Written by: 1912212.eth, Foresight News
The much-anticipated surge has finally occurred. On the evening of May 8, BTC broke through the $100,000 mark and soared to above $102,000, achieving five consecutive weekly increases. However, the most eye-catching performance was from Ethereum, which rose over 20% in 24 hours, breaking through the $2,000 mark and reaching $2,200. ETH/BTC returned to above 0.02, rebounding over 14% from the low point.
Ethereum's surge has also led to a skyrocketing market for altcoins, with the staking token EUGEN rising over 40% in 24 hours, ETHFI rising over 28%, and both OP and ARB rising over 15%. In terms of public chains, SOL increased nearly 10%, while SUI and BERA both saw increases of over 19%. In the stablecoin sector, ENA rose over 28%, and LQTY rose over 39%.
The crypto market has been quiet for several months since January this year; what are the factors influencing this increase? How will the subsequent market unfold?
Bitcoin spot ETFs have seen continuous net inflows since mid-April.
ETF data, as an indicator of market capital inflow, shows that Bitcoin spot ETFs have seen continuous net inflows since April 15.
Charts show that net inflows over 2 days exceeded $900 million, net inflows over 1 day exceeded $600 million, and net inflows over 5 days exceeded $300 million, while net outflows occurred only on 3 days and were far smaller than net inflows.
Currently, the cumulative total net inflow of Bitcoin spot ETFs has reached $40.77 billion, with strong capital inflows laying a solid foundation for BTC's price surge.
Companies like Strategy are still continuously buying.
Data shows that Strategy spent $555.8 million to acquire 6,556 BTC between April 14 and 20, with an average price of $84,785. Subsequently, they invested another $180.3 million to acquire 1,895 BTC at an average price of $95,167. Additionally, Strategy has launched an ambitious "42/42 Plan" to raise $84 billion over two years to purchase Bitcoin, following last year's implementation of the $42 billion "21/21 Plan."
Japanese listed company Metaplanet increased its holdings by 145 BTC on April 24, followed by an additional investment of $53.4 million to acquire 555 BTC on May 7. Furthermore, on the same day, they issued ordinary bonds worth $25 million to purchase additional Bitcoin. Metaplanet's CEO stated in a letter to shareholders that the company will continue to steadfastly promote its Bitcoin strategy, aiming to hold a cumulative total of 10,000 BTC by the end of the year.
Indian listed company Jetking, Nasdaq-listed company Thumzup, and U.S. listed medical technology company Semler Scientific are purchasing or planning to purchase more Bitcoin.
Both long-term and short-term holders of BTC have increased their holdings.
Glassnode data shows that both short-term holders (STH) and long-term holders (LTH) of Bitcoin are increasing their holdings. LTH has been continuously accumulating since early March, while STH also started increasing their holdings in the past week. Glassnode defines LTH as investors holding BTC for more than 155 days, while STH are those holding for less than 155 days. According to their latest weekly report, LTH has increased its holdings by over 250,000 BTC since early March, bringing the total holdings of this group to over 14 million BTC.
This indicates that market confidence is recovering, and accumulated momentum has surpassed investors' inclination to sell for safety.
When BTC approached the local low of $74,000, over 5 million BTC were in a loss state. However, as the market recovered, this number has decreased to about 1.9 million BTC, indicating that over 3 million BTC have returned to a profitable state.
Ethereum spot ETFs have seen continuous net inflows combined with positive effects from the Pectra upgrade.
Ethereum spot ETF data also shows an optimistic trend. Since the end of April, it has achieved net inflows over 7 days, with net inflows exceeding $60 million on 3 days, and the maximum daily net outflow did not exceed $30 million.
