Easing geopolitical tensions drive macro easing transmission, and net spot capital inflows push Bitcoin up 3.42% for the week | Bitcoin | Research Report | Cryptocurrency Market Analysis | Late-stage bear market

This week, global financial markets exhibited a marked recovery in risk appetite, driven by easing geopolitical tensions and cooling inflation expectations. On August 3, the U.S. announced a pause in further military strikes against Iran and shifted toward diplomatic negotiations, effectively alleviating market concerns about a second inflationary wave. This drove long-end U.S. Treasury yields lower and weakened the U.S. Dollar Index, thereby shifting overall macro-financial conditions from tight to accommodative, creating $Bitcoin (BTC.CC)$ a favorable macro tailwind environment.

Improved macro risk appetite smoothly transmitted through capital channels into the crypto market, with U.S. spot Bitcoin ETFs recording strong net inflows of $869 million for the week, driving Bitcoin’s price up 3.42% to $64,909. Although the Fed's net liquidity scale contracted modestly by 1.26%, high-impact geopolitical developments overrode existing market pricing logic. Declining activity in derivatives markets and funding rates reverting to zero indicate that high-leverage speculative trading has exited the market. On-chain exchange holdings show sustained net outflows and deposit accumulation, clearly signaling that spot buyers now dominate the market.

Integrating macro transmission dynamics, on-chain supply structure, and trading dominance analysis, macroeconomic conditions and the crypto market are exhibiting synchronized characteristics. EMC Labs assesses that Bitcoin is currently transitioning from a 'decline phase' to a 'bottom-consolidation phase,' with short-term spot buying pressure dominating market direction.

Macro Finance

This week, the dominant driver of the macro financial environment was the reshaping of risk appetite triggered by geopolitical events. On August 3, the U.S. suspended strikes against Iran and shifted toward negotiations, causing WTI crude oil futures to plunge approximately 5% to $80.79 per barrel, while Brent crude similarly retreated to $83.87 per barrel. The rapid unwinding of geopolitical risk premiums directly interrupted inflationary pressures transmitted via energy prices. On the hard data front, this week’s U.S. core CPI annual increase came in at 2.60% (previous: 2.90%), headline CPI annual growth dropped to 3.50% (previous: 4.20%), core PCE registered 0.13% (previous: 0.33%), and PPI fell to 5.50% (previous: 6.00%). These inflation and labor market indicators not only weakened expectations for a September rate hike but also confirmed the coexistence of persistently cooling inflation and economic resilience.

Regarding monetary liquidity and interest rates, the Federal Reserve’s net liquidity declined by 1.26% week-over-week, indicating that the central bank’s balance sheet remains on a controlled contraction path. However, SOFR moved only slightly down by 0.01% to 3.65%, reflecting stable funding conditions in short-term money markets. Driven by a significant release of inflationary pressure, the U.S. 10-year Treasury yield dropped sharply by 9 basis points to 4.66%, while the 2-year yield edged up by 3 bps to 3.71%, resulting in a bull-flattening yield curve. Pressured by the decline in long-end yields and reduced safe-haven demand, the U.S. Dollar Index fell 0.20% for the week. Equity markets broadly experienced valuation recovery, with the Nasdaq surging 5.19% to close at 26,690.62, the S&P 500 rising 3.58% to 7,757.64, and the Dow Jones climbing 2.96% to 54,036.93.

From a macro-to-Bitcoin transmission perspective, although the Fed’s net liquidity decreased by 1.26% quarter-over-quarter—imposing marginal constraints on the underlying liquidity pool—market pricing has been dominated by easing geopolitical tensions. The sharp drop in energy prices lowered inflation expectations, while the 9-bp decline in long-end Treasury yields and a weaker dollar significantly reduced the discount rate pressure on non-yielding assets. The robust equity market rebound substantially expanded global financial markets’ risk absorption capacity, shifting overall macro financial conditions from tight to accommodative and providing clear macro support and tailwinds for Bitcoin.

Crypto Markets

Bitcoin traded in a volatile rebound pattern this week, opening at $62,764 and closing at $64,909—a weekly gain of 3.42% with an intraweek range of 5.00%. Technically, Bitcoin broke above its 30-day moving average ($64,299) but remained capped below both the 90-day MA ($66,659) and the 200-day MA ($70,162).

Incremental capital inflows continued prominently. U.S. spot Bitcoin ETFs recorded a cumulative net inflow of $869 million for the week, with the single largest daily inflow of $246.4 million occurring on August 5, making it the core engine of marginal capital inflows. Meanwhile, stablecoin supply increased modestly by $52.76 million, indicating generally stable liquidity conditions.

