Deng Tong, Golden Finance
Bull market return, hurry back!
Overnight, the cryptocurrency market saw a significant rebound, with Bitcoin rising again to over $100,000, peaking above $103,000, and Ethereum even achieving a more than 20% increase. The cryptocurrency market is in great shape. As of the time of writing, BTC is up 4.7%, priced at $102,804. Additionally, many other major coins have achieved double-digit increases.
What factors are driving the rapid recovery of the cryptocurrency market? How high can this round of market rise?
First, the United States and the United Kingdom reach a trade agreement.
The United States and the United Kingdom announced a trade agreement on May 8 (Thursday), marking the first formal trade agreement since President Trump initiated a global parity tariff policy. Trump called the agreement a 'historic breakthrough,' while UK Prime Minister Starmer stated that reaching consensus on the anniversary of WWII victory is 'a historic day.'
According to Trump, the UK will open its market to several agricultural products, including U.S. beef, ethanol, and 'almost all products produced by our farmers,' with expected export amounts involving 'tens of billions of dollars.'
On the UK side, Starmer pointed out that the agreement is 'extremely important' for Britain's automotive and steel industries. According to Downing Street, the import tariff on UK cars will be reduced from 25% to 10%. Additionally, the U.S. will ease tariff measures on UK steel and aluminum products.
Although the terms of the agreement are still to be further determined, the Trump administration is eager to announce this preliminary outcome, drawing market attention. Capital Economics analyst Paul Ashworth noted: 'This reflects the increasingly urgent desire of the Trump administration to seek compromise before the impact of tariff measures affects economic growth and inflation.'
Trump denied exaggerating the importance of the agreement, stating that this agreement is the 'best outcome currently achievable.'
After Trump announced the trade agreement with the UK, U.S. Secretary of Commerce Rootnik stated that enhancing market access for U.S. exporters will bring in billions of dollars in revenue. Rootnik said in the Oval Office: 'They agreed to open the market, which will create $5 billion in opportunities for U.S. exporters.' 'We still have a 10% tariff, which will bring in $6 billion for the U.S.' Rootnik stated that the agreement would not put pressure on the British economy, nor would it negatively impact British workers. He added that the agreement means the UK can export 100,000 cars to the U.S. 'with only a 10% tariff to pay.'
As a direct result of President Donald Trump's announcement of a 'trade agreement' with the UK, Bitcoin prices surged above $100,000, the Dow Jones increased by 500 points, and the S&P 500 rose by 1.47%.
Trump wrote in a Truth Social post: 'There are many other deals in serious negotiation!'
The agreement between the U.S. and the UK will signify a easing of global trade tensions, thereby boosting risk appetite across various markets, including cryptocurrencies.
Second, multiple states in the U.S. may start a cryptocurrency reserve race.
On May 6, New Hampshire Governor Ayotte announced on social media that New Hampshire will pass a bill approved by the state Senate and House, allowing the state to 'invest in cryptocurrencies and precious metals.' House Bill 302 was introduced in New Hampshire in January this year, allowing the state's treasury department to invest funds in cryptocurrencies with a market cap exceeding $500 billion. 'The state that stands for 'Give me liberty, or give me death' is leading the future development of business and digital assets,' stated New Hampshire Republicans in a May 6 post on X. With the signing of this bill, New Hampshire becomes the first state in the United States to consider establishing a strategic Bitcoin reserve through legislation, including an initiative in collaboration with the federal government.
Subsequently, Arizona Governor Katie Hobbs signed a bill on May 7 allowing the state to hold unclaimed cryptocurrency for at least three years and deposit it into a 'Bitcoin and Digital Asset Reserve Fund.' House Bill 2749 allows Arizona to claim abandoned digital assets if there has been no response to any communications within three years. The state's custodians can stake these cryptocurrencies to earn rewards or receive airdrops.
Meanwhile, on the same day, the Texas House committee passed a Republican-backed bill with a vote of 9 to 4 aimed at establishing a Bitcoin reserve, which now only requires a vote of the full House to be submitted to Governor Greg Abbott's desk.
North Carolina's Digital Asset Investment Act will authorize the state treasurer to invest 5% of any designated funds in 'qualified digital assets.' The bill passed its second reading in the House on April 30 with a vote of 71 in favor and 44 against, and was submitted to the Senate for review. The bill will also 'examine the feasibility of allowing state retirement income plan members to make such investments (via cryptocurrency ETP),' and study the establishment of a state reserve to hold seized or confiscated cryptocurrency.
Ishmael Green, a partner at Diaz Reus law firm, stated he expects about six states to follow New Hampshire's lead in the short to medium term—'because states are seeking to hedge against inflation in addition to protecting their balance sheets.'
FalconX research director David Lawant stated he also expects several more states to enact such laws in the next 6 to 12 months.
