In the past week, affected by short contracts, BTC has experienced large fluctuations, with the maximum intraday fluctuation reaching 11.69%. On February 3, the price of BTC fell to $91,231, the lowest point since mid-January. The volatile market caused the short-hand loss of spot to exceed $800 million. At 0:00 the next day, the price of BTC rebounded to $98,842 and fluctuated around $97,000. Recently, ETH short positions have hit a record high. ETH spot hit a low of $2,125.01 on February 4, and has now rebounded to about $2,700, with the maximum intraday fluctuation of 10.22% (the above data is real-time data of Binance spot at 15:00).
Due to the tariff policy released on February 3 and the non-agricultural 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 hedging tool, broke through $2,900, setting a new high. BTC and ETH experienced large fluctuations in the short term, and market sentiment was relatively cautious. Although it has stabilized after experiencing drastic fluctuations, the future trend will continue to be affected by macroeconomic data and market sentiment.
Market Review
BTC activity drops to one-year low, but long-term holder demand increases
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 all-time high in November 2024 and is currently at 3,760, the lowest level since February 2024. At the same time, the number of BTC transactions and memory pool transactions have also dropped significantly.
But data shows that demand from long-term holders has increased recently. The growth of long-term holders is often accompanied by a rebound in BTC prices. Therefore, despite the weak BTC network activity in the short term, the increase in demand from long-term holders may have a positive impact on BTC prices.
ETH short positions hit a record high, and the market faces volatility risks
On February 10, ETH was trading at $2,636, with a market capitalization of $317 billion and a daily trading volume of $19.5 billion. ETH short positions surged to 40% in the past week, setting a new record 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.
ETH short positions have increased by 500% since November 2024. In particular, on February 2, ETH prices plummeted 37% in just three days due to trade war concerns. Despite strong market trading volume, ETH prices have failed to recover and their recent gains have lagged behind other altcoins.
Despite the increase in short positions, ETH still attracts capital inflows. In December 2024, ETH attracted more than $2 billion in new funds, and the inflow of ETH spot ETF exceeded that of BTC spot ETF, indicating that investors still have some confidence in ETH. Recently, ETH prices have been under strong selling pressure, and short positions have not weakened. Investors are advised to pay attention to whether ETH will fall further or a short squeeze will occur against the background of the accumulation of short positions.
Trump announced reciprocal tariffs, significantly increasing 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 duty-free quotas and exemptions for some trading partners. This measure postponed the originally planned 25% tariff on Canada and Mexico, and market sentiment fluctuated for a time. Although BTC and US stocks have rebounded after the plunge, market sentiment remains cautious.
The three major U.S. stock indexes plunged more than 1% during the session, wiping out the gains for the whole week. U.S. Treasury 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 rose due to safe-haven demand, and London gold rose for six consecutive weeks, up 2.18%.
Hong Kong investment immigration recognizes BTC and ETH as proof of assets for the first time
On February 7, 2025, Invest Hong Kong approved a client to apply for investment immigration using ETH worth HKD 30 million as proof of assets. Prior to this, in October 2024, another client successfully applied using BTC and was approved, becoming the first case in Hong Kong to apply for investment immigration using cryptocurrency.
Hong Kong investment immigration requires applicants to prove that they hold HK$30 million in assets and invest the same amount within six months. Whether the conditions can be met by investing in cryptocurrency ETFs or directly in cryptocurrency has not yet been determined. Crypto assets must be stored in cold wallets or mainstream exchanges such as Binance.
Macro dynamics
Gold prices hit a new high as risk aversion and central bank gold purchases push up gold prices
On February 10, COMEX gold futures broke through $2,900/ounce and hit a record high, approaching the $3,000 mark. The recent continued rise in gold prices stems from a surge in safe-haven demand, especially Trumps announcement of additional tariffs on imported steel and aluminum and increased uncertainty in global trade and inflation. As a traditional safe-haven asset, gold is supported by strong demand.
Central bank gold purchases also provide support for gold prices. Global central bank gold purchases will reach 1,045 tons in 2024. In particular, the Peoples Bank of China has continued to increase its gold holdings and announced that it will allow insurance funds to invest in gold, which is expected to bring incremental market funds. In addition, geopolitical risks and global economic uncertainties have also made gold continue to be favored by investors.
As the global economic situation changes, analysts predict that gold prices may continue to rise. In the short term, affected by Trumps tariff policy, gold will be used as a tool to combat inflation and trade risks. In the long term, supported by the global trend of de-globalization and the credit risk of the US dollar, gold prices may continue to maintain strong growth in 2025.
Weak non-farm data and falling unemployment rate drive the dollar to rebound
On February 7, the U.S. Bureau of Labor Statistics released mixed non-farm payroll data for January, with 143,000 new jobs and the unemployment rate falling to 4.0%, both far below market expectations. The annual wage growth rate in January was 4.1%, higher than the expected 3.8%, while the monthly wage growth unexpectedly reached 0.5%, far exceeding the expected 0.3%. The University of Michigan Consumer Confidence Index showed that consumer confidence fell to its lowest point in seven months due to concerns about inflation, further exacerbating market uncertainty.
On February 10, the US dollar index fluctuated upward to 108.31, reflecting the markets renewed concerns about rising inflation and interest rate hike expectations. Although new jobs were weak, strong wage data and a decline in unemployment provided the market with optimistic expectations for the Feds interest rate hike path, pushing the dollar to rebound after falling on Monday.
In the coming week, the United States will release the January CPI data and hold a monetary policy hearing by Federal Reserve Chairman Powell, which is expected to become a key factor affecting the trend of BTC.
2025 The stock market faces the risk of high valuations, and the crypto market may become a new destination for risky assets
The stock market is expected to perform strongly in 2025, with the SP 500 expected to rise 11%, but high valuations and high market concentration pose hidden dangers. Although corporate earnings growth and interest rate cuts have boosted market sentiment, current stock market valuations are close to historical highs, especially US stocks and technology stocks. The concentration of the US stock market is extremely high, with the top ten stocks accounting for more than 20% of the global market value, which means that the performance of a single stock can have a significant impact on the overall market.
Risk capital from traditional financial markets is likely to flow into the crypto industry, especially BTC, as a digital gold to hedge against stock market volatility and inflation. Although the crypto market has been illiquid in the past due to the bloodsucking of projects such as $TRUMP and $MELANIA, this situation is expected to improve with the influx of funds. The increased activity and liquidity of the crypto market will attract more investors to seek opportunities.
Disclaimer: The above content does not constitute investment advice, an offer to sell, or a solicitation of an offer to buy to residents of the Hong Kong Special Administrative Region, the United States, Singapore, and other countries or regions where such offers or solicitations may be prohibited by law. Digital asset trading may be extremely risky and volatile. 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.
