Trader's Seven Weapons Series — Trust in Practice (Part 3)

Macro Information Analysis

Macro information is the most overlooked yet most critical component of the "Trust" weapon — because it determines the overall market water level, not the direction of a single K-line. Below is the macro information analysis framework you need to supplement separately, to be added as an independent chapter.

This is where I differ most from many traders. For me personally, technical indicators are the least important part. I've argued with many traders because I believe the crypto market is different from the stock market — the crypto market has no protection mechanisms. In crypto, K-lines can be drawn in advance, and then quant firms are instructed to execute trades according to those pre-drawn lines.

Therefore, I want to zoom in on this chapter and explain it in detail — this is the underlying logic of the entire crypto market.

Macro Information Analysis: Understanding the Direction of the Water Level

Micro analysis tells you "which one to buy,"
Macro analysis tells you "whether you can buy."

If you only focus on on-chain data, funding rates, and project fundamentals while ignoring the macro environment, it's like going out before checking the weather forecast — the direction is right, but the weather is wrong, and you still end up losing.

Below are the macro information modules we need to continuously track and how they affect our trading decisions.

I. Federal Reserve Interest Rate Decisions

The Fed's interest rate decisions are the anchor for risk asset pricing. They are not just a "reference factor" but a "decisive factor."

During rate hike cycles:
Risk-free rates rise, capital flows out of risk assets, and Bitcoin faces pressure.
Historical data shows that Bitcoin often performs worst at the end of a rate hike cycle.
What you need to focus on is not "whether rates are hiked" but the expectations of rate hikes — the market trades on expectations, not facts.

During rate cut cycles:
Risk-free rates fall, capital flows back into risk assets, and Bitcoin benefits.
When expectations of rate cuts form, that's often the window for the market to move early.

Key indicators:
Federal Funds Rate: Current target range
Dot Plot: Fed officials' future rate projections
FOMC Meeting Minutes: Implicit policy tendencies and internal discussions
Fed Chair Speeches: Every word can trigger market volatility

Practical advice:
Three days before an FOMC meeting, do not open new heavy positions.
Two hours after the rate decision is announced, wait for the market to digest the first round of volatility before reassessing direction.
If Powell's wording shifts from "inflation is transitory" to "inflation is persistent," that is a very strong signal.
If you see the dot plot's long-term rate expectations revised upward, it means market expectations for future easing are weakening, which is negative for all crypto assets.

II. Nonfarm Payrolls: The Job Market's Health Report

Nonfarm Payrolls (NFP) is one of the most important reference data points for the Fed, usually released on the first Friday of each month.

Data implications:
NFP above expectations: Strong job market → Economy overheating → Fed needs to continue hiking or maintain high rates → Negative for risk assets.
NFP below expectations: Cooling job market → Slowing economy → Fed may cut rates early → Positive for risk assets.

Key derivative indicators:
Unemployment Rate: If unemployment rises while NFP is strong, it may indicate structural changes in the labor force, which has profound implications for the inflation path.
Average Hourly Earnings: Earnings growth reflects inflationary pressure. If average hourly earnings rise, it suggests a wage-price spiral is forming, making it less likely for the Fed to pivot early.

Practical advice:
Market volatility is extreme two hours before and after the NFP release. Set stop-loss orders in advance or avoid this window.
After the NFP release, first observe the market's reaction direction before deciding to trade — don't jump the gun; let the market complete its first round of adjustment.

III. Inflation Data: CPI and PCE

Inflation data directly determines the Fed's room for action.

CPI (Consumer Price Index)
CPI above expectations → Sticky inflation → Fed cannot cut rates → Negative
CPI below expectations → Cooling inflation → Fed has room to cut rates → Positive

PCE (Personal Consumption Expenditures Price Index)
This is the Fed's preferred inflation indicator. PCE is more comprehensive than CPI because it includes substitution effects and more accurately reflects actual consumer behavior.
Core PCE YoY ≥ 2.5% → Fed will not cut rates easily
Core PCE YoY ≤ 2.0% → Rate cut cycle may begin

Practical advice:
Focus on the trend of CPI and PCE, not the absolute value of a single month. Three consecutive months of data direction is more informative than one month's data.
If CPI falls but PCE rises, it indicates that consumer-side inflation is spreading to broader areas — this is a potential warning signal.

IV. Tariffs and Trade Policy

Tariffs are among the most underestimated macro variables.

Impact mechanism of tariffs:
Imposing tariffs → Imported goods become more expensive → Imported inflation → Fed cannot cut rates → Negative for risk assets.
Raising tariffs → Trade partner retaliation → Global supply chain reconfiguration → Lowered economic growth expectations → Pressure on risk assets.
Tariffs are essentially a wealth transfer; the price increases they cause directly erode household disposable income, dampening consumption and investment.

Practical advice:
Monitor trade friction dynamics among major economies, especially tariff developments between the US and China, and the US and Europe.
Changes in tariff policy usually take weeks or even months to be fully priced into the market; do not underestimate their cumulative effect over time.

