tightening

The European Central Bank (ECB) is expected to announce an interest rate hike on Thursday, marking the first increase since 2023, in response to the energy price shocks triggered by the conflict in the Middle East. The market widely anticipates that the ECB deposit rate will be raised from 2% to 2.25% to curb the inflationary pressures arising from the constrained energy supply due to the tensions in the Strait of Hormuz.Data shows that the eurozone's inflation rate rose to 3.2% in May, significantly above the central bank's policy target of 2%, with rising energy prices being the main driving factor. This policy adjustment occurs against the backdrop of economic growth pressures in the eurozone, where the economy contracted in the first quarter, and some economists warn that interest rate hikes could further drag down growth and consumer confidence.Analysts point out that the Federal Reserve and the Bank of England have not yet synchronized their tightening policies, and the ECB's preemptive action may reflect its greater sensitivity to energy-driven inflation. The market will closely watch President Lagarde's subsequent statements to determine whether a new tightening cycle will be initiated.

According to Jinshi reports, Federal Reserve official Logan stated that the current monetary policy is neutral or even somewhat accommodative, and it is necessary to maintain a mildly tightening policy stance.

It has been reported that banks in the Hong Kong region are tightening account openings. According to informed sources, in accordance with the requirements of the Hong Kong Monetary Authority, some banks in the Hong Kong region will start tightening the opening of investment accounts from May 26, including the need to sign paper declarations, but there is currently no impact on savings accounts.

According to Jinshi News, T. Rowe Price Chief U.S. Economist Blerina Uruci stated that the market may still be underestimating the likelihood of the Federal Reserve further tightening its policies.She pointed out that since early May, the duration of the Iran conflict has exceeded expectations, oil prices have risen, and U.S. economic growth has remained resilient. Uruci believes that the probability of the federal funds rate remaining unchanged over the next 12 months is 45%, the probability of a rate hike by the end of the year or early 2027 is 35%, and the probability of a rate cut is 20%.

A recent report from blockchain analysis company Chainalysis points out that compliance standards in the cryptocurrency industry are tightening significantly, with about 47% of organizations entering the market in 2026 having pre-warning standards that can reach the strict levels of the top 10% of the industry in 2020. This indicates that the entire ecosystem is maturing rapidly, with newcomers equipped with more aggressive monitoring measures from the outset.The report shows that companies' "direct monitoring" of funds coming directly from known illegal sources has become consistent and strict, but there is still a significant gap in "indirect monitoring" of funds flowing through intermediary addresses. For example, the indirect risk warning thresholds for categories such as ransomware and fraudulent stores on cryptocurrency trading platforms are often 10 to 100 times higher than direct thresholds. The Chainalysis team points out that this gap between direct and indirect monitoring creates opportunities for illegal actors. Companies that can bridge this gap will not only enhance their regulatory defenses but also distinguish themselves as trustworthy counterparties.The report suggests that this indicates the industry is in a transitional period, having achieved specialization in direct risk management but not yet treating indirect risks with the same rigor. The elevation of industry compliance standards is a response to increasingly stringent regulations and ongoing threats from entities such as North Korean hacker groups. In 2025 alone, hackers linked to North Korea caused approximately $2 billion in cryptocurrency losses.

According to Jinshi reports, the Federal Reserve's meeting minutes show that most participants indicated that if inflation remains above 2%, some policy tightening measures may be necessary.

Binance Research released a chart analysis this week indicating that four on-chain signals point to the same conclusion: supply is tightening, and selling pressure has been exhausted.Long-term dormancy: Nearly 60% of BTC supply has not moved for over a year, significantly higher than 27% in 2012. The dormancy rate peaked at 69.5% when the spot Bitcoin ETF was approved in January 2024 and has since remained close to historical highs.SLRV indicator: The short-term to long-term holder value ratio is deeply entrenched in historical bottom territory, indicating a lack of market sentiment. Long-term holders dominate the supply, while short-term speculators have largely exited. Historically, every cycle bottom has been accompanied by this ratio entering the current region.Exchange balances: Since peaking at 17.6% during the pandemic, exchange balances have dropped to 15%, with approximately 500,000 BTC permanently leaving exchanges, and seller supply has fallen to a six-year low.STH MVRV indicator: Since November 2024, the BTC short-term holder MVRV has mostly remained below 1, gradually exhausting selling pressure. Currently, this ratio has rebounded to 1, and short-term holders are beginning to reaccumulate unrealized gains. As profit accumulation is still in its early stages, a new wave of selling pressure is unlikely to emerge immediately; historically, this pattern often appears before a sustained recovery.

According to The Block, Rob Nichols, the CEO of the American Bankers Association (ABA), sent a letter to bank executives on Sunday evening urging them to contact senators to further tighten the provisions related to stablecoin rewards before the Senate Banking Committee's markup vote on Thursday.Nichols warned that the current draft fails to effectively prevent crypto companies from offering "interest-like rewards" to users, which could lead to significant outflows of bank deposits, threatening economic growth and financial stability.The current draft, negotiated by Senators Angela Alsobrooks and Thom Tillis, prohibits paying interest or returns to users holding stablecoins but allows rewards linked to real activities or transactions, a provision that has received support from Coinbase. The banking industry groups believe that the related exceptions contain loopholes that could be exploited and jointly sent a letter on May 8 to Committee Chairman Tim Scott and Democrat Elizabeth Warren, requesting technical revisions to the wording of the provisions.

