In May 2025, the crypto market experienced a deep adjustment, with Bitcoin's price falling from a peak of $100,000 to around $97,000, while mainstream coins like Ethereum and Sol saw declines exceeding 7%. This pullback is both an inevitable correction of the technical aspect and the result of multiple macro risks resonating.
Core drivers of the pullback
1. Fed policy game: As the FOMC meeting approaches on May 7, market concerns about the interest rate path have intensified. Although the Fed began a rate-cutting cycle in March, recent hawkish signals (such as inflation expectations being raised to 2.5%) and the deadlock in debt ceiling negotiations have tightened liquidity expectations, prompting investors to preemptively sell off for safety.
2. Technical and leverage liquidation: Bitcoin triggered a 'death cross' (50-day moving average crossing below the 200-day moving average) after falling below the key support level of $75,000. High-leverage contracts (with total positions exceeding $50 billion) triggered a chain of liquidations, with the liquidation amount reaching $1.38 billion within 24 hours.
3. Geoeconomic shocks: The U.S. tariff increase policy in April raised global stagflation risks, causing funds to shift from risk assets to traditional safe havens like gold, resulting in a single-day market cap loss of over 10% in the crypto market.
Market differentiation and resilient sectors
Despite overall market pressure, some sectors have broken through against the trend:
SocialFi and RWA: TON rose against the trend by 4.49% due to the expansion of social application scenarios, while tokens like PENDLE and MKR benefited from the demand for real asset tokenization, with increases exceeding 3%.
AI sector resilience: AI-related tokens like Fetch.ai (FET) only fell by 2.3%, while trading volume surged by 30%, indicating a bet on the long-term narrative.
Future paths and trading possibilities (for reference only)
1. Short-term key level contest: If Bitcoin holds the range of $95,000-$92,000, it is expected to bounce back and challenge the previous high of $105,000; if it fails to hold, it may drop to $90,000.
2. Policy-sensitive period layout: Market volatility may intensify around the Fed meeting on May 7 and the CPI data release on the 14th. It is recommended to use options hedging (such as straddle strategy) and tighten stop-losses.
3. Long-term value anchoring: Although institutional funds have temporarily withdrawn (with a net outflow of $8.7 billion from Bitcoin ETFs), banks like Standard Chartered still maintain a target price of $200,000 by 2025, and RWA and DeFi innovations may lay the groundwork for the next bull market.
Conclusion
The pullback is both a release of risk and a nurturing of opportunities. Investors need to control leverage and diversify allocations (such as BTC + defensive tokens) while closely monitoring the Fed's policy inflection points and geopolitical movements. As Arthur Hayes said, 'The tide of liquidity will eventually turn, and clearer sailing often follows the storm.'