Additionally, Ethereum has completed the Pectra upgrade, which is the first upgrade of the Ethereum mainnet since the Cancun upgrade in March last year. This includes two collaborative updates: the Prague execution layer hard fork and Electra consensus layer upgrade, and plans to incorporate 11 Ethereum Improvement Proposals (EIPs). Important EIPs in this upgrade include EIP-7251 (increasing the maximum effective balance of validators), EIP-7691 (improving blob throughput), and EIP-7623 (increasing calldata fees).
This upgrade has provided significant technical enhancements for the Ethereum mainnet and ecological projects, with market capital reflecting directly in ETH prices and ecological projects.
USDT and USDC market cap increased by over 4% in one month.
The total market cap of stablecoins continues to hit new highs. According to DefiLlama data, the current total market cap of stablecoins has reached $242.226 billion, with a 7-day increase of over $16.078 million. USDT has a monthly increase of 3.75%, with a market cap of $150.179 billion, while USDC has a monthly increase of 1.18%, with a market cap of $60.904 billion, having retreated since peaking at the end of April.
USDT market cap chart
The market caps of the two major stablecoins are not decreasing but increasing, indicating that capital is still being injected into the crypto market.
USDC market cap chart
The Fed is expected to cut rates in June-July, and the China-U.S. trade war may soon reconcile.
In the early hours of May 8, after concluding a two-day meeting, the Federal Reserve announced it would maintain the federal funds rate at the range of 4.25% to 4.5%. This marks the third consecutive meeting since January and March this year where the Fed did not cut rates. Powell stated, "The outlook for monetary policy may include lowering short-term rates." He mentioned in a press conference that the outlook "may include" a rate cut or keeping rates stable, depending on economic conditions. Fluctuations in GDP data will not really change our situation." This has further exacerbated tensions between the Fed and the White House. Trump has repeatedly criticized the Fed on social media, stating that talking to Powell is like playing music to a cow, as Powell is always too late.
The current probability of the Federal Reserve cutting interest rates by 25 basis points as early as June is 30%, slightly higher than the earlier 27%. According to futures prices, the probability of a rate cut by July is about 75%. Recently, the Bank of England cut rates, and the People's Bank of China also lowered rates and reserve requirements, with global liquidity M2 continuing to rise. The expectation of a Fed rate cut may promote capital inflows into crypto assets.
On tariffs, Trump has wielded the tariff stick, causing global capital markets to tremble. Under pressure from the market and domestic public opinion, Trump finally could not sit still and frequently expressed intentions for talks with China. On May 7, China's Ministry of Foreign Affairs announced that Vice Premier He Lifeng would visit Switzerland from May 9 to 12, during which formal talks would be held with U.S. Treasury Secretary Yellen and Trade Representative Tai. This is the first face-to-face consultation on economic and trade issues between high-level officials of China and the U.S. since the G20 summit in 2024, interpreted by the market as a clear signal from both parties to "pause tariff escalation."
Future market trends
Raoul Pal, former Goldman Sachs executive and founder of Real Vision, tweeted, "I believe BTC's dominance has peaked today. Daily, weekly, and monthly DeMark topping signals have appeared, and the top levels are lower than the 2021 highs, which in turn were lower than the 2017 highs. If this judgment holds, it would mark the arrival of the next phase of the 'Banana Zone' (referring to altcoin season). Let's wait and see."
Placeholder partner Chris Burniske, who has been shouting that the bull market is not over, tweeted again, stating, "When the blockchain economy is thriving, it has the fastest economic feedback loop of any trillion-dollar system globally: activity - on-chain capital inflow - price - activity. When we fall into despair, we always forget this and then are surprised by how quickly wealth changes."
Jack Tan, co-founder of WOO X, stated, "Bitcoin breaking through $100,000 again is not only a confidence restoration in price but also a firm vote of confidence in the future vision of decentralized finance globally. As the impact of trade war-related news gradually diminishes, the gold market has also entered a wait-and-see period, with risk appetite returning to a dominant position."
The most optimistic "call king" Arthur Hayes, co-founder of BitMEX, stated that Bitcoin will reach $150,000 by the end of May.
