Week 20 On-chain Data: Institutional-led Bull Market Faces First Test, Where Will BTC Go Next?

Original Title: "Cold Thinking Under Fervor: From On-chain to Macro Upheaval, How to Perceive the Cycle and Destiny of the Cryptocurrency Wave? | WTR 5.26"

Original Source: WTR Research Institute

Weekly Recap

During this week from May 19th to May 26th, Bitcoin reached a peak near $111,980 and a low near $102,000, with a fluctuation range of about 9.78%. Observing the distribution of chips, there was a significant amount of chip transactions around 99,000, which will provide some support or resistance.

• Analysis:

1. 60000-68000 around 1.22 million coins;

2. 76000-89000 around 1.25 million coins;

3. 90000-100000 around 1.43 million coins;

• The probability of not breaking below 95,000 to 100,000 in the short term is 80%;

Important News Aspects

Economic News Aspect

1. Key Event: Trump's Tariff Policy Reversals and Uncertainty

◦ Content: Trump's tariff policy towards the European Union has been fluctuating between "imposing a 50% tariff" and "extending the 90-day negotiation window to July 9th." The fourth round of tariff negotiations between the US and Japan is scheduled for the 30th.

2. Federal Reserve's Monetary Policy Expectations and Official Statements

◦ Rate Cut Expectations Diverge:

▪ Bullard: Rate cuts may still be needed in the next 10-16 months (dovish).▪ Bostic: Need to wait 3-6 months to observe uncertainty (neutral).

▪ Williams: Cannot fully understand in June or July (cautious).

▪ Morgan Stanley: The Fed will not cut rates this year and will start cutting rates from March 2026 (hawkish, significantly deviating from the mainstream market expectations).

◦ Key Data: Friday's PCE data is a key basis for the Fed's monetary policy.

3. Other Macroeconomic Indicators and Asset Prices

◦ US stock index futures rise (Nasdaq futures 1.5%, SP 500 Index 1.2%).

◦ US Dollar Index falls by 0.1%.

◦ Citigroup raises gold price target to $3,500 per ounce (due to tariff escalation expectations).

◦ U.S. Treasury Secretary Announces Sovereign Wealth Fund Plan Suspension.

Crypto Ecosystem News

1. Bitcoin (BTC) Market Performance and Driving Factors

◦ BTC price rebounds to $110,000 (following easing of Trump's tariff policy).

◦ Coindesk Analyst: BTC hitting new all-time highs mainly driven by institutions, retail meme frenzy fading, market sentiment shifting towards more sustainable behavior, potentially paving the way for a long-term trend.
◦ Analyst Eugene Ng Ah Sio: BTC maintains a clear upward trend, if sustained, altcoin market opportunity.

◦ Interpretation:

▪ Institution-led "ongoing narrative": The success of ETFs is a core driver of BTC's ongoing bull market, a typical "ongoing narrative."

2. ETF Fund Flows (Core "Ongoing Narrative")

◦ Last week, U.S. BTC spot ETF saw inflows of $2.75 billion, ETH spot ETF saw inflows of around $250 million (highest since early February).

◦ U.S. BTC spot ETF cumulative net inflows of $44.499 billion, hitting a new all-time high.

◦ Grayscale GBTC with 30 consecutive days with no outflows, net assets over $71 billion.

3. Corporate and Institutional BTC Holdings (Reinforcing Institutional Narrative)

◦ Bitwise Data: Companies in the U.S. and elsewhere have purchased more than 3 times the new BTC supply within 2025.

◦ Semler Scientific acquires 455 BTC.

◦ Strategy increased holdings by 4,020 BTC last week.

4. Regulatory Developments and Industry Conferences (Key Variables Influencing the "Expectation Narrative")

◦ SEC's Hester Peirce supports providing clearer securities law guidance for PoS/DPoS activities, seen as positive information for U.S. institutional participation in staking. Bitcoin 2025 Conference (May 27-29), White House Cryptocurrency and AI Director, U.S. Senators, and expected Vice President Pence to attend.

◦ Analysis:

▪ Regulatory Clarity "Expectation Narrative": Peirce's statement is crucial as it indicates a potential development of the regulatory environment towards more clarity and friendliness, which is vital for the industry's long-term healthy growth, especially in emerging areas like Staking.

