Wintermute: Bitcoin's Rise Reflects a 'Relief Rally' Rather Than the Start of a New Bull Market

On July 7, Wintermute released a market analysis stating that the latest U.S. non-farm payroll data significantly fell short of market expectations, coupled with comments from Waller interpreted as dovish, which propelled a broad rebound in global risk assets, with the cryptocurrency market showing the most notable performance. Bitcoin and Ethereum have recently outperformed the S&P 500 and Nasdaq indices significantly. The current rise in Bitcoin is underpinned by solid fundamentals, primarily driven by continued accumulation by whales, a shift in options funding towards call options, and improvements in on-chain data. Additionally, the end of net outflows for Bitcoin spot ETFs has provided a boost to market sentiment.

The cooling U.S. labor market has led the market to further reduce interest rate hike expectations for the year, while Waller reiterated the 2% inflation target at the Sintra Forum without signaling a more hawkish stance, which investors interpreted as a shift towards a more dovish Federal Reserve policy. In the cryptocurrency market, on-chain data for Bitcoin shows that whale wallets have accumulated over 270,000 BTC near the 200-week moving average, while funds in the options market have shifted from hedging positions to call options with strike prices between $60,000 and $70,000. Meanwhile, Ethereum's rise has been more driven by institutional narratives, including the official launch of Ethereum Institutional and the ongoing development of institutional tokenization infrastructure. However, the recent layoffs of about 20% at the Ethereum Foundation and a 40% budget cut, along with previous outflows from ETH ETFs, still reflect some pressure on its fundamentals.

This round of increases aligns more with the characteristics of a "relief rally" rather than the beginning of a new long-term bull market. Improvements in the macro environment, easing tensions in the Middle East, continued institutional positioning in Ethereum, and low liquidity during the summer have collectively driven market recovery. However, from a funding perspective, the cumulative outflow from Bitcoin spot ETFs this year still amounts to approximately $2.73 billion. Until ETF funding continues to improve and establishes a trend, the market should view the current situation as a sentiment recovery rather than a structural reversal, maintaining a cautious outlook for the future.

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