Weekend market liquidity is generally average, but last night Bitcoin suddenly led the charge, surpassing $107,000, just a step away from a new high.
If BTC fails to rally and experiences a pullback, $102,000 is short-term support, while $93,000-$98,000 is the first line of defense.
Additionally, on May 16, Bitcoin spot ETFs saw a net inflow of $260 million, continuing three days of net inflows. MicroStrategy founder Michael Saylor also released a Bitcoin tracker, indicating that institutions and large investors are still bottom-fishing Bitcoin, which will have a certain uplifting effect on Bitcoin's short-term price.
Next, we can pay attention to the trend after the U.S. stock market opens tonight.
If the U.S. stock market stabilizes, Bitcoin has the hope to challenge the new high position of $110,000.
The slight fluctuation of BTC currently essentially reflects the mainstream capital's game at high levels.
Ethereum, in the short term, is expected to have limited pullback space and may hold support around $2080. The performance of Ethereum directly affects many altcoins; a washout process is expected over the next few days, after which the market is likely to resume its upward momentum.
Most opinions still favor the logic of a medium to long-term bull market, especially led by ETFs and institutional funds, but the short-term market has shown obvious cautious sentiment, with some funds beginning to flow into altcoins.
On-chain data indicates that the holding volume remains high, the confrontation between bears and bulls is intensifying, technical indicators show pullback pressure, and the options market's volatility premium suggests that large funds are positioning for extreme scenarios.
The crypto market shows the following trends:
- U.S. government fiscal expenditure has not decreased and still exceeds 7% of GDP.
- Government and corporate debt will face a refinancing peak of $3.5-4 trillion in the third and fourth quarters.
- There may be tax cuts, regulatory relaxation, and supplemental leverage ratio (SLR) adjustments (potentially increasing bank leverage/liquidity) later this year.
- Inflation is decreasing (this week's CPI and PPI reports show a slowdown in inflation), which could greenlight the Federal Reserve for rate cuts.
Overall, liquidity conditions are favorable as the Federal Reserve may need to buy some upcoming refinancing and new debt issuance.
These factors increase the possibility of an 'altcoin season', even if the Federal Reserve is currently still holding back.
Now everyone is guessing when the Federal Reserve will start cutting interest rates?
Currently, there are two possibilities:
If the economy significantly declines in 2025, the Federal Reserve may cut interest rates more than twice a year to stimulate the economy.
However, if the U.S. economy remains stable, the Federal Reserve may only cut interest rates 1-2 times, or even less, to control inflation.
The key time point is the Federal Reserve's meeting on June 18, where Powell will release the dot plot, hinting at the number of rate cuts for the year.
According to the CME FedWatch Tool, the probability of a rate cut in June is only 8.3%, rising to 34.2% in July, and 51.5% in September, indicating that the market generally expects a rate cut to occur in September.
In terms of altcoins:
Since the fourth quarter of last year, we have observed a sustained rise in altcoins and Meme coins for the first time. Meanwhile, Bitcoin's dominance rate seems to have peaked:
If we really enter the 'altcoin season', the Bitcoin dominance rate in the picture above still has a long way to fall. This means that (some) altcoins will perform excellently.
But how do we confirm the 'altcoin season'? Here are the key factors:
The last year of the cycle.
Bitcoin's dominance rate started at 65-70%.
Transition from Quantitative Tightening (QT) to Quantitative Easing (QE).
ETH/BTC ratio is rising.
Retail investor interest and the revival of 'Meme'.
Currently, we are in the early stages of this process. ETH/BTC is still at 0.024, and ETH/USD is 46% lower than its historical high. The Federal Reserve is still implementing QT.
So, how do we respond to the current situation?
- We are not interested in BTC at the current price level.
- Conversely, we will reallocate a small portion of profits to higher-risk assets.
Historically, assets that perform well at the end of the cycle are those that performed well early + emerging/sparkling things. Tokens with strong communities/narratives and low circulation may have the largest gains.
DeFi projects with strong fundamentals may also perform well, and we also expect top 'blue-chip' Meme coins to excel.
Additionally, on-chain activity has been relatively sparse in recent days, and PVP seems to be ineffective; below are some recently focused and held Meme targets that have already taken off.
$Labubu
Labubu, after being quiet for more than half a year, has recently been revived by dealers, taking off with a wave of volume. As a popular IP under Pop Mart, Labubu is really on fire, with a Thai princess carrying a Hermès bag with it, Liu Yifei only shaking hands with it on stage, Rose taking a photo with it, and Lisa excitedly screaming in front of it, with the Thai tourism minister personally welcoming it for tourism. The trillion-dollar trendy toy empire Pop Mart behind it has recently reached new highs in stock prices.
$B
The BNB chain's BUILDon has currently captured 50% of the entire market's trading volume at $USD1, receiving official support from Four.meme, with expectations of going on Binance alpha.
$Frogger
The Ethereum chain's Frogger, belonging to the Pepe family: an image from the 1983 Marvel comic series, is now the largest holding token of V God, with overseas communities continuing to build, and the price has been relatively firm these days. There are expectations for interaction with V God.