According to Jinshi reports, Federal Reserve Chairman Powell stated that current interest rates are at the high end of the neutral range, slightly tightening.

According to Jin Shi reports, Federal Reserve officials Harker and Goolsbee warned that the inflation situation is severe and may even be worse. They believe that the inflation issue is more serious than the employment market, suggesting support for tightening monetary policy. Goolsbee rated the inflation outlook as "orange" in an interview, while Harker pointed out that inflation has been above the target level for five consecutive years, and the current situation is "definitely a more vivid and brighter orange."

According to Jinshi reports, Federal Reserve Chairman Powell stated that the policy interest rate is currently at the high end of the neutral range, slightly tightening, and is on the edge of tightening and not tightening.

According to Crypto Politan, Polish President Karol Nawrocki signed a new law earlier this month, officially incorporating the EU DAC8 directive into national legislation. Investors who fail to report cryptocurrency gains as required will face a punitive tax rate of up to 75%.DAC8 refers to the eighth amendment of the EU Directive on Administrative Cooperation in the Field of Direct Taxation, specifically targeting digital assets. It requires platforms such as exchanges, brokers, and wallet service providers to collect user and transaction data and report it to tax authorities. Tax departments in member countries will automatically share this information. The Polish National Revenue Administration (KAS) will use this to monitor the holdings and trading activities of cryptocurrency investors in the country.Local media estimate that about 3 million people in Poland hold cryptocurrencies, but currently, only about 1% of investors pay taxes in accordance with the law. Under current regulations, cryptocurrency trading income must be reported via the PIT-38 form by April 30, 2026, and is subject to a unified capital gains tax rate of 19%; mining and staking rewards are tax-exempt upon receipt, but taxes must be paid when converted to fiat currency.

According to Jinshi reports, Federal Reserve Governor Mulan stated that the current monetary policy is misaligned and too tight.

According to Jinshi reports, Federal Reserve's Williams stated that the ultimate goal of interest rate cuts is to prevent the policy from becoming too tight.

According to CoinDesk, Sygnum's Chief Investment Officer Fabian Dori stated that the recent pullback in Bitcoin is primarily driven by liquidity tightening rather than a structural collapse in fundamentals. He believes that Bitcoin's volatility will remain high in the short term, and prices may decline further, as market sentiment has fallen to extreme fear levels, exposing the market to more volatility and downside risks.Dori pointed out that since June of last year, the U.S. Treasury's issuance of notes and bonds has led to a significant increase in the Treasury's total account balance, effectively withdrawing liquidity from the market. As one of the most sensitive asset classes, the cryptocurrency market has been significantly affected.Despite the bleak short-term outlook, Dori remains optimistic about the long-term prospects, believing that factors such as improving business cycle data, the growth of stablecoins, and increased institutional participation support a constructive long-term outlook, and the current market environment is completely different from the systemic risk environment of 2022.

According to CoinDesk, Bitcoin's price fluctuated on Thursday, rebounding to around $67,000 after briefly dropping to about $65,900, with market attention shifting to Trump's latest statements on trade and tariffs.He previously posted on Truth Social that the U.S. trade deficit has "decreased by 78%" due to tariffs imposed on other countries and companies, and expressed optimism about achieving a surplus for the first time in decades this year.Analysts believe that if expectations for tariffs rise, it could affect the inflation trajectory and reinforce market pricing for "higher rates for longer." In this scenario, the dollar typically strengthens, risk assets come under pressure, and cryptocurrencies like Bitcoin are also susceptible to changes in liquidity and interest rate expectations.Market views suggest that if the tariff narrative strengthens further and drives the dollar higher along with a tightening financial environment, Bitcoin's rebound momentum may struggle to sustain; however, if related statements fade into political noise, the crypto market may refocus on capital flows, leverage conditions, and key technical levels.

According to market news, BitMEX co-founder Arthur Hayes stated in a recent article that the continuous decline in Bitcoin prices while the Nasdaq 100 index remains relatively stable may be signaling an early warning of tightening credit in the dollar economy, indicating that a broader credit crisis is on the horizon.He described Bitcoin as a "fiat liquidity fire alarm," reacting faster than traditional indicators like stocks. Hayes pointed out that Bitcoin is highly sensitive to changes in the financial system, and its price decline while the Nasdaq remains stable usually means that financial system issues not yet reflected in stocks are about to impact the broader market. He also warned that the impact of AI on white-collar jobs could lead to a large number of people losing income, making it difficult to repay credit cards, auto loans, and mortgages.An increase in default rates will prompt banks to tighten credit, further slowing the flow of funds in the economy, and the most vulnerable banks may go bankrupt due to a lack of funds to meet obligations. Hayes believes that the Federal Reserve may ultimately be forced to intervene on a large scale to prevent a full-blown crisis, and government intervention could make scarce digital assets like Bitcoin more attractive by undermining trust in the traditional monetary system.Hayes proposed two possible paths: one is that Bitcoin's drop from $126,000 to $60,000 has already priced in an economic slowdown, with stocks following suit; the other is that Bitcoin's decline continues, with stocks subsequently accounting for credit risks as well. Regardless of the path, the ultimate outcome will be a significant injection of funds into the system to prevent a banking crisis, and this response may offset Bitcoin's decline and drive it to new highs once the system stabilizes.

According to Jinshi, Federal Reserve's Bostic stated that it is necessary to maintain policy tightening to bring inflation down to 2%.