Matrixport Market Observation: Gold Prices Hit New Highs, Uncertain Future Direction for Risk Capital

In the past week, BTC experienced significant volatility due to short contracts, with an intraday maximum fluctuation of 11.69%. On February 3, BTC's price fell to $91,231, marking the lowest point since mid-January, and the choppy market led to spot short losses exceeding $800 million. By midnight the next day, BTC's price rebounded to $98,842 and fluctuated around $97,000. Recently, ETH short positions reached an all-time high, with ETH spot hitting a low of $2,125.01 on February 4, and it has since rebounded to around $2,700, with a maximum fluctuation of 10.22% during the week (the above data is from Binance spot real-time data at 15:00).

Due to the tariff policy announced on February 3 and the non-farm data released on February 10, the US dollar strengthened, with the dollar index rising to 108.31 on the 10th. Gold, as an inflation hedge, broke through $2,900, reaching a new high. BTC and ETH experienced significant fluctuations in the short term, and market sentiment remained cautious. Although there was some stabilization after the intense volatility, future trends will continue to be influenced by macroeconomic data and market sentiment.

Market Overview

BTC activity drops to a one-year low, but demand from long-term holders increases

On February 7, a report from CryptoQuant indicated that BTC network activity has dropped to a one-year low, but some indicators show bullish potential. The BTC network activity index has fallen 15% from its historical high in November 2024, currently at 3,760, the lowest level since February 2024. At the same time, the number of BTC transactions and the transaction volume in the mempool have also significantly decreased.

However, data shows that the demand from long-term holders has increased recently. The growth of long-term holders often accompanies a rebound in BTC prices. Therefore, despite the weak BTC network activity in the short term, the increase in demand from long-term holders may positively impact BTC prices.

ETH short positions reach an all-time high, market faces volatility risks

On February 10, ETH was trading at $2,636, with a market capitalization of $317 billion and a daily trading volume of $19.5 billion. In the past week, ETH short positions surged to 40%, setting a new historical high. According to Coinglass data, the 24-hour liquidation amount has reached $44.65 million, indicating increased market volatility. Additionally, the Ethereum Foundation recently transferred 50,000 ETH, further triggering cautious sentiment among investors.

Since November 2024, ETH short positions have increased by 500%. Particularly on February 2, due to trade war concerns, ETH's price plummeted by 37% in just three days. Despite strong market trading volume, ETH's price has failed to recover, and its recent gains have lagged behind other altcoins.

Despite the increase in short positions, ETH continues to attract capital inflows. In December 2024, ETH attracted over $2 billion in new funds, and the inflow of ETH spot ETFs exceeded that of BTC spot ETFs, indicating that investors still maintain some confidence in ETH. Recently, ETH's price has faced strong selling pressure, and short positions have not weakened, suggesting that investors should monitor whether ETH will decline further or experience a short squeeze against the backdrop of accumulated short positions.

Trump announces "reciprocal tariffs," significantly raising steel and aluminum tariffs causing market turbulence

On February 10, the White House announced a 25% tariff on all imported steel and aluminum, canceling the tax exemptions and waivers for some trading partners. This measure delayed the planned implementation of the 25% tariff on Canada and Mexico, causing market sentiment to fluctuate. Although BTC and US stocks rebounded after a sharp decline, market sentiment remained cautious.

The three major US stock indices plunged more than 1% during the session, erasing the weekly gains. US Treasury yields rebounded due to inflation expectations, with the one-year Treasury yield rising to 4.23% and the ten-year yield rebounding to 4.49%, putting pressure on the stock market. Gold rose due to safe-haven demand, with London gold achieving six consecutive weeks of gains, increasing by 2.18%.

Hong Kong investment immigration first recognizes BTC and ETH as asset proof

On February 7, 2025, the Hong Kong Investment Promotion Agency approved a client to use ETH valued at 30 million HKD as proof of assets for investment immigration. Previously, in October 2024, another client successfully applied and was approved using BTC, becoming the first case of using cryptocurrency for investment immigration in Hong Kong.

