Tariffs, Employment, and Interest Rate Cut Expectations in a Tug of War, BTC Surges 9.08%, Hits All-Time High (07.07~07.13)

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BTC daily price trend

This week, BTC opened at $109,217.98 and closed at $119,130.81, up 9.08%, with a high of $119,500 and a low of $105,119.70, an amplitude of 11.04%, and a moderate increase in trading volume.

In last week's report, we mentioned, "Some positive changes are also happening. After more than a month of silence, the activity of funds in the market has begun to increase. This increase may resonate with funds outside the market, pushing BTC to start the fourth wave of this bull market." This week, the strong buying power of funds in the market and the BTC Spot ETF channel outside the market resonated, pushing BTC to hit a new all-time high this week.

At the same time, uncertainties from the chaos of the "reciprocal tariff war" and the unexpected information from the job market leading to interest rate cut expectations have suddenly increased, which is worth close attention.

Policy, macro finance, and economic data

The tariff war and US employment data were the main factors affecting the market this week.

On July 10, Trump announced that starting from August 1, a uniform tariff of 35% would be imposed on all imported goods from Canada. On July 12, Trump demanded market opening, and if no agreement could be reached by August 1, tariffs of 30% would be imposed on Mexico and the EU. Previously, the US had sent letters to Japan and South Korea setting the tariff rate at 25%.

In addition, on July 12, Trump also sent uniform letters to 23 other countries, listing tariffs of 20–50%, but these could be reduced through negotiation before August 1.

Currently, the tariff rates announced for major trading countries exceed market expectations. At the same time, the $3.4 trillion "Big Beautiful Bill" tax reform and spending bill has entered a deep review stage in the Senate, and the US deficit rate may surge to 9% in the 2026 fiscal year. The "double-edged combination" of fiscal expansion and tariff inflation has led the market to reassess the risk of stagflation. Affected by policy uncertainty and robust data resonance, the dollar index rose about 0.8% on a weekly basis. Long-term concerns have not yet had a significant impact on the market but are accumulating.

Labor Department data showed that as of the week of July 5, initial jobless claims fell to 227,000, a seven-week low, far better than the market estimate of 235,000; the strong data led traders to once again delay bets on the first rate cut in September, and by the weekend, FedWatch data showed that the probability of a July rate cut fell to 5.2%, and the probability of a September rate cut fell to 60.4%.

On July 2, Federal Reserve Chairman Powell emphasized at the ECB Sintra Forum that a July rate cut is possible but not officially supported, and the second-round effects of tariffs on inflation remain uncertain. The Federal Reserve is internally divided, with several officials "defecting" to rate cuts, and this week the director of the Federal Housing Finance Agency suddenly revealed that "Powell may resign."

All signs indicate that the conflict between Trump and Powell over "rate cuts" is deepening further. However, the key point is whether tariffs will lead to a significant rise in inflation, which would directly affect the rate cut in September. The US stock market and BTC have already priced in a September rate cut. If there are clear signals of rising inflation, the market will be under pressure, and there is a high probability of a certain degree of downward pricing, but it will not change the market trend.

Crypto market

Uncertainty in the macro market has affected US stocks hovering near historical highs, with the three major valuations slightly lower. But benefiting from the dual resonance of large inflows of funds inside and outside the market, BTC surged 9.08% this week, hitting a new all-time high.

Technically, the biggest achievement of BTC this week is breaking through the "Trump bottom" established since November last year, that is, the $90,000-$110,000 fluctuation range. BTC has fluctuated in this range for as long as 8 months, which is the third largest consolidation platform in this bull market cycle, with more than 30% of BTC moving on-chain in this range.

This range prices in the major breakthrough of BTC and crypto assets being established as US strategic reserve assets after Trump took office, which is very significant. It also means the large-scale institutional adoption triggered by US public companies incorporating BTC into their treasuries. We believe this range will be a very important new starting point.

The breakthrough of this range means that BTC has officially started the fourth wave of this bull market. In the June monthly report, we mentioned that, like the past three waves, this wave is likely to be completed with a rapid rise in a short time. This short time may be two or three months, which is worth close attention.

BTC breaking through the "Trump bottom" that has fluctuated for 8 months has also activated the willingness to go long on other crypto assets including ETH, and the market has seen a general rise.

EMC Labs

EMC Labs (Emergent Labs) was established in April 2023 by crypto asset investors and data scientists. It focuses on blockchain industry research and Crypto secondary market investment, with industry foresight, insight, and data mining as its core competitiveness, committed to participating in the booming blockchain industry through research and investment, promoting blockchain and crypto assets to bring well-being to humanity.

For more information, please visit: https://www.emc.fund