In April, Bitcoin first fell to a new low of $74,500, and then rebounded to break through $97,800. The entire market also followed Bitcoin's plunge and surge, and market sentiment experienced a roller coaster-like ups and downs.
However, during this sharp drop and surge, Bitcoin whales have been constantly moving. Since April, the number of addresses holding more than 1,000 Bitcoins has soared, with an increase of more than 60 in more than a month. This data is similar to the level of whale addresses in November and December 2024. Bitcoin has risen sharply in these two months. However, small retail investors holding less than 10 Bitcoins have continued to decline. The most concerned: super whales with more than 10,000 BTC have been buying, basically buying small when the price drops slightly, and buying big when the price drops sharply! It can be said that without these whales buying, Bitcoin would have repeatedly broken new lows.
From these data, we can see that the current price of Bitcoin has indeed received strong support. The main force is still optimistic about the future market in the long run, and the selling of retail investors also illustrates the effectiveness of the market cleansing.
Entering May, the crypto market will face the dual test of "macro policy + technology upgrade", the game between the Federal Reserve's interest rate decision and non-agricultural data, the reconstruction of the ecosystem by the Ethereum Pectra upgrade, and the disturbance of geopolitics and regulatory trends, which may cause Bitcoin to find a new direction in the shock. Overall, after the violent shock in April, the crypto market has initially stabilized, providing a better entry window for the layout of macro and industry events in May.
Here, we summarize the major financial events that will occur in May into four categories: macroeconomic policies, crypto ecology, geopolitics, and market sentiment, so that you can better understand the changes in the market in May and prepare investment strategies in advance.
How has Bitcoin performed in May in history?
First, let’s review: How did Bitcoin, as a bellwether of the cryptocurrency market, earn in May? The following are statistics from third-party websites such as tradingview:
As can be seen from the chart above, in May, Bitcoin has generally had more positive returns, but the difference is not big. In 13 years, the increase and decrease ratio is 7:6. In the second year of the previous three halvings, namely: 2013, 2017, and 2021, the increase and decrease ratio was 1:2; the average monthly return rate was about +10.2%, the largest increase was +70.4% in 2017, and the largest decrease was -35.1% in 2021.
Overall, Bitcoin's performance in May was quite volatile, with both significant increases and decreases. Up years are usually accompanied by positive market sentiment and strong demand from investors, while down years may be affected by macroeconomic factors, regulatory policy changes or market adjustments.
Macroeconomic policy: global central bank decisions and data storm
On May 8, the Federal Reserve announced its interest rate decision
The market consensus is to maintain the federal funds rate range at 4.25%-4.50%, and wait and see whether a rate cut cycle will begin in June.
Key focus: The current interest rate remains at 4.25%-4.5%, but attention should be paid to the dot plot's hints at the path of interest rate cuts in 2025 (the market expects a 50 basis point rate cut for the whole year).
Although it is highly likely that the interest rate will remain unchanged at this meeting, given the current situation and market sentiment, the market is likely to fall sharply unless Powell clearly expresses his dovish stance in the subsequent press conference. After such a long period of high-level fluctuations, the decline may start at $10,000, and form the first line of defense at $85,000 and the second line of defense at $80,000.
Of course, if there is a dovish stance, then it is more likely to rise first and then fall, because the market is already quite heavy, and retail investors are not willing to hand over their chips to a sufficient extent. After three rounds of halving, the consensus of BTC is too strong. Without a torturous market, there will be no bloody chips.
On May 8, the Bank of England announced its interest rate decision
The market highly expects that the Bank of England will cut the benchmark interest rate by 25 basis points from 4.50% to 4.25% at this meeting to hedge against slowing global growth and trade risks. This is the first rate cut since March 2020. For Bitcoin, if the rate cut is implemented, it may lead to a weakening of the euro, indirectly supporting dollar-denominated assets and causing Bitcoin to rise. However, the Bank of England's interest rate announcement this time is too close to the Federal Reserve's interest rate decision, and the impact may not be obvious.
May 13, US April CPI released
CPI is a core indicator of the Federal Reserve’s policy, and the quality of the data directly affects the market’s judgment on the liquidity of the cryptocurrency market.
The survey generally expects a month-on-month increase of +0.1% and a year-on-year increase of +2.6%. The core CPI month-on-month increase of 0.3% is the watershed. A value higher than this may trigger market concerns about "stagflation", while a value lower than this will strengthen the narrative of interest rate cuts.
In the bullish scenario, if the CPI data is significantly lower than expected (such as core CPI ≤3.4% year-on-year), Bitcoin may rise rapidly as the market expects loose liquidity. For example, when CPI drops to 3.4% in May 2024, Bitcoin will rise by 7.02% the next day; in a bearish scenario, if the data is higher than expected (such as core CPI ≥3.7% year-on-year), Bitcoin may come under pressure to fall due to the selling of risky assets caused by rising expectations of interest rate hikes. For example, when CPI soared to 7.9% in March 2022, Bitcoin fell 6.37%.