Long-Term Insight: Used to observe our long-term situation; Bull Market / Bear Market / Structural Change / Neutral State

Medium-Term Investigation: Used to analyze what stage we are currently in, how long this stage will last, and what circumstances we will face

Short-Term Observation: Used to analyze the short-term market situation; as well as the emergence of certain directions and the possibility of certain events occurring under certain conditions

Long-Term Insight

• Illiquid Long-Term Whale

• On-Chain Spot Total Sell Pressure

• BTC's USA ETF

• Long-Term Participant Holdings Structure across Different Timeframes

• Exchange Large Inflow-Outflow Net Whale

• Long vs Short-Term Holder Cost Basis Line

(See chart Illiquid Long-Term Whale)

• Has shown a continuous upward trend since the end of 2023, indicating that these entities are continuously accumulating.

• The overall trend indicates a strong belief from long-term holders and whales, continuously withdrawing BTC from the liquid market, which constitutes strong supply-side support. The long-term bullish structure remains unchanged, but the added short-term buying momentum may weaken marginally.

(See chart On-Chain Spot Total Sell Pressure)

The recent market "total sell pressure" is overall in a slightly upward trend. There has been a small amount of inflow, but trading activity is normal rotation, not panic selling. From the perspective of "potential sell pressure," there is no sign of concerning, large-scale chips concentrating on exchanges recently, indicating a low market selling intent.

(See chart BTC's USA ETF)

The recent ETF fund inflow volume has indeed seen a significant decline compared to previous peaks, even approaching the zero axis on certain trading days or seeing slight net outflows. Currently:

• The "ongoing narrative" is being challenged: The slowdown in ETF fund inflows is a direct test of one of the core drivers of this bull market.

• The current ETF flow is a critical window for observing institutional sentiment and new capital sources, and its continued weakness will put pressure on market confidence.

• The buy-side power driven by ETFs is weakening at the margin, which is a significant change the current market is facing.

The market needs to find new demand growth points or wait for ETF demand to recover under new conditions.

(Chart below shows the holding structure of long-term participants across different timeframes)

The proportion representing holders of over 6 months (overlay of green to purple areas) has recently slightly increased to 0.449. Analysis: The increase in the proportion of long-term holders (often considered "smart money" or steadfast believers) and its maintenance at a high level are signs of a healthy market structure, reducing short-term speculative selling pressure.

• Synergy with Chart 1: This aligns with the increasing trend of illiquid supply in Chart 1, illustrating a shift of chips from short-term traders to long-term holders and a transition from abundant liquidity to supply scarcity. The market's microstructure remains solid, with a significant "ballast effect" from long-term holders.

(Chart below shows net inflows and outflows of large amounts on trading platforms)

Represents the net outflow of large transfers (yellow $100-1000 million, red $1000 million and above). Although not as continuous and intense as in certain previous stages, the overall net outflow remains the dominant trend, and large-scale net inflows have not appeared. Despite the slowing down of ETF flows, large amounts of funds continue to flow out from trading platforms, indicating that large investors or institutions are still accumulating BTC and self-custodying, or executing trades through the OTC market. The potential selling pressure from trading platforms continues to decrease, with accumulative behavior from large investors persisting, although its intensity may fluctuate with market conditions.

(Chart below shows cost basis lines of short-term and long-term holders)

The cost basis line of short-term investors (orange-yellow) is currently at $95,411. The current price (around $109,000) is still significantly above this cost basis line.

• As long as the price remains above the average cost basis of short-term holders, the risk of large-scale panic selling in the short term is relatively low, as most short-term participants are in a profitable state. Key support level: $95,411 is an important psychological and technical support zone. If the price retraces to this level and finds effective support, it will strengthen market confidence; if broken, it may trigger stop-loss orders, increasing short-term downward pressure.

• Battle Point for New/Old Capital: This price level is also a key area where new market participants and short-term profit seekers engage in a battle.

• Short-term market structure remains healthy, but close attention is needed to the effectiveness of the $95,411 support.

