US economic data slightly better than expected, the market took a brief breather, but optimism is hard to claim before adjustment factors are eliminated.

This week, Bitcoin started at $80,708.21 and finally closed at $82,562.57, with an overall increase of 2.31%, a volatility of 10.86%, and a continued decline in trading volume compared to last week. The price of Bitcoin is operating within a descending channel, with a slight rebound.

The CPI data released by the United States was slightly higher than expected, and there are signs of further easing in the Russia-Ukraine conflict, which has temporarily provided breathing space for the US stock market and the Bitcoin market.

However, the U.S. stock market valuations are still in the process of declining and hitting bottom, and according to historical data, there is still further room for decline. The fundamental reason for the drop in valuations—the chaotic tariff policy that could trigger inflation, thus raising concerns about the U.S. economy falling into "stagflation"—has not been alleviated. The uncertainty of policies continues, and the Federal Reserve Chairman also insists on a data-driven stance.

This chaos and deadlock make it difficult for concerns about "stagflation" to dissipate; the longer it lasts, the greater the potential space for valuation adjustments. This is also the reason for our cautious attitude towards a short-term rebound in Bitcoin.

Macroeconomic and Financial Data

Last week's employment data released by the United States showed that non-farm payrolls were slightly below expectations, and the unemployment rate rose slightly, indicating signs of a slowdown in the labor market, which intensified concerns about a potential recession in the U.S. economy, leading to a significant market decline.

This week, the United States released the latest CPI data, showing that the unadjusted CPI for February increased by 2.8% year-on-year, slightly lower than the expected 2.9%, and down from the previous value of 3%; the seasonally adjusted CPI for February increased by 0.2% month-on-month, lower than the expected 0.3%, and down from the previous value of 0.5%. The CPI data came in better than expected, which somewhat eased the panic caused by last week's employment data, giving the unsettled market a temporary breather.

Under the influence of last week's sharp decline and this week's favorable CPI data, the U.S. stock market has temporarily rebounded from a deep drop, recovering some of the losses, but still shows a downward trend for the week. The Nasdaq index remains below the 250-day line, with a weekly decline narrowing to 2.43%; the S&P 500 index has risen above the 250-day line; the Dow Jones index has dropped 3.07% but has slightly rebounded near the 250-day line.

On March 14, the University of Michigan announced that the preliminary consumer confidence index for March fell to 57.9, significantly lower than the market expectation of 63.1 and down from the previous value of 64.7. At the same time, the preliminary one-year inflation rate expectation rose to 4.9%, higher than the expected 4.2% and the previous value of 4.3%. This indicates an increasing concern among American consumers about the economic outlook.

The University of Michigan's Consumer Confidence Index reflects in advance the impact of policy chaos on the confidence of end consumers. What causes pain for the market and U.S. business owners is that this uncertainty may take even longer to alleviate.

On Friday, US stocks, European stocks, and even the Russian stock market saw a significant rebound, mainly due to certain progress in the Russia-Ukraine conflict—both sides are expected to reach a 30-day ceasefire agreement.

There is a viewpoint that certain policymakers are achieving an "economic recession" through government employee layoffs and tariff wars, which is increasingly being recognized by the market, at least in terms of results.

Putting aside these unverifiable speculations, a more objective judgment might be that the essence of this round of adjustments in the US stock market is a valuation adjustment triggered by the interest rate cut cycle. The S&P 500 Shiller CAPE ratio reached a peak of 37.80 times in December, close to the recent high of 38.71 times set in November 2021, following a large-scale stimulus during the pandemic. This high valuation includes expectations of improved trade policies and rapid development in the AI industry. Since 2025, the myth of AI growth has been shattered, coupled with increased policy uncertainty, which has crushed economic growth expectations, making it difficult for the market to sustain such high valuations, leading to a downward correction in search of a new balance.

Currently, the maximum declines of the Nasdaq, S&P 500, and Dow Jones indices have reached 14.59%, 10.36%, and 9.79% respectively, all near the 250-day moving average, entering the "market correction" range (10%-20% decline), but this does not mean that the market has completed the clearing process. Currently, the S&P 500 Shiller CAPE ratio is at 34.75 times, down about 8.07% from the peak. According to historical patterns over the past 20 years, if it continues to decline, it may return to 32.89 times, representing a further decline of more than 5%; if it returns to the mean of 27.25 times, there is still more than 21% of retracement space. Of course, we believe that the probability of such a deep adjustment is very low, unless extreme circumstances lead to a genuine recession in the U.S. economy.

In the midst of chaos, risk aversion sentiment has intensified, pushing gold prices to briefly break through the $3000 per ounce mark. The US dollar index has slightly rebounded after hitting a new low, the 2-year Treasury yield has risen by 0.7%, and the 10-year Treasury yield has increased by 0.37%, indicating that some funds are beginning to withdraw from US Treasuries and are instead buying into the stock market.

Overall, the US stock market has entered a correction phase, but the outlook for inflation and interest rate cuts remains unclear, especially as the effects of policies have not completely faded. This makes it quite likely that the market will continue to correct downwards to adapt to asset valuations in the current chaotic market environment. Influenced by the Bitcoin spot ETF, we maintain the judgment that Bitcoin will continue to be constrained by adjustments in the US stock market. Although Bitcoin has rebounded for several consecutive days and returned to around $83,000, it may still drop to $73,000 in the next two months.

Stablecoins and Bitcoin Spot ETF

Compared to last week's net inflow of $1.282 billion in the dual-channel, this week's supply inflow in the dual-channel is $237 million, a significant decrease in inflow scale. Specifically, Bitcoin spot ETFs saw an outflow of $842 million, Ethereum spot ETFs saw an outflow of $184 million, and stablecoins saw an inflow of $1.264 billion.

Although the inflow of stablecoins has decreased and the outflow through ETFs has increased, the existing funds entering the exchange have been converted back into buying pressure, allowing the price of Bitcoin to return to $83,000. Currently, the existing funds on the exchange have slightly rebounded, but this rebound can only be viewed as a minor bottom-fishing behavior and is not enough to become a driving force for a market reversal.

Selling Pressure and Sell-off

Data shows that last week, the group of short-term holders continued to sell off to cut losses, with the largest loss day occurring on March 13, but the scale was lower than that on March 10.

In terms of unrealized gains and losses, short-term holders currently bear an average loss of 9%, which includes a large number of ETF holders. In this round of decline, short-term holders have been both the triggering force and the main bearers of losses. They will continue to face pressure in the upcoming market turbulence and may also serve as a source of selling pressure for further declines.

In the three weeks since the decline, the long-term holders group has shifted from reducing their holdings to increasing them, adding approximately 100,000 Bitcoins. Another noteworthy group, the large holders, has also increased their holdings by nearly 60,000, with a cost below $80,000. In the long run, both groups are consistent winners and also serve as stabilizers in the market.

Cycle Indicator

According to relevant data, the Bitcoin cycle indicator is 0.375, indicating that the market is in an upward continuation phase.