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

1. Macroeconomics

2. Geopolitics and Middle East Conflict

Negotiations between Trump and Iran have been fluctuating, with significant gaps remaining. The likelihood is that the Middle East situation will continue to be a “conflict and negotiation” state over the next 2 to 4 weeks. Politically, Trump aims to de-escalate tensions in the first half of the year to avoid a scenario in the second half where high oil prices and stock market pressures occur simultaneously.

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

Recently, major central banks like the Federal Reserve, Bank of England, and Bank of Japan have shifted towards a more hawkish stance. Markets are even beginning to price in the possibility that the Fed may not cut rates this year or may even hike again. The latest FOMC meeting had a hawkish tone: 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, who was previously dovish, has shifted to support holding rates steady, further reinforcing hawkish market expectations.

3. Stagflation and Recession Risks Divergence

Low-risk perception: Some believe that current non-farm employment data may be unreliable, and inflation has remained above 2% for several years. A significant external shock could push the US economy into stagflation or recession, but the market is not fully pricing in this risk.

Counterview: Others argue that the US is now a net energy exporter, with much lower dependence on oil imports than in the 1970s and 80s. Therefore, high oil prices alone are insufficient to cause typical stagflation. The deeper risk 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 to curb inflation—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 properties and has fallen significantly amid rising central bank tightening expectations and liquidity pressures.

Hedging suggestions: To manage short-term uncertainty, consider holding risk assets while also allocating to VIX (volatility index) positions and benefiting from natural gas shortage themes, such as fertilizer and natural gas stocks, 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.

2. Cryptocurrency

3. Market Trends and Sentiment

In the context of increased macro volatility, Bitcoin (BTC) has shown stronger resilience compared to gold, maintaining 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 relatively low, while options markets are more active, with put 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 purchases of Ethereum, with weekly buys around 60,000 ETH. Overall, Bitcoin spot ETFs still see slight net inflows.

3. On-Chain Data and Bottoming

On-chain data shows that long-term holders’ profitability has fallen back into the range seen at previous cycle lows (green zone), suggesting the sharpest decline phase may be over, and the market is gradually bottoming. Meanwhile, short-term holders near $76,000 are taking profits, creating a temporary selling pressure.

4. Regulatory Clarity (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, banks 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 door for larger traditional capital inflows into the crypto market.