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The non-farm employment data was slightly weaker than expected, continuing the recent trend of weakening momentum in the U.S. economy. The unemployment rate rose from a cycle low of 3.43% to 4.05%. Of the approximately 200,000 jobs added in the past month, about 150,000 came from government and healthcare sectors, and the employment data for the past two months was also revised down by 111,000. Year-on-year and month-on-month wage growth slowed to 3.9% and 3.5%, respectively, providing the Federal Reserve with more positive signals that inflation is slowly retreating to its long-term target. Additionally, considering the recent performance of cryptocurrencies, will we see a slight surge in job seekers in the coming months, leading to a decrease in wage pressure?

With only a few meetings left before the November elections, and considering the Federal Reserve's strong desire not to surprise the market, we expect this month's FOMC meeting to take a more assertive stance, preparing the market for a 25 basis point rate cut in September.

TradFi assets welcomed the continued slowdown in economic data, with U.S. Treasury yields falling 5-10 basis points in a bull steepening trend. Meanwhile, driven by technology and growth stocks that are highly sensitive to low interest rates, U.S. stocks reached new all-time highs again—how many times is this for new highs this year?

Since June, the U.S. stock market has been on a continuous rise, showing a significant divergence from the performance of European stock markets and even cryptocurrencies, and there is a lack of compelling catalysts in the short term. Even the extreme right stalemate in France or a Trump victory seems unable to shake this market, especially with ample room for the Federal Reserve's easing policies; it’s best not to fight against market trends.

As the second quarter comes to a close, the focus will shift to corporate earnings reports. Citigroup analysts' models indicate that based on management guidance and strong pricing power, there is a greater likelihood of positive surprises in earnings reports. Well, say goodbye to another shorting catalyst.

We previously mentioned the strong seasonality in July, and so far, the progress has been quite smooth. The first two weeks of July have historically been the strongest period for the U.S. stock market, and the entire month of July itself is also an extraordinary month. Can we share some heat with cryptocurrencies?

As expected, short positions in SPX and Nasdaq continue to hit new lows, accounting for only 7% of the float. Is there a chance it could drop below 5% before summer ends?

More extremely, the current "winner concentration" in SPX has exceeded the peaks of the 1930s. Don’t forget, the market can correct in "price" and "time"; even if the final sell-off feels like an instantaneous disaster, the process of forming a top usually takes months or even quarters, and we have not seen any significant signals of sentiment change… not yet.

Speaking of sentiment shifts, the fate of many cryptocurrency tokens has changed, with major tokens and top altcoins experiencing a -20% correction over the past month, dropping 10% just in the past week.

The German government's public intent to sell and the unlocking of Mt. Gox's supply pushed BTC down from $65,000 to $54,000 in a week. The lack of positive catalysts combined with long-term bullish positions could not offset the immense selling pressure, leading to painful and dramatic position liquidations across the market.

There have been massive liquidations of BTC futures longs across exchanges, and even spot ETFs have seen significant outflows due to profit and loss protection.

Additionally, reports indicate that most of the price losses occurred during the Asian time zone, with European and U.S. investors possibly engaging in some bottom-fishing, while Asian investors bore the brunt of capital losses.

Meanwhile, the implied volatility of BTC and ETH has remained almost unchanged, as traders seem focused on closing positions rather than buying downside protection or directly shorting. This movement appears to be entirely driven by spot, catching traders off guard and focusing on minimizing risk rather than establishing new positions.

After experiencing a very disappointing altcoin season and price movements post-halving, the losses across the entire cryptocurrency space are quite severe, with almost no momentum to chase price rebounds relying solely on the native ecosystem. Even if the inflows following the approval of ETH ETFs might provide a short-term bottom for the market, the distribution of positions will take time, and cryptocurrency prices are likely to "stagnate" for most of the summer. If the FOMC meeting on July 31 leans heavily dovish, it may provide some overall support, but a stock market sell-off (if it indeed occurs) remains an external but real bearish risk for overall sentiment.

We still believe that this cryptocurrency cycle (and the next one) will be very different from what native users are accustomed to. With the entry of TradFi, the players have changed, the wallets are different, and the rules of the game have changed.

Friends, stay safe; it could be a long summer.