Technical support: If Bitcoin breaks through key resistance levels (such as $95,000), it may start a new round of increases; if it falls below the $88,000 support, we need to be wary of a pullback to the $82,000-74,000 range.
Crypto Ecosystem: Technological Upgrades and Market Structure Changes
May 7th, Ethereum Pectra Upgrade
Ethereum core developers have set May 7 as the target for the activation of the Pectra mainnet, and will merge Prague and Electra improvements to optimize the transaction and wallet experience.
The core optimizations are mainly: the validator staking limit is increased from 32 ETH to 2048 ETH (EIP-7251), optimizing the efficiency of large-scale institutional participation; account abstraction (EIP-7702) supports batch transactions and Gas sponsorship, lowering the user threshold; Blob throughput is doubled (EIP-7691), reducing Layer2 transaction costs and promoting ecological activity.
The upgrade window may cause node switching and synchronization delays, resulting in network congestion and gas fee fluctuations, which will have a short-term impact on the derivatives market and liquidity providers. In the long run, Pectra's performance and user experience improvements will enhance the competitiveness of the Ethereum ecosystem, attract more DeFi and Layer2 projects, and help ETH prices rise in the medium and long term.
ETH is going to be upgraded tomorrow, but the price is currently flat. More than one large investor has made it clear that they will abandon ETH. Although some people see opportunities at this time, even if ETH continues on the path of being the king of public chains, it will take time to repair the community’s collapsed confidence.
May 30, FTX's next round of repayment distribution
FTX announced that it will make a new round of repayment distribution to Class 5 and Class 6 creditors on May 30 to advance the bankruptcy reorganization process. The potential impact is mainly that creditors may sell tokens in exchange for liquidity after receiving compensation, which will increase market selling pressure in the short term; but the completion of debt liquidation will restore the industry's reputation, and the stable reorganization process of FTX will reduce market uncertainty, promote industry risk control and compliance development, and benefit the healthy development of the market in the long run.
Geopolitics: trade frictions and policy games
On May 16, the EU's counter-tariffs against the United States took effect
The EU plans to impose a 25% counter-tariff on some US products, which will take effect on May 16. If the tariffs are stronger than expected, it may intensify global trade frictions, boost risk aversion, and be bearish for risky assets. Bitcoin may fall; if the tariffs are mild, the market reaction will be limited.
May 22, "TRUMP DINNER" dinner
Trump held a private dinner for the top 220 holders of the "TRUMP" coin at the Washington Golf Club, the official time is May 22.
This event has caused the TRUMP coin to double in a short-term surge, market sentiment has fluctuated greatly, and secondary altcoins may be hyped up. TRUMP may have a second chance to rise before the dinner, but we need to pay attention to the risk of good news turning into bad news.
In addition, we can pay attention to whether Trump will release some policy expectations at this dinner. If Trump sends a signal of supporting cryptocurrency regulation or tax cuts, it may stimulate market optimism.
Market sentiment: institutional trends and public opinion trends
May 16: U.S. foreign investors net bought long-term securities in March
The Treasury Department's "International Capital Flows Report" (TIC) will reveal on May 16 the strength of foreign net purchases of U.S. long-term securities in March; the net purchase scale in the same period last year was more than US$160 billion, but last month (February) the net purchase value was -US$45.2 billion, which was the first negative value in the past ten months, which also prompted Bitcoin to rise in April.
In the short term, if foreign capital continues to flow into U.S. Treasuries and the U.S. dollar strengthens, it will put pressure on crypto assets in the short term; if it flows out, it may be beneficial to non-correlated assets such as Bitcoin; in the long term, if global capital allocation accelerates to crypto assets, it will support currency prices at the macro level.
Summarize:
In general, the major financial events in May may have two possible trends, but generally speaking, the bullish factors are mainly the Fed’s dovish signals, ETH upgrades, and Trump’s favorable policies, while the bearish events may be: CPI rebound, escalation of geopolitical conflicts, FTX repayment selling pressure, etc.
In summary, the market in May may present a mixed situation of long and short positions, and the volatility may hit a new high this year. Investors need to dynamically balance between risks and opportunities. In the short term, the market is likely to rise and fall before the Fed's fourth interest rate meeting this year in mid-June, which will wear down people's hearts, and even squat again before the real reversal and rise, forcing retail investors to hand over more chips.
Therefore, we should have an optimistic attitude towards the long-term market: the basic logic of the fourth round of halving is still there; operate the current short-term market with patience and caution: control leverage and even use leverage with caution, set profit and stop loss, and the most important thing is to survive to the end.