V. ETF Inflows and Outflows

ETFs are the bridge connecting traditional capital and the crypto market. ETF inflow/outflow data is a window into institutional sentiment.

Data you need to track:
Daily net inflows/outflows: Positive numbers indicate institutional capital entering; negative numbers indicate exiting.
Consecutive days of net inflow/outflow: Sustained inflows are a bullish signal; sustained outflows are bearish. Historically, net outflows for over 7 consecutive days often correspond to BTC mid-term highs or阶段性 bottoms.
Total ETF AUM (Assets Under Management): Rising indicates capital accumulation; falling indicates capital withdrawal.
Grayscale GBTC premium/discount: Changes in GBTC premium/discount are an effective tool for observing institutional sentiment. When the premium rises significantly, it often means institutions are entering through the trust channel.

Practical advice:
Watch the number of consecutive net outflow days. If it exceeds one week, it means bullish forces are systematically retreating.
If ETF inflows are large but BTC price is stagnant or falling, it indicates that whales are taking the opportunity to distribute — a signal worth noting.

VI. Institutional Holdings Changes

Institutional holdings data is the footprint of "smart money" and holds significant reference value.

Monitor the following institutions' actions:
MicroStrategy: Continuously adding or pausing? This is one of the largest institutional holders of Bitcoin, and its actions have a bellwether effect on the market.
Asset managers like BlackRock, Fidelity: Are they increasing or decreasing holdings? Are they launching new products?
Market makers and hedge funds: Changes in crypto asset allocation at top firms like Citadel, Millennium, Point72 — though this data is harder to obtain, it can be inferred indirectly through market structure changes.
Public company holdings: "Digital asset" line items in quarterly reports of companies holding BTC.

Practical advice:
If multiple institutions are simultaneously increasing holdings, it indicates that big money is forming a consensus in the same direction.
If institutions increase holdings but prices fall, it's a notable divergence signal — possibly meaning retail is selling while institutions are buying.
If institutions you follow are consistently decreasing holdings while prices fall, and you are still adding, you need to reassess your judgment.

VII. Banks' Actions

Banks are the bridge between traditional finance and the crypto market. Their actions directly affect the efficiency and accessibility of capital flows.

Signals you need to watch:
Are banks opening up or tightening services for crypto firms?
Are banks launching crypto custody services?
Are banks hiring crypto talent?

Practical advice:
If top banks begin systematic deployment in crypto services, it indicates that compliance and institutionalization are accelerating, which is a long-term positive for the industry.
If there are signs of systemic bank pullback from crypto services, it means compliance costs are rising, and the industry may face periodic pressure.

VIII. War and Geopolitics

War is the most unpredictable variable in the macro environment.

Impact mechanism:
War leads to global supply chain disruptions → Energy prices rise → Inflation rises → Interest rates remain high → Pressure on risk assets.
War triggers safe-haven capital flows → Short-term boost for USD and gold; crypto assets may face short-term pressure or become a haven in some regions, depending on the specific conflict and global capital flow direction.

Practical advice:
When pre-war signals appear, reduce positions and hold cash or stablecoins.
In the early stages of war outbreak, there is usually violent volatility — do not participate.
When war enters a stalemate and the market has fully digested it, you can resume some operations.

IX. Practical Integration of Macro Information: A Directly Applicable Verification Process

When facing a basket of macro news, you can quickly verify and judge in the following order:

Step 1: Is liquidity (funding conditions) expanding?
Rising expectations of Fed rate cuts → Macro bias leans positive.
Weak NFP + declining CPI → Probability of rate cuts rises → Shift to bullish mindset.
Conversely, if employment is strong + CPI is stubborn → Rate cut expectations diminish → Maintain bearish mindset.

Step 2: Is capital flowing into the crypto market?
ETF net inflows for more than 5 consecutive days → Institutional capital is aggregating.
ETF net outflows for more than 7 consecutive days → Capital is systematically withdrawing.

Step 3: What are institutions and whales doing?
Increasing holdings + decreasing supply flowing to exchanges → Buying power exceeds selling pressure.
Decreasing holdings + increasing supply flowing to exchanges → Selling pressure is accumulating.

Step 4: Has the current market pricing already reflected known macro expectations?
If the market has already fallen 20% in advance and the bad news lands with a muted market reaction, sentiment has been fully priced in.
If the market is at highs and bad news triggers a sharp decline, pricing is still fragile and far from reflecting risks.

Macro information does not determine "whether Bitcoin will go up or down tomorrow," but it determines whether the battlefield you are on is a plain or a swamp. Identifying the battlefield type is more important than deciding which weapon to use.

My personal analysis of macro information leans bearish. Ethereum's激烈 oscillation around $1700-$1800 has triggered a strange phenomenon: investment banks loudly proclaim continuous outflows from Ethereum, but institutions are scooping it up.

This phenomenon of "saying no with the mouth but acting yes with the body" is the main reason for the current激烈 oscillation.

On the daily timeframe, I remain bearish on Bitcoin. As long as no positive macro news emerges, it will continue to grind lower to test traders' patience.