Risk appetite continues to dominate the market, with Bitcoin participation dropping to extremely low levels | Latest Bitcoin market analysis | Cryptocurrency | Virtual assets

This week’s global financial markets started with turmoil triggered by a geopolitical conflict originating from Greenland, beginning with a small-scale 'triple sell-off' in stocks, bonds, and currencies. This was followed by fluctuations due to U.S. employment data and third-quarter GDP figures, finally concluding with the suspension of tariff hikes on eight European countries and data that met or slightly exceeded expectations.

By Friday, the U.S. Dollar Index plummeted 1.91% for the week to 97.479, while the 10-year U.S. Treasury yield gave up most of its gains but remained at a high of 4.231%. The three major U.S. stock indexes recovered most of their early-week losses, closing slightly lower.

Amid wild speculation driven by both safe-haven and speculative capital, precious metals continued to surge, with gold and silver rising 8.3% and 14.8% respectively for the week.

This week, the macro financial market was mainly influenced by the geopolitical crisis in Greenland. The employment and GDP data released by the US this week were largely in line with expectations, further reinforcing the expectation of a 'soft landing' characterized by 'growth not stalling but marginally cooling + inflation/cost pressures still present.' This also led the market to believe that the Fed will not cut interest rates in the next three FOMC meetings, with the earliest rate cut likely occurring in June.

The escalating 'Greenland' conflict this month dominated this week's financial market volatility.

At the beginning of the month, Trump publicly stated the need to 'own' Greenland rather than lease it, linking the narrative to national security issues such as 'defense/countering China and Russia,' setting the stage for subsequent escalations.

On January 19, in an effort to 'acquire' Greenland, President Trump proposed a timeline for imposing additional tariffs on goods from Denmark and several European countries — starting February 1, an additional 10% tariff would be imposed, increasing to 25% on June 1 if no 'Greenland agreement' is reached.

This news triggered an accelerated decline in Bitcoin, leading to a mini 'triple sell-off' crisis in stocks, bonds, and currency in the US at the beginning of the week.

On January 21, during the Davos meeting, Trump announced that he had reached a 'framework for future Greenland arrangements' with the NATO Secretary General, and accordingly withdrew tariff threats against several European countries. The market breathed a sigh of relief, and with slightly better-than-expected employment and GDP data, the three major indices gradually recovered their losses.

This conflict further exacerbated the global capital's trust crisis in the United States, sparking widespread discussions about selling off US assets, driving the US dollar index down 1.91% for the week.

Amid the sell-off of US assets, speculative funds rushed into the precious metals market, resulting in an 'apocalyptic rally,' with gold and silver surging 8.3% and 14.8%, respectively, in a single week.

The crypto market is again facing an outflow dilemma via both stablecoin and ETF channels, with total weekly outflows exceeding $4.7 billion, of which $3.4 billion came from the stablecoin channel and $1.3 billion from the ETF channel. This scale of outflow marks the largest weekly outflow since January 2023, surpassing last week's inflow of $3.1 billion.

Moreover, the progress of the 'Crypto Market Structure Act' has encountered obstacles. Traditional financial institutions and industry forces represented by Coinbase have fundamental conflicts regarding interest-bearing stablecoins, causing the voting progress to be delayed until February or March. This has also led to the exit of short-term speculative funds.

The above analysis is provided by EMC Labs.

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About EMC Labs
EMC Labs is a partner of Victory Securities, and together they have launched the only virtual asset fund approved by the Securities Regulatory Commission to accept stablecoin subscriptions—the Victory EMC BTC Cycle Fund. EMC Labs was co-founded by seasoned virtual asset investors and data scientists, with its core team hailing from JD.com, Bell Labs, and Marsbit. EMC Labs has invested substantial resources into building professional engines for analyzing on-chain BTC data and technical indicators.

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