The market is filled with a watchful sentiment, and multiple data points suggest a pullback risk.

Macroeconomic Review

Policy Context Overview

1. Path to Reducing Inflation

• Promote peace between Russia and Ukraine, release Russia's oil and gas resources, and lower global energy prices.
• The situation in the Middle East may trigger new conflicts, temporarily pushing up oil prices but controlling them through diplomacy.
• Increase import tariffs, leading to a mild economic recession in the short term, and suppressing inflation.
• Impose tariffs on a certain country to exert pressure, initiate negotiations, or carry out economic blockades.

2. Interest Rate Path

• Pressuring central banks to cut interest rates and expand balance sheets to stimulate global liquidity.
• Promote legislation, accelerate the development of digital currencies, and weaken the monetary control of central banks.

3. Stimulating Economic Pathways

• Permanent tax reduction policy to increase disposable income for businesses and individuals.
• Implement differentiated tariffs on the manufacturing industry to protect domestic industries.
• Locking in over a trillion dollars in investment through visits.
• Expand oil and natural gas extraction to increase energy export revenues.
• Explore the acquisition of Greenland, Canada, Mexico, Panama, etc., to expand the economic landscape.

4. Political Familism Path

• Accumulate family wealth through digital currency policies.
• Purge dissenters, consolidate a loyal team, and ensure policy continuity.

Logical Summary

The policy is centered on economic stimulus, aimed at reducing inflation (energy + tariffs), lowering interest rates (central bank + digital currency), attracting investments, and stimulating growth through energy development, while simultaneously consolidating power and family interests through territorial expansion and political purges. The overall strategy is aggressive in the short term but relies on diplomacy and the effectiveness of policy execution in the long term.

Neutral Interest Rate

Currently, the market predicts a 25bp rate cut on September 17, 2025, with a total of 2 rate cuts in 2025 bringing the rate down to 4.00%. The neutral interest rate is expected to rise to 3.50%. Whether to initiate rate cuts in advance is currently the focus of the central bank and government negotiations. The visible tariffs have turned into a long-term game, and the resulting tariff recession is beginning to slowly manifest. At the same time, the central bank is secretly providing liquidity as U.S. Treasury bonds have rebounded over the past two weeks, transitioning to continued QT. In the past week, the central bank has continued to reduce its holdings of U.S. Treasury bonds and tighten liquidity, leading to a bullish adjustment in the global M2 float.

Key Events to Focus on Next Week

Event (Central Bank Speech and Policy Statement)

Key Data to Focus on Next Week

On-chain Data Analysis

1. Changes in the medium and short-term market data affecting the market this week

1.1 Stablecoin Fund Flow Situation

This week, the market showed a significant decrease in volume, down 76.4% month-on-month. The market may be starting to cool down or is in a consolidation phase, with an average daily issuance of 0.78 million belonging to a low liquidity state. This level often appears in situations such as: the market lacks direction, trading volume shrinks; major players and institutions are on the sidelines; on-chain funds have no intention to enter, etc. If the market continues to be sluggish next week, it can be confirmed that this week is a complete "low issuance, low liquidity" period, and the market has entered a cooling phase.

1.2 ETF Fund Flow Situation

This week's inflow dropped from 2.8 billion of the previous week to 670 million, a decrease in inflow speed of 76%. It is almost on par with the low point of ETF enthusiasm from 5/5 to 5/9, indicating that this wave of ETF market has come to a temporary halt. Last week's ETF inflow provided strong support to the market, with prices once rising to 108,000. After a reduction in ETF this week, prices have adjusted back to 103,700, indicating that the current price is highly dependent on ETF funding, lacking natural buying support from the market.

1.3 OTC Premium and Discount

From May 23 to May 31, the overall over-the-counter premium of the two main stablecoins remained around 100.0%, with very little fluctuation, showing clear signs of a cautious market sentiment and a slowdown in liquidity.

• A stablecoin premium briefly rebounded to around 100.2%, but overall it remains below the previous heat range of 2%--3%;
• Another stablecoin has a slightly higher premium, indicating that some cross-border or institutional fund preferences still exist, but the intensity is limited;
• Overall, the premium of off-exchange stablecoins has remained at "zero premium" or "near discount", indicating insufficient buying interest off-exchange and a lack of new fiat currency inflow into the market.

1.4 Purchase Behavior of a Certain Company

Observing the price performance of a certain company, it is evident that there has been a significant drop, and the technical pattern does not support this. However, in this period, we can see that the company's stock price has not reached the previous cycle's high point. The market's enthusiasm for chasing the company's stock is actually not as strong as before. Although the company has repurchased shares and increased its net asset value, bringing additional value to the market (as we mentioned in the previous issue, nearly $4.5 billion was spent starting from April 14), the company's stock price is at a premium compared to the market. It is essential to pay attention to when this round of the game will end.

1.5 Exchange Balance

The exchange balance ratio continues to decline, dropping to a nearly one-year low of 15.046%, with on-chain selling pressure significantly alleviated; however, the exchange balance ratio of a certain asset has instead increased this week, rising from 13.52% to 15.83%. There is a certain level of selling in the market for this asset.

2. Mid-term market data changes affecting the market this week

2.1 Holding Address Holding Ratio and URPD

This week, the number of addresses holding between 1K and 10K coins saw a noticeable decline on the 26th and 27th, showing certain signs of short-term bearishness. However, this was mainly absorbed by addresses holding between 100 and 1K coins. Therefore, the short-term outlook is bearish, while the medium to long-term market structure has changed. The chip URPD distribution is relatively even, with no significant signals.

Considering the market fluctuations, funding data, and on-chain data, the overall market is expected to continue its correction next week, especially after a certain asset has risen again, which further validates our confidence.