Bitcoin rose 4.25% last week, and on Monday, it briefly surpassed $87,400, indicating a slight warming of market sentiment, but whether this upward trend can be sustained remains uncertain. BitMEX co-founder Arthur Hayes expects Bitcoin to first surge to $110,000 before retreating to $76,500.
The Federal Reserve's dovish stance, Trump's potential adjustment of tariff policies, and last week's $744.3 million inflow into Bitcoin ETFs are all key factors supporting the market. But next, will Bitcoin continue to surge, or will it face adjustments? Let's take a look.
Federal Reserve policy shift: Is a liquidity turning point approaching?
The Federal Reserve's stance has always been a market barometer, especially for high-volatility assets like Bitcoin, where the Federal Reserve's monetary policy tightening or loosening is particularly important for Bitcoin's liquidity. Recently, the Federal Reserve has released clear 'dovish' signals, and market bets on interest rate cuts within the year have surged to 78%.
Expectations of interest rate cuts and Bitcoin's liquidity impetus
After the March FOMC meeting, the Federal Reserve clearly stated it can tolerate short-term inflation fluctuations, indicating that even if inflation is higher than expected, it will not rush to tighten monetary policy. This means that the market's expectations for interest rate cuts may come true, and rate cuts will have two direct impacts:
Liquidity easing: After interest rate cuts, dollar credit expands, market liquidity increases, and investors are more willing to invest in high-risk assets, with Bitcoin often being a beneficiary.
Declining dollar attractiveness: Interest rate cuts typically weaken the dollar's appeal, prompting some funds to flow into hedge assets like gold and Bitcoin.
The Federal Reserve's stance determines the flow of funds, which is one of the core driving forces behind Bitcoin's price fluctuations.
Balance sheet expansion: Will the liquidity 'flood' return?
In addition to lowering interest rates, the Federal Reserve may further expand its balance sheet. If Trump's tariff policy raises inflation, the Federal Reserve may have to respond by increasing its bond purchasing. This scenario is not unfamiliar— in 2020, the Federal Reserve's massive liquidity infusion triggered a 'liquidity bull market' for Bitcoin, will a similar situation repeat this time?
Currently, the Federal Reserve is still withdrawing some liquidity monthly, but if policies reverse, the market may welcome a new wave of capital frenzy, at which point Bitcoin's liquidity may be ignited again. However, this also means the market needs to closely monitor inflation data. If inflation spirals out of control, the Federal Reserve may tighten liquidity, at which point Bitcoin may face pressure.
Trump's tariff policy: Black swan or gray rhino?
As the market focuses on Federal Reserve policy, Trump's trade policy has become a new source of uncertainty. With the official implementation of tariff policies on April 2, the market begins to assess its potential impact. If tariff policies tighten, it may push up inflation, indirectly affecting the Federal Reserve's rate cut pace and impacting the cryptocurrency market.
Signals of tariff policy adjustment
Recently, the Trump team has released some 'easing' signals, suggesting that certain industries may receive tariff exemptions, such as semiconductors and new energy equipment, which has reduced panic in the market. Additionally, allied countries may enjoy certain tariff benefits, mitigating the impact on the global supply chain.
But more notably, there are rumors that the Trump team is considering viewing Bitcoin as a 'strategic hedge tool' to combat the risks of declining dollar purchasing power. If this idea gains policy support, it could open up new market demand for Bitcoin.
Historical experience: How has Bitcoin responded to changes in trade policies?
Bitcoin has demonstrated certain anti-inflation properties amidst recent trade policy changes. For example, after the U.S. imposed a 25% tariff on steel in November 2024, Bitcoin surged 14% against the trend within two weeks. This was mainly because the rise in tariffs increased inflationary pressures, and some funds viewed Bitcoin as a hedge.
Currently, if Trump's tariff policy leads to rising prices while the Federal Reserve maintains a 'dovish' stance and is unwilling to curb inflation through interest rate hikes, Bitcoin may continue to be favored. Conversely, if tariff escalations trigger market panic and drag down economic growth, Bitcoin may also face short-term impacts.
Currently, the impact of tariff policies is still unclear, and the market needs to closely monitor further statements from the Trump administration. If Bitcoin indeed becomes part of the policy game, its market role may undergo profound changes.
Future trend of Bitcoin: Can fund inflows and technical aspects drive price breakthroughs?
The price movements of Bitcoin are influenced not only by macroeconomic policies but also by the flow of funds and technical indicators in the market, which play a significant role in determining its trend. We will look at the current technical aspects and fund flows of Bitcoin to see potential future trends.
Institutional demand shows signs of recovery
According to Coinglass data, recent fund flows into Bitcoin spot ETFs show strong signs of recovery. Last week, net inflows into Bitcoin spot ETFs reached $744.3 million, following a net outflow of $830.5 million the previous week. This reversal in fund inflows indicates a reduction in selling pressure and suggests an improvement in market sentiment. If this fund inflow continues and intensifies, Bitcoin may further rebound, boosting market confidence.
Meanwhile, CryptoQuant's data indicates that stablecoin reserves on Binance have reached a new historical high of over $31 billion. This growth suggests that investor confidence on Binance remains strong, and these funds are expected to enter the market at the appropriate time. An increase in stablecoin reserves is usually a sign that the market is about to enter a bullish cycle.
Bitcoin technical analysis: Bulls target $90,000
From a technical perspective, Bitcoin has recently broken above and closed above the 200-day exponential moving average (EMA), showing some recovery potential. Currently, Bitcoin is slightly above $87,400, and if it finds support near the 200-day EMA, it may challenge the psychological level of $90,000 again. If Bitcoin successfully breaks above this level, further upward space will point to $95,269, a target derived from the March 2 high.
The Relative Strength Index (RSI) is above 51, in the bullish zone, indicating that current market momentum is gradually strengthening. Meanwhile, the MACD indicator shows a bullish crossover on the daily chart, issuing a buy signal, suggesting that Bitcoin may be about to enter a new round of upward movement. The rising green histogram also signifies strong upward momentum, further supporting the bullish technical signals.
Bitcoin prediction: Possibility of $110,000
BitMEX co-founder Arthur Hayes recently stated on social media that Bitcoin may first reach $110,000 before pulling back to $76,500. This prediction is based on the Federal Reserve's dovish stance on inflation and the flexibility of the Trump administration on tariffs. If the U.S. government adjusts its tariff policy on April 2 and narrows the scope of tariffs, Bitcoin may experience a surge due to improved market sentiment.
Additionally, as the White House may exempt tariffs for certain industries and impose reciprocal tariffs on major trading partners, global economic pressure may ease, which also helps restore investor confidence. Since Bitcoin itself has certain hedging properties, it may further attract institutional investors’ attention, driving Bitcoin further upward.
Overall, the future trend of Bitcoin is full of uncertainties, but there are also many supporting factors. The Federal Reserve's dovish policy may boost Bitcoin liquidity, while Trump's tariff policy increases market variables. Fund inflows and technical indicators suggest that Bitcoin may rise, but inflationary pressures and global economic risks still need attention. Investors should closely monitor macroeconomic policies and market trends, respond flexibly, as short-term volatility is inevitable.