The 7-day average spot trading volume declined by 11.44% week-over-week to 54,012 BTC, signaling a moderate contraction in spot market turnover activity. However, strong net inflows through ETF channels provided a solid foundation for the price recovery. On-chain exchange balances showed clear withdrawal absorption behavior, with exchange-held Bitcoin declining by 12,567 BTC over the week, confirming a clear trend of coins moving off exchanges and settling into long-term storage.

Derivatives markets and leverage structures exhibited deleveraging and low risk appetite. Open interest in perpetual contracts rose modestly by $950 million to $59.45 billion (a weekly increase of 1.62%). However, the 7-day average derivatives trading volume plunged 15.37% to $26.32 billion, and funding rates declined to near zero. The contraction in derivatives volume and the normalization of funding rates indicate the absence of overheated leveraged buying, confirming that this week’s rally was not driven by high-leverage speculative activity.

On-chain holder behavior and profit structures indicate generally mild selling pressure. The network-wide MVRV ratio rose slightly by 0.03 to 1.23, reflecting improved profitability across the board. Long-term holder (LTH) MVRV increased by 0.34, and LTH SOPR rose to 1.03, yet LTH supply decreased by 81,913 BTC, showing significant LTH liquidation within the week. Short-term holder (STH) MVRV rebounded by 0.02 to 0.94, easing holding pressure, while STH SOPR remained at 1.00—indicating short-term holders are at breakeven with no signs of panic-driven selling.

Market Implications

This week, the crypto market formed a clear transmission chain: 'macro improvement → rising risk appetite → spot capital inflows → Bitcoin price appreciation.' Geopolitical de-escalation, falling oil prices, and cooling inflation expectations drove lower Treasury yields and a strong equity rally. Spot Bitcoin ETFs saw $869.17 million in net inflows for the week, offsetting upward pressure from the Federal Reserve...

Market internals indicate that the current rally is primarily driven by spot activity rather than leverage, as evidenced by declining exchange BTC balances, marginal expansion of stablecoin supply, falling derivatives trading volumes, and funding rates returning to zero. Meanwhile, the Short-Term Holder SOPR has stabilized around 1.00, one-week long positions continue to liquidate, and long-term holder balances are decreasing—clearly signaling a transition from a 'decline phase' into another 'decline phase.'

Outlook

Although geopolitical easing has pushed down long-end nominal yields by 9 bps, the 10-year U.S. Treasury nominal yield of 4.66% and the TIPS real yield of 2.43% remain within a typically restrictive rate range, exerting downward pressure on equity valuations.

On-chain unrealized losses remain severe, with persistent selling by long-term holders, while short-term holders as a whole remain underwater. Despite significant capital inflows this week, Bitcoin prices have yet to break above the $65,000 resistance level due to substantial stop-loss selling.

Key upcoming catalysts:

U.S. CPI/PPI data scheduled for release on August 12–13, along with U.S. Treasury auction results. Inflation indicators serve as the core signal for the Federal Reserve’s interest rate path. Data coming in below expectations would confirm sustained disinflation, pushing down Treasury yields (currently at 4.66% for the 10-year) and weakening the U.S. Dollar Index (DXY currently at 99.60), thereby expanding global fiat liquidity and creating favorable conditions for capital inflows into highly liquidity-sensitive assets like Bitcoin. Conversely, stickier-than-expected data could reignite concerns about further rate hikes or prolonged higher rates, tightening financial conditions.

U.S. consumer demand and confidence indicators due on August 14: Strong retail sales combined with declining inflation expectations would reinforce the 'soft landing' narrative and support market risk appetite. However, unexpectedly weak consumption or a rebound in longer-term inflation expectations could trigger worries about slowing economic growth or a hawkish pivot by the Fed, thereby affecting Bitcoin’s macro risk-reward profile.

The above analysis is provided by EMC Labs.

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About EMC Labs

EMC Labs is a strategic partner of Victory Securities. Together, they have launched the Victory EMC BTC Cycle Fund—the only virtual asset fund approved by the securities regulator that accepts stablecoin subscriptions. EMC Labs was co-founded by seasoned digital asset investors and data scientists, with a core team drawn from JD.com Financial, Bell Labs, Marsbit, and other institutions. EMC Labs has invested significant resources in building a proprietary engine to analyze Bitcoin on-chain data and technical indicators.

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