QCP: The current U.S. economy is closer to the late cycle rather than a recession, and this week's data will determine the future direction of Bitcoin

QCP released its daily market observation stating that this week, Bitcoin continued to decline, briefly falling below the key $90,000 mark, due to tightening market expectations for interest rate hikes and ongoing ETF outflows dampening market sentiment. Thin liquidity further amplified this wave of decline, indicating that Bitcoin is becoming increasingly sensitive to changes in the macro environment.

This pullback occurred against the backdrop of rapidly re-pricing expectations for the Federal Reserve—shifting from nearly certain rate cuts to a roughly balanced probability. This has put pressure on interest rate-sensitive assets like Bitcoin, while the stock market remained relatively stable due to robust corporate earnings, especially strong profits and record AI-driven capital expenditures reported by large tech companies.

As the U.S. government reopens, official data is being released, providing the market with necessary insights into economic fundamentals. This week, the market is highly focused on labor market data and the Conference Board's Leading Economic Index, which has now incorporated the latest job vacancy data. This information will help determine whether labor tightness or inflation will dominate the Federal Reserve's policy response.

Beneath the surface, the U.S. economy still shows a K-shaped divergence: spending among high-income households remains resilient, while low-income groups face increasing pressure. Federal Reserve Chairman Powell reiterated a cautious stance, noting that rate cuts are "not a given." Overall, current economic conditions are closer to the late cycle rather than a recession.

Despite ongoing risks from fiscal constraints and labor market divergence, the resilience of household balance sheets and corporate capital expenditures still provides a buffer against downturns. This week's data will determine whether Bitcoin's pullback is a temporary position adjustment or the beginning of a broader decline in risk appetite.