Wintermute: Declaring a Cryptocurrency Market Bottom is Premature, but Risk Appetite is Clearly Returning

BlockBeats News, June 16th, Wintermute stated in the latest market weekly report that the rebound in risk assets was mainly driven by two major positive factors. First, the US May CPI increased by 4.2% year-on-year. Although it has accelerated for the third consecutive month and hit a new high since 2023, the data overall met market expectations, alleviating investors' concerns about inflation spiraling out of control. At the same time, the core CPI fell to 2.9%, indicating that the inflationary pressure from energy prices may be approaching its peak, rather than spreading further into the service sector and wage growth. Secondly, the over 100-day Iran conflict has been announced to be over, with US President Trump approving the resumption of navigation in the Strait of Hormuz and lifting the maritime blockade. The formal agreement is expected to be signed in Switzerland on June 19th. With the rapid dissipation of geopolitical risk premiums, the Brent crude oil price has dropped from around $110 to the $80 range, falling another 6.6% this week. Meanwhile, the US dollar index and US bond yields have simultaneously declined, further improving market risk appetite.

Looking at the cross-asset performance, the market is showing a clear "risk-on sentiment return" feature. The Russell 2000 Index rose by 4.0%, the Nasdaq Index rose by 2.3%, the total market capitalization of altcoins rose by 3.1%, while oil, which had previously shown strength, became the worst-performing asset. Wintermute believes that the market's current main focus is turning to the upcoming Federal Reserve interest rate meeting. The 4.2% overall inflation level supports a policy stance of "maintaining higher rates for longer," while the fall in core inflation and oil prices suggests that the current inflation pressure may be temporary. The market generally expects that this meeting will not adjust interest rates, so the dot plot, economic forecasts, and newly appointed Chair Powell's first press conference will be key factors in deciding the market's direction for the second half of the year.

Regarding the crypto market, Wintermute believes that the recent rebound is more of a risk asset sentiment recovery rather than the start of a new uptrend. The report points out that two weeks ago, Bitcoin saw a 14% decline in a single week, not due to the widely believed "Strategy selling 32 BTC," but influenced by factors such as escalating inflation concerns, strong non-farm payroll data, and the loss of momentum in the rebound rally from $60,000 to $83,000. While Bitcoin rebounded this week and altcoins rose, Ethereum continued to decline against the trend, maintaining a relatively weak performance. Wintermute states that the true turning point of the market is not the price but the flow of funds. Currently, there are no significant signs of improvement in stablecoin net inflows, spot ETF fund flows, and the size of digital asset treasuries, so it is still too early to determine that the market has bottomed out. In their view, the future will require observations of continuous ETF fund inflows, renewed stablecoin issuance, and institutional funds re-entering the market to confirm the start of a new uptrend in the crypto market.