BitMart Research Institute Weekly Highlights: Market Panoramic Analysis Under Middle East Tensions and Stagflation Expectations

I. Macroeconomic Overview

1. Geopolitics and Middle East Conflicts

Negotiations between Trump and Iran have been fluctuating, with significant gaps remaining. Over the next 2 to 4 weeks, the Middle East situation is likely to continue a “conflict and negotiation” cycle. Politically, Trump aims to de-escalate tensions in the first half of the year to avoid high oil prices and stock market pressure during the upcoming election cycle in the second half.

2. Federal Reserve Monetary Policy and FOMC (Hawkish Tilt)

Recently, major central banks such as the Federal Reserve, Bank of England, and Bank of Japan have shifted towards a more hawkish stance. Markets are even pricing in the possibility that the Fed may not cut interest rates this year or may even raise them again. The latest FOMC meeting tone was hawkish: the dot plot shows an increase in members supporting only one rate cut this year; meanwhile, the Fed raised inflation expectations, and Powell downplayed signs of a weakening labor market. Additionally, Waller, previously dovish, has shifted to support holding rates steady, further reinforcing hawkish market expectations.

3. Divergence Between Stagflation and Recession Risks

Low-risk perception: Some believe that current non-farm employment data may be unreliable, and with inflation remaining above 2% for several years, a significant external shock could push the US economy into stagflation or recession. The market’s pricing of this risk remains insufficient.

Counterview: Others argue that the US is now a net energy exporter, with dependence on oil imports much lower than in the 1970s and 1980s, so high oil prices alone are unlikely to cause typical stagflation. The deeper risks of stagflation may stem from long-term fiscal expansion and weakening Fed independence. However, if key Middle Eastern straits are blocked long-term and the Fed maintains hawkish policies—possibly raising rates again—the market’s main trading logic could shift from “stagflation trades” to “recession trades.”

4. Traditional Asset Performance and Trading Strategies

Gold has sharply declined: Recently, gold has not shown clear safe-haven attributes and has fallen significantly amid rising central bank tightening expectations and liquidity pressures.

Hedging suggestions: To manage short-term uncertainty, it is advisable to hold risk assets while also allocating to VIX (volatility index) positions, as well as fertilizer and natural gas stocks benefiting from natural gas shortages, as defensive hedges. If the market can weather the next 1 to 3 months of volatility, risk assets may perform well in the second half of the year.

II. Cryptocurrency Overview

1. Market Trends and Sentiment

In the context of increased macro volatility, Bitcoin (BTC) has shown stronger resilience compared to gold, maintaining relative stability around $70,000. Recently, after rebounding from $76,000, BTC has retreated and entered a consolidation phase. Both spot and futures trading volumes are subdued, while options markets are more active, with put options skew rising and prices increasing, indicating rising risk aversion and fear in the market.

2. Institutional Movements and ETFs

Institutional allocations are diverging. MicroStrategy’s Bitcoin buying has slowed significantly, from weekly additions of 10,000–20,000 BTC to about 1,000 BTC. Meanwhile, other institutions continue large-scale ETH purchases, with weekly buys around 60,000 ETH. Overall, spot Bitcoin ETFs are still experiencing slight net inflows.

3. On-Chain Data and Bottoming Signals

On-chain data shows that long-term holders’ profitability has fallen back into the oscillation range corresponding to the bottom of the previous bull-bear cycle (green zone), suggesting the most severe decline phase may have ended, and the market is gradually bottoming. Meanwhile, short-term holders near $76,000 are taking profits, creating a temporary selling pressure.

4. Regulatory Developments (Clarity Act)

On the regulatory front, the consensus on the Clarity Act in the Senate has become easier to achieve, with the probability of passage rising to 80–90%. Additionally, the banking system may gradually relax restrictions, allowing users to indirectly participate in yield-bearing products related to stablecoins. This is seen as a clear policy positive, potentially opening the floodgates for larger traditional capital inflows into crypto markets.