Overall Analysis:

1. Foundation: The supply side continues to tighten, with long-term holders remaining strong in their belief. Despite the marginal slowdown in short-term accumulation momentum, non-liquid supply continues to increase, the proportion of long-term holders remains stable at a high level with a slight uptick, large funds continue to flow out of exchanges, and large transfers to exchanges (potential selling pressure) are inactive. Together, these factors form a strong supply-side support in the market, which is a core feature distinguishing it from previous cycles.

2. Current Challenge: ETF momentum is weakening, and the market faces a demand test (Chart 3). The significant decrease in ETF fund inflows is the most direct challenge the current market faces. This means that the primary source of incremental funding has become weak, and the market needs a new demand story or the recovery of existing demand to sustain upward momentum.

3. Short-term Market Sentiment and Key Levels (Chart 6). The current price is above the short-term holders' cost line ($95,411), providing a "safety cushion" for the market. This price level is a key watershed for judging the strength of the short-term market.

4. The Overlay Effect of Macro Uncertainty and Narrative Vacuum Period. Against the backdrop of weakened ETF inflows, macro-level uncertainty (Trump's tariffs, Fed policy ambiguity) may amplify the negative impact on market sentiment. Simultaneously, as discussed in the following text (News Analysis and Summary), new "expectant narratives" that can attract funding on a large scale (such as stablecoin channels, substantial regulatory breakthroughs) have not yet formed effective traction. The market may be in a brief "narrative vacuum period" or "narrative fatigue period."

5. Pressure Under "Attention Competition." In a situation of weakened self-propulsion and an unclear macro environment, the crypto market (especially assets other than BTC) may appear more passive in the "attention competition" with stronger narratives like AI.

Future Outlook:

Medium-term:

Main Tone: Likely High Volatility, Key Period for Direction Choice. The market may undergo a period of oscillation and consolidation in the current price range (for example, with $95,411 as the lower limit and the previous high as the upper limit). The direction choice will depend on:

1. Can ETF flows recover? This is the most critical observation indicator.

2. Can positive macroeconomic news emerge as catalysts? (e.g., PCE data exceeding expectations, Fed signaling dovishness, trade tensions easing).

3. Can new industry narratives emerge and attract funding?

· Downside Risk: If the ETF continues to experience net outflows and there is negative news at the macro level, causing the price to drop below the $95,411 short-term holder cost line, it may trigger a deeper correction, and the market will retest lower long-term support levels.

· Upside Potential: If the ETF resumes its uptrend or if other significant positive news emerges, coupled with the already tight supply situation, the price still has the momentum to challenge and surpass new highs. However, the process may be more turbulent than before.

• Test of the "Summer Surge" Expectation: From market news, it is evident that the market is expecting to break the market calmness this summer and ignite a market surge. In the current background of declining ETF flows, achieving this becomes more challenging and will require strong catalysts either at the macro level or within the industry.

Medium to Long Term:

The foundation of a structural bull market remains, but the path now relies more on fundamental realization. The supply structure dominated by long-term holders is the core logic of long-term optimism. However, the extent and sustainability of future bull markets will depend more on:

1. Can the crypto industry truly generate sustainable economic value and large-scale applications? The realization of narratives such as "Stablecoins/Exchange Platform Channels" is key (but challenging).

2. Can the regulatory environment move towards a clearer, more favorable direction? This will determine whether institutional funds can flow in on a larger scale and more sustainably.

3. Can BTC consolidate and expand its value proposition in competition with traditional assets and emerging technologies? Besides being "digital gold," are there other widely recognized narratives? Differentiation will intensify:
• In a more challenging market environment, only projects with core technology, strong ecosystems, and clear value propositions can stand out.

Medium-Term Exploration

• Liquidity Supply

• Price Structure Analysis

• Futures Settlement Structure

• WTR Risk Factor 1

• USDC Buying Power Composite Score

• Whale Composite Score

(Subsequent Image: Liquidity Supply)

Liquidity supply continues to show significant growth, and it's possible that the current market's changing factors are not reflected in the liquidity risk. The abundant liquidity can help the market maintain its amplitude in the current pricing structure.

(Subsequent Image: Price Structure Analysis)

The current spot price is around 108,000, and the price of the short-term cost line is around 95,000. The current pricing may hover around these two price levels.

