Matrixport Research: BTC Technical Support is Solid, Liquidity Still Appears Lagging

Despite Federal Reserve Chairman Powell's relatively hawkish stance at the FOMC meeting on June 18, 2025, the overall tone of the Federal Reserve has significantly shifted towards a more dovish approach. After the June meeting, President Trump publicly criticized the Fed's policy stance, and several Fed officials signaled dovish sentiments in their public remarks. Powell himself adopted a more conciliatory attitude during his appearance at a congressional hearing this week.

Currently, the rationale for the Federal Reserve to maintain interest rates unchanged is becoming increasingly difficult to justify, as inflation levels have fallen to 2.38%, not far from the 2.0% target. Last Friday, Fed Governor Waller suggested for the first time that the July FOMC meeting might consider a rate cut; subsequently, on Monday, Governor Bowman expressed a similar view. Chicago Fed President Goolsbee further downplayed the inflation impact from tariffs, reinforcing market expectations for a dovish shift from the Fed.

Although Powell and several economists had previously warned that tariffs could lead to inflation rising above 3% again, this scenario has not materialized. Current inflation remains stable, and the unemployment rate has held steady at 4.2% for nearly a year, contrary to market expectations of a softening job market. Powell did not refute the recent more dovish remarks. He stated that if inflation remains moderate, the timing for a rate cut could be advanced. Although the likelihood of a rate cut in July remains low, the Fed may signal a possible policy adjustment for September at the meeting on July 30.

Corporate credit spreads have narrowed again compared to the same period last year, and BTC performance may continue to improve

Earlier this week, influenced by the U.S. military's airstrikes on Iran, BTC briefly retraced to near its 21-week moving average (98,532 USD). This level serves as a key technical support and is often seen as a dividing line between bullish and bearish trends. BTC is currently in a seasonal consolidation phase, and the Fed's dovish tone may provide moderate upward support for prices.

Corporate credit spreads have shown signs of narrowing again compared to the same period last year—this signal is historically viewed as bullish. A narrowing credit spread typically reflects improving economic fundamentals, and in such an environment, the macroeconomy and BTC's performance often move in sync. This dynamic also indicates that while current data may not be sufficient to prompt immediate action from the Fed, political pressure could still drive adjustments in its monetary policy stance.

The rise in stablecoin inflows coincides with market liquidity shortages, with BTC dominating market focus

Stablecoin inflows, particularly Tether, have begun to rise recently. Although the overall trend remains unstable, since April, Tether's minting scale has reached approximately 12 million USD, while Circle's minting activity has been relatively limited. This divergence is noteworthy, as the sustained rise in the crypto market has historically relied on strong injections of stablecoins and broader liquidity channels. When comparing the issuance scale of stablecoins to the overall cryptocurrency market capitalization, liquidity issues become even more critical. In the absence of large-scale capital inflows, traders are likely to continue focusing their attention on BTC, which has significantly outperformed other crypto assets.

Disclaimer: The market carries risks, and investments should be made cautiously. This article does not constitute investment advice. Trading in digital assets may involve significant risks and volatility. Investment decisions should be made after careful consideration of personal circumstances and consultation with financial professionals. Matrixport is not responsible for any investment decisions made based on the information provided herein.