FOMC Meeting and Future Macroeconomic Outlook

1. Macroeconomic and Market Environment

The Federal Reserve maintained interest rates at the May FOMC meeting, emphasizing the challenges posed by the uncertainty of tariff policies to its dual mandate, and adopted a "wait-and-see" strategy. The balance sheet reduction continues to slow, and liquidity needs to pay attention to the debt ceiling and changes in reserves.

Powell reiterated that the economic resilience supports a wait-and-see strategy, and the timing of interest rate cuts depends on tariff progress and economic data, with a reassessment at the June meeting. It is advised to pay attention to economic data after the expiration of the July tariff deferment, as a rate cut of 50-100 basis points within the year is still possible.

2. Capital Flow Analysis and Mainstream Coin Market Structure

external capital flow

• ETF funds: This week, inflow was $919 million, which is a decrease in inflow.
• Stablecoin: In this period, an additional issuance of $2.549 billion was made, with an average daily issuance of $196 million, and the level of issuance is moderate.

Market Sentiment Index

• OTC Premium: The premium for stablecoins continues to decline, showing a significant divergence from price trends.

Bitcoin ( BTC )

• Technical aspect: The market is in a volatile upward range.
• On-chain chip distribution: Chip peak returns to around $93,000.

Ethereum ( ETH )

• The trend is weaker than BTC, ETH/BTC maintained a fluctuation and broke down this week, with funds continuously flowing back to BTC.
• On-chain activity: The increase in active addresses may indicate the completion of a stage bottom.

3. Summary and Analysis of the FOMC Meeting

Key Points of the Meeting

1. Interest rates remain unchanged: The Federal Funds Rate will be maintained in the range of 4.25%-4.50% with unanimous approval.
2. Dual Mission Challenge: The risk of uncertainty in the economic outlook is rising, with increased risks of unemployment and inflation.
3. Economic and Inflation Outlook:
   • The economy is expanding steadily, the job market is stable, and the unemployment rate is low.
   • Fluctuations in net exports affect data, but the overall economic resilience is strong
   • The risks of inflation and unemployment rising are exacerbated by the uncertainty of tariff policies.
4. Interest Rate Forward Guidance: Maintaining a cautious attitude, there may be a rate cut in the future, but the magnitude and timing will be more prudent.
5. Monetary Policy and Balance Sheet Reduction:
   • The benchmark interest rate and the tapering plan remain unchanged.
   • Emphasize the continued reduction of the balance sheet size and a firm commitment to returning inflation to 2%.

Shrinkage Table and Liquidity Observation

1. Balance Sheet Reduction Progress:
   • The pace of tapering will slow down starting from June 2024.
   • The current pace of balance sheet reduction is approximately $40 billion per month, with the balance sheet size reduced to $6.71 trillion.
2. Liquidity and Treasury Dynamics:
   • After the debt ceiling expires in January 2025, the Treasury will initiate extraordinary measures.
   • Current ON RRP balance is 1299 billion USD, bank reserves are 3.219 trillion USD, TGA is 590.4 billion USD
   • It is recommended to pay attention to the decline in bank reserves in July and August, and be alert to the liquidity risk as the Treasury's "X-Day" approaches.

Powell Press Conference Highlights

1. "Observe the changes" stance
2. Dual Mission Balance
3. Monetary Policy Stance
4. Possibility of interest rate cut

Market and Policy Outlook

1. Federal Reserve Strategy: Cautious observation, waiting for clarity on tariff policies and confirmation from economic data.
2. Interest Rate Cut Expectations: A reduction of 50-100 basis points is expected within the year, and the impact of tariffs in the second half of the year may weigh on GDP.
3. Economic data support: Employment, consumption, inflation and other data performance.

4. On-chain Data Analysis

stablecoin fund flow situation

The total amount of stablecoins has increased to 210.379 billion USD, with a single cycle issuance of 2.549 billion USD. The average daily issuance has slightly decreased compared to the previous period, but it remains within a moderate range. Overall, the continuous issuance of stablecoins constitutes a medium-term bullish factor, providing liquidity support for risk assets.

ETF capital flow situation

In the past four weeks, ETF capital flows have shown a "rapid warming-peak retreat" rhythm transition. This week, an inflow of $919 million was observed, significantly lower than the high levels seen in late April. This indicates that the current price increase has gradually detached from substantial capital support and is more driven by market sentiment and technical momentum.

OTC Premium

The off-exchange premium of USDT and USDC continues to decline and has fallen into an underwater range, diverging from the price trend of BTC. This "price rise and premium drop" reverse structure indicates that short-term risks are accumulating, and investors need to be wary of potential liquidity withdrawal and price correction pressure.

URPD( On-chain Chip Structure )

The first major support level on the chain is around $93,000, and the second major support is around $84,500.

Holding Address Holding Ratio

The on-chain holding structure of BTC shows characteristics of "mid-level accumulation, large holders reducing positions, and whales returning." Overall, the chips are being distributed towards mid-level addresses, and the on-chain structure is becoming healthier, which helps stabilize the market for medium-term development.

Chart Pattern Analysis

In the short term, BTC may fluctuate between $100,000 and $104,000, further rallying after fixing the 4-hour indicators. It is important to be cautious of potential divergence risks around the $104,000 mark.