(Futures Settlement Structure below)

The current derivative settlement structure has transitioned from a short to a long settlement structure. In the current environment, the long side may face higher risks than the short side. After the previous short trend turned into a long trend, the market briefly entered a consolidation phase at a high level. To supplement the comprehensive observation, consider the spot risk factors.

(WTR Risk Coefficient 1 below)

The WTR Risk Coefficient 1 shows that BTC and ETH currently do not exhibit significant spot risk, and the prerequisite conditions for a substantial pullback have not yet formed.

(USDC Buying Power Composite Score below)

The USDC buying power has a slight score fluctuation and currently maintains a relatively high score. There may still be liquidity support provided by USDC buying power in the market.

(Whale Composite Score below)

The whale's score remains relatively high and has not decreased. The market may still lean towards a consolidating tone.

Short-Term Observations

• Derivative Risk Coefficient

• Options Intentional Transaction Ratio

• Derivative Trading Volume

• Options Implied Volatility

• Profit and Loss Transfer Volume

• New Addresses and Active Addresses

• BitOranges Exchange Net Long

• Auntie's Exchange Net Long

• Heavy Sell Pressure

• Global Buying Power Status

• Stablecoin Exchange Net Long

Derivative Rating: The Risk Coefficient is in the red zone, indicating high derivative risk.

(Derivatives Risk Factor)

The risk factor is still in the red zone, and currently, both long and short liquidation amounts are relatively low. As expected last week, the derivative market will experience significant volatility this week, leading to liquidation of derivative participants.

(Options Intent Trading Ratio)

The put-to-call ratio is at a moderate-high level, with trading volume at a median level.

(Derivatives Trading Volume)

The derivatives trading volume is at a median level.

(Options Implied Volatility)

The options implied volatility has shown only slight fluctuations in the short term.

Sentiment Status Rating: Neutral

(Profit Loss Transfer Amount)

Last week, it was mentioned that the market's positive sentiment (blue line) and price were in a divergence state. Subsequently, market sentiment rose to a short-term high, breaking this divergence condition.

(New and Active Addresses)

New active addresses are at a low level. Both spot and selling pressure structure rating: BTC and ETH are in a continuous large outflow state.

(Tangerine Exchange Net Position)

Currently, BTC continues to experience large outflows.

(Below is the Net Inflow of Exchange E)

The current overall ETH outflow continues to be significant, with only a small amount inflow.

(Below is the High-Weight Sell Pressure)

ETH has seen a significant high-weight sell pressure, but it has now eased.
Buy Power Rating: Global buy power is stable compared to last week, similar to stablecoin buy power.

(Below is the Global Buy Power Status)

Global buy power remains stable compared to last week.

(Below is the Net Inflow of USDT Exchange)

Stablecoin buy power remains stable compared to last week.

Weekly Summary:

Analysis and Summary of News:

1. The "Division" and "Dependency" in the Current Market:

◦ Macro Level: The market is oscillating amidst the high uncertainty of Trump's trade policy and the vague expectations of the Fed's monetary policy, leading to severe volatility in risk sentiment. As part of the risky assets, the crypto market's short-term trend is highly correlated with these macro factors.◦ Crypto Internals: BTC, relying on institutional fund inflows through ETFs and the "digital gold" narrative, has shown a certain resilience and "maturity" (QCP view ), becoming a "stabilizing force" in the market. However, this strength is to a large extent a short-term realization of the "on-going narrative".

2. Sustainability of Core Drivers Needs to be Questioned:

◦ After the "Honeymoon Period" of BTC ETF: Following the initial institutional allocation, the sustainability of subsequent fund inflows will depend on whether BTC can continue to prove its value in global asset allocation (against gold, stocks, etc.) and whether the macro liquidity environment is supportive.

◦ Pressure from the Realization of "Expectation Narratives": Whether it is the Fed rate cut, clarity in the regulatory environment, or the large-scale implementation of crypto applications (such as "stablecoin/exchange platform channels"), these drivers of future growth face a long and uncertain realization path. The market's patience for these narratives is limited.

