Macroeconomic interpretation: Currently, the market's expectations for a Federal Reserve interest rate cut have been reduced to only once this year, but the upcoming May CPI data may serve as a catalyst for a policy shift. If the data is weaker than expected, it could reignite bets on a September rate cut, providing fuel for risk assets. If the European Central Bank's policy meeting signals a dovish stance, it will further alleviate global liquidity pressures. However, the Federal Reserve's silence poses a potential threat—in the context of tariffs possibly driving up inflation, the rate cut tool is firmly locked away, and the absence of 'Fed put options' makes the market more vulnerable to black swan events.
U.S.-China trade negotiations made positive progress in London, with Commerce Secretary Howard Lutnick stating that 'negotiations are proceeding smoothly.' The preliminary agreement on rare earth exports reached in Geneva has alleviated the risks of a full-blown trade war. Notably, the Moscow Exchange simultaneously announced the launch of a Bitcoin index, with data sources covering four major platforms including Binance and Bybit. This move responds to the increasing reliance of Russian companies on cryptocurrencies for cross-border payments due to Western sanctions, suggesting that cryptocurrencies are accelerating their integration into the new global trade landscape.
Recent data shows that global crypto funds experienced a net inflow of $7.05 billion in May, driving total assets under management to a record $167 billion. Behind these numbers lies an intriguing contrast: during the same period, global equity funds saw a net outflow of $5.9 billion, and gold funds experienced their first net outflow in 15 months. The reversal in fund flows reveals a deeper logic: investors no longer categorize cryptocurrencies simply as high-risk speculative assets, but rather as a strategic allocation to counteract dollar weakness and economic uncertainty.
Market analysts have observed that #BTC has strongly broken through the short-term downtrend line, forming a typical bullish consolidation triangle pattern. Although the market had anticipated a lackluster summer performance, the strength of the breakout suggests that new capital is continuously flowing in. The technical and capital market aspects provide dual support. Bitcoin reached a daily high of over $110,000, just a step away from this year's peak. The key support level of $105,000 has become a dividing line for bulls and bears; as long as it stabilizes above this level, the upward trend remains intact.
Institutional holdings also reflect confidence, with Strategy's Bitcoin holdings surpassing $64 billion and unrealized gains reaching $23.19 billion. Ironically, traditional financial giant U.S. Trust pointed out that the Federal Reserve is unlikely to initiate a rate cut anytime soon. Amid the uncertainty of tariffs and a resilient labor market, decision-makers tend to prefer to 'stay put,' which, paradoxically, accelerates the inflow of funds seeking alternative assets into the crypto space.
Regulatory dynamics are reshaping the competitive landscape. The U.S. (GENIUS Act) has made progress in the Senate, coupled with Circle restarting IPO discussions and expectations for stablecoin legislation, injecting vitality into the Ethereum ecosystem. Ethereum's implied volatility has significantly increased, and option skew has shifted bullish, with ETF inflows reaching $281 million over the past week. Meanwhile, Ethereum staking has hit a historic high of 34.65 million coins, accounting for nearly 30% of the total supply, validating its value capture capability as a settlement layer infrastructure. On-chain data clearly shows that institutional interest is shifting from a Bitcoin-dominated approach to a 'double-engine driven' model.
Regarding market impact projections, BTC's 'siphon effect' strengthens, with the wealth effect generated by institutional holdings like MicroStrategy continuing to attract traditional capital, but the technical aspect needs to be wary of the selling pressure in the historical strong resistance zone of $110,000-$115,000. If a valid breakout occurs, it will open the path to $120,000. Additionally, there are opportunities for Ethereum's ecosystem to overtake, with compounded growth in staking yields, stablecoin regulatory clarity, and ETF fund inflows potentially pushing the Ethereum/Bitcoin exchange rate out of the trough, especially when the GENIUS Act clarifies the tokenization framework, Ethereum's on-chain asset issuance may see an explosion. Furthermore, the rise of non-U.S. pricing tools such as the Russian Bitcoin index, combined with the weakening status of the dollar as a reserve currency, highlights the value of cryptocurrencies' 'de-geographical' attributes. However, the back-and-forth nature of Sino-U.S. tariff negotiations may induce commodity volatility, indirectly suppressing risk appetite.
The massive unrealized gains in institutional holdings, subtle changes in ETF fund flows, and the Federal Reserve's silence during the political season all constitute short-term retracement triggers. Investors need to pay closer attention to two key signals: first, whether BTC can build a solid base above $105,000, and second, whether ETH spot ETF weekly fund inflows can maintain levels above $200 million. As the macro fog has not yet lifted, the helm may be more important than the sail.
BTC Data Analysis:
CoinAnk data shows that over the past month, global crypto funds performed remarkably, with nearly 300 funds attracting over $7 billion in net inflows, pushing the overall asset management scale to a historic high of over $167 billion, marking an important milestone for the cryptocurrency market. During the same period, traditional assets such as equity funds experienced a net outflow of $5.9 billion, and gold funds also rarely saw their first outflow of funds in 15 months, highlighting that investors are viewing crypto assets as strategic tools for diversified investment portfolios, rather than mere high-risk speculative assets, reflecting a demand for hedging against dollar weakness and global economic uncertainty.
This shift in capital reveals that cryptocurrencies are gradually becoming a mainstream allocation. We believe that the inflow trend will continue but stabilize, indicating an increase in market maturity and enhancing the attractiveness of crypto assets as an inflation-hedging tool. For the crypto market, this phenomenon could accelerate the entry of institutional funds, improving overall liquidity and price stability, but high volatility and regulatory uncertainty still pose risks, warranting attention to short-term fluctuations that may arise from policy changes.
