Credit rating downgrade triggers market fluctuation, capital inflow masks risks; BTC may face high-level volatility.

2025-07-30 13:27:27

The rise momentum and capital inflows mask potential risks, and the market may enter a high-level consolidation period.

Macroeconomic and Market Environment

Recent macro events have triggered market fluctuations. Downgrades in credit ratings, changes in tariff policies, and tax cut bills have raised U.S. Treasury yields, impacting the stock market and the cryptocurrency market.

U.S. stocks may face a correction, with the technology sector under pressure, while financial and defense stocks are relatively resilient. Cryptocurrencies may retreat to support levels, requiring close attention to signals from the Federal Reserve.

Fiscal stimulus and expectations of interest rate cuts are favorable for the stock market and crypto assets, but it is also necessary to be wary of the risks associated with the widening fiscal deficit and the status of the dollar.

If the Federal Reserve turns to easing and the dollar hegemony remains solid, the market is expected to continue its rise; otherwise, it may be necessary to increase the allocation of non-dollar assets.

Strategy recommendation: increase holdings in mainstream cryptocurrencies and dynamically adjust the global asset allocation structure.

Capital Flow Analysis and Main Cryptocurrency Market Structure

External Capital Flow

ETF funds: This week inflows reached $2.8 billion, a significant rise.
Stablecoins: This week, there was a rise of 2.3 billion, with an average daily rise of 321 million, which is at a high level.

Market Sentiment Indicator

OTC premium: stablecoin premiums continue to rise

Bitcoin ( BTC )

Technical Analysis: The market is in a volatile upward range.
On-chain chip distribution: chips above $103,000 increase

Ethereum(ETH)

Performance is weaker than BTC, ETH/BTC maintains fluctuations, and funds continue to flow into BTC.

On-chain movement: the increase in active addresses may indicate the completion of a phase bottoming.

Macroeconomic Review

The impact of credit rating downgrade on the market

Background:

On May 16, 2025, a rating agency downgraded the United States' credit rating from the highest level, citing the surge in debt to 136 trillion dollars, which accounts for 122% of GDP, and high interest expenses, which account for 3% of GDP. This marks the loss of the highest rating from the three major agencies for the United States following downgrades by other rating agencies in 2011 and 2023. The downgrade, coupled with new tariffs and tax cuts, is expected to increase the deficit by 3.3 trillion dollars, exacerbating volatility in the bond market in the short term.

Historical Review:

2011: Risk aversion boosted bond demand, and the 10-year yield fell to 1.7%.
2023: The increase in bond issuance led to selling pressure, causing yields to rise to 4.9%, followed by fluctuations.
2025: Similar to 2023, rating downgrades and policy uncertainty push yields up (, 30-year breaks 5% ), short-term selling pressure continues.

Supply Side:

Low maturity pressure: The peak of bond maturities in May-June is mostly short-term treasury bills, accounting for 80% of (, with a 4% yield attracting buyers and low rollover risk.
Debt issuance pressure increases: New policies will expand the scale of debt issuance, raising supply, and yields may rise further.

Demand Side:

Short-term: The Federal Reserve's interest rate cut ) can save about $90 billion in interest for every 25 basis points lowered (, and stopping the balance sheet reduction can boost demand, helping to lower yields.
Long-term: Bond demand relies on the hegemony of the US dollar, and it is necessary to maintain the international status of the US dollar to ensure rigid buying.

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) impact on the stock market and Bitcoin

Short-term impact ( until July 2025 )

Stock Market

Increased volatility: The downgrade in ratings has intensified market concerns about fiscal sustainability, coupled with the uncertainty of tariff policies ( regarding the 10% tariffs ) imposed by multiple countries and the tax reduction legislation, which may trigger a rise in risk-averse sentiment. The increase in the debt ceiling has led to an increase in bond supply, pushing yields above 5% for 30-year bonds (, raising corporate financing costs.
Sector differentiation: Technology stocks and high-valued growth stocks are under pressure, while consumer goods and retail may be pressured due to rising tariffs. The financial sector benefits from a high interest rate environment, while the defense and energy sectors may perform strongly due to increased policy spending.
Federal Reserve Policy: If the Federal Reserve signals a rate cut or halts balance sheet reduction in July, it may ease market pressures and boost the stock market, especially small and mid-cap stocks.

Strategy:

Reduce holdings in overvalued technology stocks, focus on the financial, defense, and energy sectors.
Closely monitor the Federal Reserve's policy signals and prepare to seize rebound opportunities under the expectation of interest rate cuts.
Configure defensive assets ) such as consumer staples ETFs or gold ### to hedge against volatility.

Cryptocurrency

Interest rate pressure: Rising bond yields reduce the attractiveness of zero-yield assets ( such as cryptocurrencies ), and funds may flow towards high-yield government bonds with a 4% yield (.
Potential benefits: If the Federal Reserve hints at a rate cut in July, the crypto market may rebound in advance, as easing expectations are favorable for risk assets. Decentralized finance projects may attract some funds due to safe-haven demand.

Strategy: If the Federal Reserve releases signals of easing, consider increasing holdings of mainstream cryptocurrencies or DeFi tokens.

![Market Observation Weekly: Macroeconomic Disturbances Intensify Volatility, Funding Frenzy Cannot Conceal Structural Risks])https://img-cdn.gateio.im/webp-social/moments-59f55edfb99eda5c0ec163b6b73a0e4f.webp(

Long-term impact ) after 2025 (

Stock Market

Policy-driven: The new policy's $3.8 trillion tax cuts and $200 billion defense/border spending will stimulate the economy and benefit the overall performance of the stock market. If tariff revenues ) are expected to effectively offset the $2.7 trillion ( deficit, market concerns about fiscal deterioration will ease, supporting the continuation of the bull market.
Interest rates and valuations: The Federal Reserve's interest rate cuts can lower corporate financing costs and boost high-growth sectors. However, if the deficit continues to expand and high interest rates are maintained, valuation pressures will limit the upside potential.
Dollar Impact: The long-term performance of the stock market depends on the international status of the dollar. If the dollar's dominance is solid, foreign capital inflow will support the stock market; if the dollar's status wavers, capital outflow may drag down the market.

