Macroeconomic interpretation: The dual easing of the Federal Reserve and trade policy, combined with institutional investors accelerating their allocation to crypto assets, injects a strong impetus for Bitcoin to break critical resistance levels, with traditional assets and the crypto market flying in tandem. We will analyze the direction of the crypto market from three dimensions: macro policy, capital flows, and market structure.
Trump's key statements last night became a turning point for the market: first, he abandoned the threat to fire Federal Reserve Chairman Powell, alleviating market concerns about uncertainty in monetary policy; second, he acknowledged that tariffs on China were too high and released expectations for negotiations, driving a broad rebound in risk assets. As a result, gold prices plummeted by 3% in a single day, the US stock technology sector and Chinese concept stocks collectively warmed up, and the correlation between the Nasdaq 100 index and Bitcoin significantly increased, approaching $95,000 during the day.
It is noteworthy that senior officials at the US Treasury have recently frequently mentioned the concept of 'digital gold', and the Trump team has publicly supported cryptocurrencies as a new type of reserve asset. The shift in policy direction has directly stimulated institutional funds to accelerate their entry into the market, with the 21 Capital fund, co-initiated by Cantor, SoftBank, and others, attracting attention for its innovative model — the fund converts Bitcoin holdings into equity and issues shares at $10 per share, implying an implicit valuation of $85,000 for Bitcoin. If this 'securitization' operation mode receives regulatory approval, it may set a precedent for the compliance entry of trillion-dollar institutional funds.
On-chain data reveals a subtle balance in the current market's funding situation. Despite Bitcoin's weekly increase of 12% and ETF weekly net inflows exceeding $1.5 billion, the data shows that the total market cap of stablecoins has yet to surpass previous highs, indicating that retail funds have not entered the market on a large scale. This divergence is corroborated by data from the two major stablecoin issuers, Tether and Circle: while USDT's market cap has surpassed $145.3 billion, setting a new record, its 24-hour trading volume reached $84.9 billion, showing characteristics of high-frequency trading by institutions; whereas USDC's market cap growth more reflects the demand for enterprise-level capital accumulation.
The changes in market structure are particularly evident in Bitcoin's market share trends. On April 23, the BTC.D index reached 64.67%, marking a new high since February 2021. Historical data shows that when Bitcoin's market share exceeds the 60% threshold, it is often accompanied by two types of market evolution: either continuing an independent trend through a siphoning effect or serving as a precursor to the start of altcoin season. The current surge in open interest in the derivatives market combined with a moderate increase in funding rates suggests that this market cycle may break from the 'institutional bull' script of 2021 — traditional asset management giants like BlackRock have already accumulated 4.2% of the market's circulating supply in spot ETF holdings, and if we consider the $300.8 billion short-term US Treasury bonds held by Berkshire Hathaway (accounting for 4.89% of the US Treasury market) partially shifting to crypto assets, it would fundamentally change the liquidity structure of the market.
Market data shows that Bitcoin is testing the critical level of $95,000, with open interest increasing by 47% since the beginning of the month, but the perpetual contract funding rate remains in a healthy range of 0.01%-0.03%. This rare combination of 'high leverage, low rate' reflects the risk control awareness of market makers and indicates that institutional investors are using tools such as options for position protection. From a technical perspective, the weekly MACD histogram has expanded for three consecutive weeks, and the RSI indicator has not yet entered the overbought zone, which may trigger trend-following signals from quantitative trading systems after breaking $95,000.
Market sentiment shows characteristics of 'anxious optimism'. The Google search interest in 'Bitcoin' has increased by 320% compared to the historical average, but the social media sentiment index indicates that retail investors' confidence index in breaking previous highs is only 58%, significantly lower than the 82% during the same period in 2021. The fundamental reason for this cognitive gap lies in the change of market participants: Coinank data shows that the number of addresses holding more than 1000 BTC has increased by 21% since 2023, while the growth rate of addresses holding less than 1 BTC has dropped to a nine-month low, indicating that the dominance of this market cycle has shifted from retail to institutional investors.
