GM/GN.
The yield on the 10-year US Treasury rose toward 4.7% and is now near the upper end of its five-year range. Levels this high tighten financial conditions, raise borrowing costs and discount rates, and increase pressure on risk assets. Futures markets currently price a 38% probability of a Fed rate hike at the next meeting, although 104 economists surveyed by Reuters expect rates to remain unchanged.
Escalation in the Middle East increases the risk of further energy price growth and another inflationary impulse. This makes monetary easing less likely and raises the risk that the Fed will keep rates at their current level for longer or resume hiking. As a result, financial conditions remain tight, the cost of capital remains high, and investors have limited appetite for increasing exposure to risk assets. A sustained inflow of new capital into equities and Bitcoin may therefore be weaker and arrive later than the market previously expected.
At this point, this is the key thesis every investor needs to understand.
One interesting development this week: instead of buying Bitcoin, Michael Saylor turned to writing and recently published a massive essay that also serves as a self-education program for executives, investors, policymakers, and technology entrepreneurs.
He recommends reading 38 books, starting with the history of civilizations and ending with the history of money. At a normal reading pace, this could take one to two years. I am not even sure whether this should be seen as a sign of a market crisis: instead of his usual charts with orange circles, Michael has moved into visionary territory and is now trying to build an intellectual framework in which Bitcoin appears as the logical outcome of the development of civilizations, money, energy, technology, markets, and the centuries-long struggle to limit power.
What is happening in the market?
The price recovered 11% from the June low of $59K and approached $66K. It then began to decline, falling to $64.3K as of this hour.
Four vulnerabilities are forming at the same time:
Volatility has compressed to extremely low levels.
Realized volatility fell 31% in July and reached the 8th percentile of its historical range. The market has entered a compression phase, after which the next move could be much stronger than the current fluctuations.
US demand remains negative.
The US spot market has been trading at a discount for about two and a half months. The price recovery is still not supported by sustained demand from one of the main sources of new capital inflows.
The market has too little buying liquidity.
Stablecoins continue to leave exchanges, while new capital activity remains near annual lows. Without an expansion in this liquidity, the market will struggle to turn a local recovery into a sustained uptrend.
Investors continue to realize losses.
Realized losses still exceed realized profits. Participants are still using the price recovery to exit positions, keeping pressure on the market.
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Now to the main subject - the weekly market review. What is the market showing, which signals have activated, what new triggers have appeared, and what verdict does the Weekly Engine give on Bitcoin right now?
The full analysis is below. 👇
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