Improvement in currency Liquidity The crypto market is highly correlated with TradFi.

Market Dynamics

Macroeconomic Liquidity Analysis

Recently, there have been clear signs of improvement in currency liquidity. The tariff policy proposed by a certain national leader has caused turmoil in the market, which not only undermines investors' confidence in that country's economy but may also continue to affect market trends in the coming months. A downward spiral trend has been observed in the bond and currency markets, while the stock market has experienced a historic surge, a phenomenon that typically occurs in the mid-stage of a bear market. The cryptocurrency market has also experienced significant volatility, showing a high correlation with traditional financial markets.

Market Overview

This week, Bitcoin experienced a sharp rebound after a significant drop, while some small cryptocurrencies fell sharply due to delisting events. The market as a whole lacks clear hot themes.

The top five cryptocurrencies by increase are XCN, FARTCOIN, GAS, LAYER, and UXLINK, with increases of 110%, 100%, 60%, 40%, and 30%, respectively. The ones with the largest decreases include BERA, EOS, MEW, W, and NEAR, with declines between 20% and 40%.

It is worth noting that:

• BERA, as a representative of DeFi public chains, has broken below its long-term support level, with the on-chain stablecoin scale decreasing by 300 million USD within a week.
• FARTCOIN, as a meme coin within a certain public chain ecosystem, surged several times against the trend during a market downturn.
• BABY, as a staking project representative in the Bitcoin ecosystem, saw its market value return to the level expected by institutional investors after its listing, but the sustainability of the re-staking model has been questioned.

On-chain data analysis

The inflow of funds into the Bitcoin market has stagnated, and liquidity is rapidly contracting. The total market capitalization of altcoins has plummeted from $1 trillion at the beginning of the year to around $600 billion. This round of decline has a wide impact, with various sectors experiencing varying degrees of depreciation.

Institutional funds experienced a slight net outflow, and fear sentiment may spread across global markets. The market value of stablecoins has slightly declined, reflecting a clear increase in investors' risk aversion.

The long-term trend indicator MVRV-Z Score is currently at 1.6, close to the market bottom range. This indicator reflects the overall profit state of the market, and the current level indicates that holders are generally in a state of loss.

Futures Market Dynamics

The futures funding rate remains at a low of 0.00%, close to the market's short-term bottom range. Bitcoin futures open interest continues to decline, indicating that major funds are withdrawing from the market. The futures long-short ratio is 1.9, which is in the greedy range, but this indicator is highly volatile and has limited reference value.

Spot Market Performance

Bitcoin has experienced significant volatility this week, while other cryptocurrencies lack new investment narratives. The pressure on global financial markets continues to intensify, primarily influenced by the uncertainty surrounding a certain country's tariff policies. This weak trend has spread to almost all asset classes, and the cryptocurrency market has not been spared from this bear market environment.