The US trade war began to subside before reaching its peak. Just as investors grew concerned about extremely high rates, US President Donald Trump lowered them, positively impacting the crypto market.
Bitcoin $BTC
From May 2 to May 11, Bitcoin rose by 7.6%. The largest cryptocurrency by market capitalization once again surpassed the $100,000 mark, which it had not done since February 7. The bulk of the growth—6.4%—occurred during a single trading session on Thursday, May 8.
On May 7, another meeting of the Federal Reserve (Fed) took place, during which its chairman Jerome Powell announced that the US key interest rate remains unchanged—at a range of 4.25%-4.5%. Powell remained committed to the chosen course despite the obvious dissatisfaction expressed by the US president. He cited uncertainty as the main reason for his decision. From the Fed chair's perspective, there are significant risks of both high inflation and unemployment, so the best course of action would be to just watch and wait. Initially, investors reacted negatively to Powell's speech—Bitcoin fell below $96,000. However, the next day, there was a surge above $104,000.
But why did such a reaction follow if Powell's rhetoric was at best neutral, but not positive? The fact is that on May 8, Donald Trump announced that a trade deal with a major respected country would soon be concluded. As it turned out later, it was about the United Kingdom. Trump promised to reduce tariffs on cars, aluminum, and steel for the island nation. For vehicles, the rate is set to drop from 27.5% to 10% on a quota of 100,000 vehicles. Aluminum and steel will be supplied without taxes, while the initial rate for them was supposed to be 25%. Additionally, on May 9, Trump hinted that import rates for China would be lowered from 145% to 80%.
The growth of BTC is supported by demand from major players. For instance, last week, spot ETFs on Bitcoin once again demonstrated an inflow of funds amounting to $599.59 million. An outflow of funds was observed only on May 6, totaling $85.64 million.
From a technical analysis perspective, Bitcoin remains in an upward trend. This is evidenced by its exceeding the 50-day moving average (marked in blue). However, the RSI indicator has entered the overbought zone (above 70%). This indicates a possible upcoming pullback. Support and resistance levels are $100,000 and $109,356, respectively. The Fear and Greed Index has risen by three points compared to May 2. Its current value is 70, indicating that greed still prevails over fear among crypto investors.
Ethereum $ETH
From May 2 to May 11, Ethereum rose by 36.26%. This allowed ETH to rise above $2,500 for the first time since March 3. As with Bitcoin, the rise of Ethereum occurred after May 8, when it gained more than 6% on each of three trading sessions.
The dynamics of ETH were also largely determined by Trump's rhetoric regarding tariffs. However, there were also specific reasons for improving investment sentiment. For example, on May 7, the main network finally deployed the Pectra upgrade. This allowed several new features to be implemented:
user wallets can now function as smart contracts, and fees can be paid with other tokens;
the number of data blobs per block has increased, which should enhance scalability and reduce transaction fees for layer two solutions;
the maximum validator balance has increased from 32 to 2,048 ETH.
The total value locked (TVL) in Ethereum protocols increased by 20% over nine days—from $52.1 billion to $62.7 billion. This indicates that user confidence in the second-largest cryptocurrency is gradually returning.
A strong rise is also observed in the derivatives market. Open interest in Ethereum increased by 40% from May 2 to May 11—from $21.71 billion to $30.4 billion.
Interestingly, after two weeks of inflows, there was a recorded outflow of $55.76 million in spot ETFs on Ethereum. While the dynamics were neutral on the first day, investors consistently withdrew money from the exchange-traded funds thereafter.
From a technical analysis perspective, Ethereum is in an upward trend. This is indicated by the price exceeding both the 50-day moving average (marked in blue) and the Parabolic SAR indicator (marked in orange). The current support and resistance levels are $2,112 and $2,815.2, respectively.
Chainlink $LINK
Chainlink rose by 14.2% from May 2 to May 11. During the week, the cryptocurrency climbed above $17, updating its two-month highs. As with Bitcoin and Ethereum, the entire growth occurred from May 8 to May 10.
The rise of Bitcoin and Ethereum on May 8 and 9 spurred demand from major players (whales) for other altcoins as well. According to the analytics platform Nansen, the most popular among them was wrapped Bitcoin (WBTC), which saw an inflow of $11.47 million, while Chainlink took second place with $4.5 million.
Another reason for the growth was new collaborations. Mint Blockchain, a layer two solution on Ethereum for NFTs, announced a partnership with Chainlink. In particular, it integrated the Cross-Chain Interoperability Protocol (CCIP). This step will enable Mint to perform reliable and secure communication between different blockchains. The integration of CCIP will enhance the functionality of smart contracts in the ecosystem used for asset transfers and data sharing. In turn, Chainlink will expand its market presence and attract new users.
On Tuesday, May 6, representatives of Chainlink announced a new reward system called 'Chainlink Rewards'. The essence of this system is to distribute tokens from the Build program projects among ecosystem participants and LINK stakers. The initial distribution will affect 4% of STX tokens from the infrastructure firm Space and Time. The recipients will be LINK stakers. The Build program aims to support projects in the cryptocurrency ecosystem by providing assistance in market entry, access to various services, and much more.
From a technical analysis perspective, Chainlink is in an upward trend. This is indicated by the price exceeding the 50-day moving average (marked in blue). However, the trend is quite weak: the ADX indicator barely exceeds 20. Support and resistance levels are around $16 and $17.65, respectively.