Hong Kong's investment immigration requires applicants to prove they hold assets of 30 million HKD and make an equivalent investment within six months. It is still uncertain whether investing in cryptocurrency ETFs or direct cryptocurrencies will meet the requirements. Crypto assets must be stored in cold wallets or mainstream exchanges like Binance.

Macroeconomic Dynamics

Gold prices hit new highs, safe-haven sentiment and central bank purchases push up gold prices

On February 10, COMEX gold futures broke through $2,900 per ounce and reached an all-time high, nearing the $3,000 mark. The recent rise in gold prices is driven by a surge in safe-haven demand, especially after Trump announced tariffs on imported steel and aluminum, along with increasing uncertainties in global trade and inflation. As a traditional safe-haven asset, gold is supported by strong demand.

Central bank gold purchases have also provided support for gold prices. Global central bank gold purchases reached 1,045 tons in 2024, particularly with the Chinese central bank continuously increasing its gold holdings and announcing that it would allow insurance funds to invest in gold, which is expected to bring additional market liquidity. Furthermore, geopolitical risks and global economic uncertainties continue to make gold a favored choice among investors.

As the global economic situation evolves, analysts predict that gold prices may continue to rise. In the short term, influenced by Trump's tariff policies, gold will serve as a tool against inflation and trade risks, while in the long term, it will be supported by global de-globalization trends and dollar credit risks, potentially driving gold prices to maintain strong growth in 2025.

Weak non-farm data and declining unemployment rate drive dollar rebound

On February 7, the US Bureau of Labor Statistics released mixed non-farm employment data for January, with an increase of 143,000 jobs and an unemployment rate dropping to 4.0%, both far below market expectations. The annual wage growth rate for January was 4.1%, exceeding the expected 3.8%, while the monthly wage increase unexpectedly reached 0.5%, far surpassing the expected 0.3%. The University of Michigan Consumer Confidence Index showed that consumer confidence fell to its lowest point in seven months due to concerns about inflation, further exacerbating market uncertainty.

On February 10, the dollar index fluctuated upward to 108.31, reflecting renewed market concerns about rising inflation and interest rate hike expectations. Although the job creation figures were weak, strong wage data and a declining unemployment rate provided the market with optimistic expectations regarding the Federal Reserve's interest rate hike path, driving the dollar to rebound after a decline earlier in the week.

In the coming week, the US will release January CPI data and hold a monetary policy hearing with Federal Reserve Chairman Powell, which is expected to be a key factor influencing BTC's trends.

2025 stock market faces overvaluation risks, crypto market may become a new destination for risk assets

The stock market performed strongly in 2025, with the S&P 500 expected to rise by 11%, but high valuations and excessive market concentration pose risks. Despite corporate earnings growth and interest rate cuts boosting market sentiment, current stock market valuations are nearing historical highs, particularly in US stocks and tech stocks. The concentration in the US stock market is unusually high, with the top ten stocks accounting for over 20% of global market capitalization, meaning the performance of a single stock could significantly impact the overall market.

Risk capital from traditional financial markets is likely to flow into the crypto industry, especially BTC, as a "digital gold" to hedge against stock market volatility and inflation. Although past phenomena like the $TRUMP and $MELANIA projects led to liquidity issues in the crypto market, this situation is expected to improve with capital inflows. Increased activity and liquidity in the crypto market will attract more investors seeking opportunities.

Disclaimer: The above content does not constitute investment advice, sales offers, or purchase offers to residents of the Hong Kong Special Administrative Region, the United States, Singapore, or other countries or regions where such offers or invitations may be prohibited by law. Trading in digital assets may involve significant risks and volatility. Investment decisions should be made after careful consideration of personal circumstances and consultation with financial professionals. Matrixport is not responsible for any investment decisions made based on the information provided herein.