of a single stock may have a significant impact on the overall market.
Risk capital in the traditional financial market is likely to flow into the crypto industry, especially BTC, as a "digital gold" to hedge against stock market volatility and inflation. Although in the past, the blood-sucking phenomenon of projects like $TRUMP and $MELANIA has led to insufficient liquidity in the crypto market, 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 any other country or region where such offer or invitation may be prohibited by law. Digital asset trading may involve significant risks 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 made based on the information provided herein.