The synergistic effect between the crypto market and technology stocks: It is noteworthy that the correlation between crypto assets and technology stocks has reached a new high. Since the Federal Reserve signaled interest rate cuts, Bitcoin's excess return relative to the Nasdaq 100 index has reached 15.9%, and this divergence has further expanded following Tesla's announcement to accelerate the mass production of humanoid robots. The Robot ETF (159770) has surged over 11% in the last 11 trading days, and its constituent stocks have shown a seesaw effect with crypto mining stocks — when technology stocks rise more than 2% in a single day, the Bitcoin volatility index decreases by 12%, suggesting that some quantitative funds are engaging in volatility arbitrage between the two asset classes.
This synergistic effect has received new annotation at the regulatory level. The US SEC has recently accelerated the compliance review of 'AI + blockchain' projects, and among the first batch of six projects approved for record, four involve decentralized computing power trading protocols. The marginal improvement in the regulatory stance has led institutions like BlackRock to explicitly list 'crypto-native AI projects' as a key allocation direction in their quarterly reports, which may shift the market narrative from merely monetary to the discovery of application value.
Currently, there are three major potential risk points in the market: the liquidity shock that may be triggered by the inversion of the US Treasury yield curve, the liquidity siphon effect after Bitcoin's market share breaks the 70% threshold, and the regulatory uncertainty during the US election cycle. However, data from the derivatives market shows that institutional investors are hedging these risks through cross-cycle derivatives portfolios — the premium rate for Bitcoin futures expiring in May remains at a high of 18%, while the premium rate for contracts expiring in December has plummeted to 9%, forming a unique 'near high, far low' term structure, which typically appears on the eve of significant technical breakthroughs.
From the perspective of capital flows, among the institutional funds flowing into cryptocurrencies in the past two weeks, 63% are allocated to products with a lock-up period of six months or more, indicating that professional investors are firmly optimistic about the medium-to-long-term trend. As the market oscillates and builds momentum around the $95,000 mark, the breakthrough momentum is continuously accumulating under multiple favorable catalysts, suggesting Bitcoin may be writing a narrative unlike any previous cycle.
BTC Data Analysis:
Coinank data shows that Bitcoin's market cap dominance (BTC.D) surged to 64.67% this morning, reaching a cycle peak and setting a new high since Q1 2021, significantly above the three-year average of 53%. Historical cycle patterns indicate that when BTC.D breaks the 60% threshold, it often triggers a conversion from 'siphon effect' to 'overflow effect': after the dominance surpassed 70% in 2019 and 2021, the altcoin market achieved average quarterly gains of 312% and 189%, respectively. However, the current market environment presents three heterogeneous factors: the proportion of institutional holdings surpassing 23%, the contraction cycle of stablecoin market cap, and the historical peak of open interest in derivatives, which may alter the traditional rotation rhythm.
This surge in dominance reveals an upgrade in funding switching preferences: Bitcoin spot ETFs have seen weekly net inflows of $940 million, creating a 'one-way street for institutional funds'; the funding rate for altcoin futures has hit an extreme negative value of -0.15%, reflecting that leveraged funds are being forced to reduce their positions. Notably, the negative correlation between BTC.D and the Nasdaq index has risen to -0.67, indicating that the crypto market is becoming detached from the pricing logic of traditional risk assets.
Currently, Bitcoin's market share is at a new high, which exerts a certain degree of suppression in the short term: the flow share of the top 50 altcoins on exchanges has shrunk to 11%, a new low since 2020, and a liquidity crisis may trigger a downward spiral in small and mid-cap projects. However, there are also structural opportunities: the Ethereum/Bitcoin exchange rate has touched a three-year low of 0.046, and historical data shows that this level has an 82% probability of triggering mean reversion. In terms of capital rotation, the market cap of stablecoins has increased counter-cyclically by 2.3% to $161 billion, providing ammunition for potential style switching. If BTC.D breaks the critical resistance of 65%, it may replicate the 'frenzied altcoin season' of Q2 2021.
The current market is in a phase of strengthening 'Bitcoin standard', but on-chain data shows that the number of addresses holding more than 1000 BTC has decreased by 7% month-on-month, indicating that whale accounts are beginning to diversify their allocations, which may lay the groundwork for the revival of the altcoin market. Investors need to pay close attention to the divergence trends between BTC.D and the market cap of stablecoins, as this indicator has accurately predicted the market style switch in Q1 2023.
