Analysis of the multi-dimensional impact of U.S.-China economic and trade negotiations and geopolitical situation on the crypto market.

1. Macro transmission of U.S.-China competition: from policy expectations to market pricing.

  1. Risk appetite and capital flow
    Signs of easing in U.S.-China negotiations (such as expectations for tariff adjustments) may drive a short-term rebound in risk assets (including cryptocurrencies). For example, during the restart of negotiations between the U.S. and China on May 7, 2025, Bitcoin broke through $97,000, and Ethereum's weekly increase reached 30%. However, if negotiations break down, the market may turn to Bitcoin as the 'ultimate safe-haven asset,' significantly amplifying its price volatility (e.g., during the India-Pakistan conflict in 2019, BTC fell 6.7% in a single day).

  2. Reconstruction of regulatory frameworks
    The U.S. 'categorical regulation' of cryptocurrencies (incorporating stablecoins into the payment system, considering Bitcoin as a commodity) paves the way for institutional entry, while China's promotion of cross-border settlement of the digital RMB may challenge the dollar's hegemony, indirectly benefiting the crypto market. If the U.S. and China reach a consensus on digital currency regulation, it could give rise to a trillion-dollar stablecoin market.

  3. Supply chain and computing power competition
    Chinese mining companies relocating computing power to Kazakhstan (deployment of 230,000 mining machines) may affect the support level of Bitcoin production costs, while the competition for clean energy mining technology in the U.S. may promote technological upgrades in the industry.

2. The 'double-edged sword' effect of geopolitical conflicts

  1. Safe-haven demand and liquidity shocks
    The breakdown of the India-Pakistan ceasefire agreement led to a brief drop in Bitcoin to $103,000, but when conflicts reignite, its role as a 'non-sovereign asset' as a safe haven becomes prominent. Historical data shows that during geopolitical crises, the correlation of the crypto market with gold dropped to -0.23, while the correlation with tech stocks rose to 0.68.19.

  2. Reflections of military conflicts on-chain.
    The drone-dominated combat model in the Russia-Ukraine conflict has increased the demand for computing power, indirectly stimulating GPU mining revenues; tensions in the Middle East may accelerate the issuance of sovereign stablecoins like oil coins, creating regulatory arbitrage opportunities.10.

3. Federal Reserve policy and market liquidity

  1. The butterfly effect of interest rate cut expectations
    The market's expectation for the Federal Reserve to cut rates in June has dropped to 3.1%. If the rate cut is delayed, it will suppress the valuation of risk assets. However, Bitcoin futures open interest has exceeded $30 billion, indicating that bulls are positioning for volatility ahead of the interest rate decision.

  2. The crowding out effect of U.S. Treasury issuance
    The issuance of trillions of dollars in U.S. Treasury bonds in June may withdraw liquidity from the market, putting short-term pressure on the crypto market. However, if China signals easing by increasing its holdings of U.S. Treasuries, it may alleviate the liquidity crisis.

4. Evolution of technical indicators and market structure

  1. The narrative of Bitcoin as 'digital gold' strengthens
    Bitcoin's market share has surpassed 65%, reaching a four-year high, reflecting institutional funds continuously flowing in through ETFs (e.g., BlackRock's spot ETF saw a net inflow of $862 million in a single week). If it breaks through the historical resistance level of $110,000, it may trigger algorithmic trading to follow suit.

  2. The 'track rotation' characteristic of altcoins
    Ethereum's Pectra upgrade (account abstraction, 40% reduction in transaction fees) has driven DeFi protocol TVL to a new high, while high-performance public chains like Solana benefit from this, forming a positive cycle of 'main chain upgrade - ecological explosion.'

5. Investment strategy recommendations

  1. Short-term (1-2 weeks)

    • Event-driven: Pay attention to the risk of details leaking from U.S.-China negotiations on May 11. If easing signals are released, consider accumulating BTC/ETH on dips (support levels: BTC 95,000, ETH 15,000).

    • Hedging tools: Use the USDT premium rate (currently -0.3%) and Coinbase funding rate (-0.02%) to gauge short-term bullish or bearish sentiment.

  2. Mid-term (Q2-Q3)

    • Track selection: prioritize allocating RWA (real asset tokenization) and Layer2 tracks (such as Arbitrum), avoiding regulatory-sensitive DeFi protocols.

    • Risk warning: If the U.S. passes the (GENIUS Stablecoin Act) (100% reserve requirement), it may trigger a liquidity crisis for small and medium-sized stablecoins.

  3. Long-term (after 2025)

    • Paradigm shift: Focus on the competition and cooperation between China and the U.S. in areas such as cross-border settlement of digital assets and AI training computing power sharing, seizing opportunities along the dual lines of 'compliance + technological innovation.'

    • Valuation reconstruction: If the total size of Bitcoin ETFs exceeds $500 billion, its market cap ratio may approach 70%, squeezing the survival space of altcoins.

Summary: The crypto market has entered an 'macro-dominated' era.

The current crypto market has shifted from being technology-driven to being dominated by geopolitics and macroeconomics, requiring investors to track synchronously:

  1. Progress in U.S.-China negotiations and dynamics of digital asset regulation;

  2. Federal Reserve interest rate path and U.S. Treasury yield curve shape;

  3. The pulsed impact of geopolitical conflicts on risk appetite.

Key indicator monitoring:

  • Bitcoin miner holdings (currently 1.8 million BTC)

  • Net inflow of stablecoins on-chain (currently averaging $1.2 billion daily)

  • Ethereum Layer2 TVL proportion (currently 35%)