3. Narrative Rotation and Differentiation Amid Attention Competition:

◦ Internal Rotation: The rapid decline of meme trends hints at an acceleration of internal market hotspots rotation. If BTC can maintain its strength, some funds may flow into ETH (benefiting from ETF expectations and potential regulatory tailwinds) and other altcoins with real progress. However, a general rise scenario is unlikely, and the fundamental and narrative "authenticity" will become more important.
◦ External Competition: The powerful narrative of AI will continue to pose a "attention" and "funding" competition to the crypto industry. The crypto industry needs to find a path to coexist with AI or demonstrate unique advantages; otherwise, it may face risks of marginalization in the "land grab" of the tech wave.

Future: Seek structural opportunities in uncertainty, but beware of "expectation" disappointments

Medium-Term:

• The market will continue to balance between macro uncertainty (trade policies, Fed interest rates) and crypto-specific drivers (ETF flows, regulatory signals).
• BTC is expected to maintain relative strength with institutional support, but overall market volatility remains high. PCE data and the Fed's stance seven months ago will be key observation points. Whether the summer can "break the calm and bring a new trend to the market" depends on whether these uncertainties can develop positively.

Medium-Long-Term:

• Optimistic Scenario: Macro liquidity improves (rate cuts materialize), regulatory environment gradually clarifies, ETFs continue to attract funds, some genuinely valuable crypto applications (possibly including an initial form of the "metaverse gateway") begin to show results. The market may usher in a broader structural bull market, but differentiation will intensify.

• Pessimistic Scenario: Continued unfavorable macro environment (stagflation, escalating geopolitical conflicts), tightening regulations, slowing down or reversing ETF inflows, and the "expectation narrative" remaining unfulfilled. The market may undergo a prolonged period of adjustment and revaluation. Other technology sectors such as AI remain strong, further diverting resources from the crypto market.

• Most Likely Scenario: Major fluctuations, sometimes upward, but the process will be turbulent. A few top assets (such as BTC, ETH) and genuinely valuable niche tracks will receive funding favor, while projects lacking fundamental support will be eliminated in large numbers. The market will pay more attention to the actual utility and sustainability of crypto, rather than pure speculative frenzy.

On-chain Long-Term Insight:

1. BTC's supply-side fundamentals remain very strong, which is a crucial source of market confidence.
2. Of course, the recent weakening inflow of ETF funds is a significant warning signal, indicating that one of the market's main demand engines is "cooling off."
3. The current market is at a critical observation and direction selection period, where macro environment, ETF performance, and the emergence of new industry narratives will collectively determine the next phase's trend.

• Market Sentiment Setting: There is a need for increased attention to risk management, maintaining patience and caution in fulfilling the "expected narrative." Frenzied emotions may need to give way to a more fundamental value consideration.

On-chain Mid-term Exploration:

1. Liquidity continues to expand, temporarily suppressing short-term risk, with the current market showing stable volatility.
2. The market is oscillating around the stock level top of 108,000 and the short-term cost line of 95,000.
3. Derivative liquidation has shifted to a long-dominated structure, with increasing short-term long pressure.
4. BTC and ETH spot risk indicators have not shown anomalies, and conditions for a deep retracement are not yet sufficient.
5. USDC buying power score remains high, supporting on-chain liquidity remains solid.
6. The whale holdings score remains high, and the market maintains a consolidation structure.

• Market Sentiment Setting: Hovering, Vigilant. While liquidity is abundant, supporting market oscillation, the derivative shift to a long liquidation structure requires vigilance against potential regime shifts.

On-chain Short-term Observation:

1. The risk coefficient is in the red zone, indicating higher derivative risk.
2. The number of new active addresses is relatively low.
3. Market sentiment rating: Neutral.
4. Exchanges' net outflows of BTC and ETH are in a continuous large quantity outflow state.
5. Global buying power and stablecoin buying power remain flat compared to last week.
6. The probability of not breaking below 95,000 to 100,000 in the short term is 80%.

• Market Sentiment Setting: In the short term, there are relatively few profit-taking chips at the current price level, and buying power is sufficient to support. The expectations for this week are largely consistent with last week, with still the possibility of further short-squeeze. The probability of a direct large retracement is relatively low.

Risk Reminder: The above is all market discussion and exploration and does not provide directional views on investment; please treat and guard against market black swan risks with caution.

This article is a contribution and does not represent the views of BlockBeats.