For more content, see (What are the highlights of New Hampshire's Bitcoin Reserve Act? Will it inspire other states to follow suit?)
(After New Hampshire wins the cryptocurrency reserve race, which states are next?)
Third, SEC reaches settlement with Ripple.
According to a statement from the SEC on May 8, the SEC and Ripple submitted a joint settlement letter to a New York court, seeking to lift the injunction against Ripple set for August 2024 and to return $75 million of the $125 million civil penalty held in escrow to the cryptocurrency company.
This settlement comes as the SEC fully withdraws from a series of cryptocurrency investigations and lawsuits initiated during Gensler's tenure. After Trump took office in January and appointed Paul Atkins, who has a friendly attitude toward cryptocurrencies, as the new SEC Chairman, the SEC's stance on cryptocurrency regulation has undergone a 180-degree turn.
However, SEC Commissioner Caroline Crenshaw harshly criticized the pending deal in a statement on May 8, stating it would impair the agency's ability to regulate cryptocurrency companies and undermine court rulings.
She stated: 'This settlement agreement, combined with the procedural dismantling of the SEC's cryptocurrency enforcement program, has caused great harm to the investing public and undermined the court's role in interpreting our securities laws.' 'At the same time, this settlement agreement, along with a series of firing decisions, has collectively harmed our lawyers' credibility in court, as we are now being asked to take legal positions contrary to those taken a few months ago.'
Meanwhile, Crenshaw believes that if Judge Torres accepts the settlement, it will erase 'the investor protections we have already won' and leave a 'regulatory vacuum' until the cryptocurrency working group develops a regulatory framework. 'This settlement agreement is not in the best interest of the investors and markets our agency serves and protects. It brings more problems than answers.'
Fourth, SEC considers new rules to ease the issuance of security tokens.
SEC Commissioner Hester Peirce stated in a speech on May 8 that the commission is considering amending rules to allow companies more freedom in issuing tokenized securities.
Peirce stated in her speech that the regulator is 'considering implementing potential exemptions for companies that issue, trade, and settle securities using blockchain technology,' freeing them from certain registration requirements. For example, decentralized exchanges (DEX) may no longer need to register as 'broker-dealers, clearing agencies, or exchanges.' The SEC has previously issued several Wells notices to DEXs like Uniswap, accusing them of failing to register as exchanges. Companies 'should not have to comply with inappropriate regulations that were established before the technology being tested existed and may be eliminated due to the characteristics of that technology.'
Fifth, concerns about stagflation are 'favorable' for crypto assets.
The Federal Reserve decided on May 7 to maintain interest rates at 4.25%-4.50%, enhancing the appeal of cryptocurrencies. Fed Chairman Jerome Powell emphasized in a post-meeting speech that the risks of stagflation are rising—slow economic growth coupled with persistent inflation—partly due to Trump's tariff policies.
Kobeissi Letter stated on X: 'The Fed seems to anticipate rising inflation and unemployment in the future,' adding: 'They have delayed interest rate cuts to observe which part of their dual mandate will heat up further. Uncertainty still exists.'
This environment enhances Bitcoin's status as a store of value, often compared to 'digital gold.' Due to concerns that inflationary pressures will erode fiat currencies, investors are using Bitcoin as a hedge, similar to when cryptocurrencies surged during the monetary easing period in 2020.
Grayscale research director Zach Pandl believes: 'The Fed is concerned about stagflation, and we believe this outcome is favorable for Bitcoin.'
Six, technical rebound in the cryptocurrency market.
From a technical perspective, the current rise in cryptocurrencies is part of a rebound from the $2.4 trillion support level. The last time the market capitalization broke the $3 trillion mark was on March 3, after which a sell-off triggered by tariffs caused the market cap to drop to $2.27 trillion on April 7. The current total market cap of the crypto market is $3.03 trillion, attempting to break through the resistance zone between $3.1 trillion and $3.25 trillion.
Daily chart of cryptocurrency market capitalization.
If this happens, it would indicate that bulls have the ability to maintain an upward trend and set their sights on historical highs above $3.69 trillion. The daily RSI has steadily risen from an oversold level of 30 on April 7 to the current 68, indicating that bullish momentum is accelerating.
How much can this round of market rally rise?
Standard Chartered: The target of $120,000 in the second quarter may be too low.
Ben Caselin, CMO of VALR: As Bitcoin seeks to solidify its value above $100,000, it is 'very likely' to set a new high above $110,000 soon. 'Retail will only enter the traditional latter half of the Bitcoin four-year cycle, which could peak macroeconomically in the fourth quarter of this year.'
Charlie Sherry, CFO of Australian cryptocurrency exchange BTC Markets: While we may see psychological resistance at the $100,000 mark, it seems Bitcoin will inevitably add another zero to its price.
Cryptocurrency entrepreneur Anthony Pompliano: The trade agreement means the likelihood of us hitting a historic high in 2025 is increasing.