Cryptocurrency

Loose policy benefits: If the Federal Reserve continues to cut interest rates and stops reducing its balance sheet, increased liquidity will drive up cryptocurrency prices, similar to the bull market of 2020-2021. In the long run, Bitcoin may break through $150,000.
Regulation and Adoption: If policies are crypto-friendly, it may promote institutional adoption, benefiting the market. However, if fiscal deterioration leads to a crisis of confidence in the dollar, cryptocurrencies may attract funds as a safe-haven asset.
Risk Factors: If the Federal Reserve postpones interest rate cuts or the dominance of the US dollar is challenged, the cryptocurrency market may experience increased volatility due to a decline in risk appetite.

Strategy:

Hold mainstream cryptocurrencies for the long term, pay attention to on-chain data ) such as active addresses and transaction volume ( to determine trends.
Diversify investments into potential projects ) such as Layer 2 solutions, Web3(, to avoid single asset risks.
If the status of the US dollar is shaken, increase BTC allocation as a hedge.

![Market Observation Weekly: Macroeconomic Disturbances Intensify Volatility, Capital Frenzy Cannot Conceal Structural Risks])https://img-cdn.gateio.im/webp-social/moments-0b37e75cf964041970241e7f85d75396.webp(

On-chain Data Analysis

) short-term impact on market data changes

1. Stablecoin Capital Flow

From May 16 to 26 this week, (, the total amount of stablecoins slightly rose to 213.596 billion, with an issuance of 2.34 billion, showing a significant rebound compared to the previous period, mainly in the second half of this week. Relative to the total, 2.34 billion accounts for about 1.1%, representing a relatively obvious rebound. For small market cap coins, this is a positive marginal change. The issuance means that more "purchasing power prepared for market entry" is being created.

![Market Observation Weekly Report: Macroeconomic Disturbances Intensify Volatility, Capital Frenzy Fails to Conceal Structural Risks])https://img-cdn.gateio.im/webp-social/moments-881b2b643620e9349aa7cfd3ad05784d.webp(

2. ETF Capital Flow

This week, there was a large inflow into BTC ETFs, totaling 2.8 billion USD, which is a strong signal of funds indicating that institutional investors are becoming bullish on BTC again. The estimated number of BTC that ETFs might purchase is slightly lower than the 33,462 coins from the week of April 21, but significantly higher than the previous weeks ), especially last week's 5,849 coins (, showing substantial buying, and the price trend is consistent with the flow of funds.

![Market Observation Weekly: Macroeconomic Disturbances Intensify Volatility, Capital Frenzy Cannot Hide Structural Risks])https://img-cdn.gateio.im/webp-social/moments-d8db384c68e904e47b2a1a580d0c97bd.webp(

3. Off-exchange Premium and Discount

This week, the off-exchange premiums for major stablecoins have both slightly rebounded, returning to the 100% level, indicating a renewed demand for stablecoins in the market. Combined with stablecoin data, not only is the on-chain performance optimistic, but there is also a slight warming trend in off-exchange capital inflows.

4. A company purchases

This round of rise began on April 14, (, when a certain company purchased 48,045 BTC, spending approximately $4.5469 billion in total. Combining stablecoin and ETF data, it can be seen that the company's purchases have also become an important funding channel for this round of rise. Moreover, the purchasing frequency since last year's relatively high point has been significantly higher than in 2023-2024. Currently, the company's cost has risen to $69,726, close to the low point in April. From an analytical perspective, this company has become an important force affecting the market, and relevant data monitoring needs to be strengthened in the future.

![Market Observation Weekly Report: Macroeconomic Disturbances Intensify Volatility, Funding Frenzy Cannot Conceal Structural Risks])https://img-cdn.gateio.im/webp-social/moments-45e44b0f0aaeb071d43033f5e695a835.webp(

5. Exchange Balance

After the latter half of this round of rise ), the price at 95000 (, BTC and ETH have been continuously withdrawn from exchanges, indicating that investors are reluctant to sell. Especially for ETH, after a rapid rise ) to 2500(, funds quickly fled the exchanges, demonstrating a strong "locking intention", showing that investors have regained confidence, which is also an important force supporting the rise in the latter half. However, the current decrease in balance has slowed down, and it is necessary to closely monitor whether the liquidity on exchanges will continue to be squeezed.

) mid-term impact market data changes

Token Holding Address Distribution and URPD

This week, the proportion of addresses holding coins has not changed much, and the addresses holding 100-1000 coins have not continued to show significant accumulation. The URPD shows a relatively healthy bar structure, and these two indicators have not given any abnormal signals.

On the data level, the funding situation and on-chain data performed well this week, coupled with a relatively smooth K-line trend, the overall phase can still be qualitatively defined as strong ( unless a destructive adjustment occurs next week ). Even if there is an adjustment next week, it should not be presumptively assumed that there will be a significant decline.

![Market Observation Weekly: Macroeconomic Disturbances Intensify Volatility, Capital Frenzy Cannot Conceal Structural Risks]###https://img-cdn.gateio.im/webp-social/moments-04bf3d141fef6c260b82dbb17af27c7c.webp(

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![Market Observation Weekly: Macroeconomic Disturbances Intensify Fluctuations, Capital

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