Crypto Market Analysis: Easing Tariff Policies Drive Market Rebound

Since March, global financial markets, including the crypto market, have been significantly affected by the "reciprocal tariff policy." Market participants closely monitor policy developments and use this as a key parameter to assess asset allocation, consumer confidence, economic outlook, and corporate profit expectations.

This week, with the preliminary agreement on tariffs reached between the US and the UK, and the first contact between the US and China being "successfully completed", the reciprocal tariff policy has entered the third phase (the agreement phase). This progress has boosted the forward-looking trading in the stock market and the crypto market. Since hitting the bottom on April 7, the S&P 500 index has continued to rebound, recovering the losses caused by the tariff policy. Bitcoin has performed even stronger, quickly breaking through multiple technical indicators this week, nearing its previous highs.

Against the backdrop of favorable news stimulating trading enthusiasm, other cryptocurrencies represented by Ethereum also started a significant Rebound this week. Previously underperforming Ethereum surged 39.01% in a single week, marking the largest weekly increase in this cycle. Data shows that the bull market season for other cryptocurrencies has already begun.

The current key question is: the Rebound has been achieved, can the market liquidity recover and drive a reversal in the second quarter market?

Policy and Macroeconomic Overview

On May 8, the leaders of the US and UK announced via phone that they had reached an "Economic Prosperity Agreement." The agreement lowers tariffs on British cars and steel and aluminum in exchange for the UK opening its market to US agricultural products, while retaining a 10% baseline tariff. The US is expected to gain $5 billion in export opportunities while also collecting $6 billion in tariff revenue.

The market views this agreement as a preliminary success of the United States' "reciprocal tariff" policy and speculates that the "10% tariff increase plus a certain amount of commitment for imports of U.S. goods" may be the expected target of U.S. tariff policies for most countries. This expectation is considered fundamentally acceptable, thereby stimulating capital inflow with a higher risk appetite, which has driven the already oversold market to rebound rapidly.

In addition, the trade representatives of the US and China held their first public contact in Switzerland since the implementation of the tariff policy. Both sides stated that they had "made substantial progress." The progress of US-China negotiations may depend more on the social and economic financial pressures in the United States rather than unilateral willingness. This increases the likelihood of ultimately reaching a rational outcome.

Despite poor survey data, the economic data and employment data in April were relatively good, and there were no significant deviations in the earnings reports of major tech companies, providing fundamental support for the strong Rebound of the US stock market.

Crypto Market Performance

Bitcoin has rebounded for 5 consecutive weeks, and this week, driven by developments in tariff policies, positive news within the industry, and buying pressure, it has risen again by over 10.46%.

From a technical perspective, Bitcoin's short-term moving averages are showing a uniform upward arrangement. The 90-day moving average has started to rise, while the 360-day moving average continues to climb. More importantly, after returning to the key support level last week, Bitcoin strongly broke through the "first upward trend line" of this cycle with a significant increase on May 8th. This indicates that forward-looking traders have basically completed their pricing correction regarding the impact of tariff policies, which can be seen as a phase shift in the medium to long-term market.

The main price pressure in the next phase comes from the $11,000 level. After breaking this position, it will face the challenge of historical highs.

It is noteworthy that after Bitcoin's continuous 5-week Rebound, other cryptocurrencies experienced a comprehensive surge this week, with Ethereum's weekly increase exceeding 39.1%. If the Rebound of other cryptocurrencies can be sustained or even reversed, it will signify the return of a period of ample market liquidity.

Capital Flow Analysis

Following a significant influx of funds last week, this week saw a dual-channel positive inflow of stablecoins and Bitcoin spot ETFs, totaling $944 million, providing substantial support for the surge in the crypto market, including Bitcoin.

Specifically, in the 7 trading days last week, 6 days recorded inflows of funds, indicating a strong willingness among investors to bottom-fish and push up prices.

In addition to a substantial influx of funds, the leverage of on-site capital has also started to increase, with both the borrowing rate and the lending interest rate showing an upward trend. This indicates that the risk appetite of on-site capital is on the rise.

Market Chip Analysis

After three months of chip cleaning, cost re-pricing, and the replacement of short-term and long-term investors, the locking degree of chips has significantly increased. Although Bitcoin has risen for five consecutive weeks, the selling pressure is gradually decreasing, which means that most short-term rebound traders have already exited the market, and the reluctance to sell in the market is intensifying, making it highly likely that Bitcoin will significantly rise and break new highs in the short term.

From the perspective of long-term and short-term holders, as the price returns to $100,000 and liquidity restores, long-term holders begin to sell off, while newly entering short-term investors start to compete for chips. This cycle's major buyers - whale investors continue to increase their holdings by over 56,000 bitcoins this week.

Currently, short-term holders have just over 10% floating profit, with only 2% of the chips in a loss state, the market is in a very safe condition, and the price of Bitcoin is very likely to achieve a rapid breakthrough to the previous high.

Cycle Indicator

According to relevant data, the BTC cycle indicator is 0.75, indicating that Bitcoin has re-entered a Rebound phase.