The current rally in the cryptocurrency market is bolstered by favourable macroeconomic conditions and increased institutional participation, according to the DeepThink report from HTX Research.
According to the report, the Consumer Price Index (CPI) in the US showed a further slowdown in inflation to 2.3% year-on-year (against the expected 2.4% and the previous 2.6%), reaching its lowest level since March 2021. The core CPI stood at 2.8%, aligning with forecasts and below the previous 3%.
The reduction in inflationary pressure has heightened expectations of a Federal Reserve rate cut in the second half of the year, positively impacting the digital asset market.
“Since early May, there has been an improvement in macroeconomic liquidity. The assets of the Federal Reserve increased from $6.7 trillion to $6.73 trillion, and net liquidity rose from $4.89 trillion to $4.94 trillion,” the report states.
Amidst this, the leading cryptocurrency once again surpassed the $100,000 mark, while Ethereum (ETH) and Solana (SOL) demonstrated significant growth. Open interest in bitcoin futures remains high at about 660,000 BTC (3.4% of the total supply), indicating strong institutional positions.
Despite the optimistic sentiment, analysts caution about the risks of short-term volatility. On-chain data shows that the profit of short-term ETH holders has reached approximately 90%, and SOL holders 88%, nearing historically high levels. Typically, figures above 90% signal a risk of local correction.
“A high percentage of short-term holders in profit and the concentration of leveraged positions mean that any breakout or breakdown of key technical levels could trigger concentrated profit-taking and a cascade of liquidations,” analysts warn.
HTX concludes that the overall market structure is still defined by a “medium-term structural bull trend combined with a short-term consolidation phase.”
Earlier in May, HTX, in partnership with seven blockchain projects, launched a two-week campaign in honour of Bitcoin Pizza Day with a prize pool of $200,000.