Let’s take a look at the market today. Yesterday, the overall cryptocurrencies surged, with Bitcoin rising by more than 5% on a daily basis, reaching a high of 9.4w. The daily chart directly broke through MA200, but in terms of volume, we can see that this volume is not very large, and is even not as high as the volume of the rebound on April 9. What does this mean?
This means that there is not much liquidity in this area, so the bulls did not spend much effort, or in other words, "the air force has not been annihilated much"! Therefore, there may be another downward correction, and the RSI is currently overbought.
Then let’s look at what we talked about before. This axis-level trend line was touched once, but was quickly recovered. So it is basically similar to the trend we talked about before. With the implementation of interest rate cuts in the second half of the year, there will still be a chance for continued increases. There will be no problem with $150,000 by the end of the year.
Other small currencies also rose sharply, for example, ETH rose by more than 15%, directly reaching 1800, Sui rose by 28%, and AAVE, UNI, RAY and other old leading white horses all rose by more than 10%. (For leading white horse projects, please refer to the previous article)
Analysis of the reasons for the rise
1. Trump’s trade war cools down
The biggest reason is Trump’s concession on tariffs. First, around April 10, Trump revoked tariffs on 75 countries (tariffs were suspended). Only a few countries did not reach an agreement and continued to increase tariffs. my country, in particular, refused to make concessions, which at one point allowed the Americans to increase our tariffs to 145%.
But yesterday, US President Trump said that tariffs on Chinese goods will not be as high as 145%, and tariffs will be significantly reduced, but will not be zero. When Trump was asked whether he would take a tough stance on China, he said no.
Therefore, the tariff war that triggered the world economic crisis should have subsided. Trump does not dare to gamble with the entire US economy. After all, the countries that have compromised have compromised, and if you really fight with the countries that will not compromise, both sides will suffer!
And why would Trump give in?
In fact, it is very simple. First, he has fulfilled his promise. When he came to power, in order to win the blue-collar votes in swing states, he said that he would restore American manufacturing and impose tariffs. He has already done it, so he is not breaking his promise.
Second, the imposition of tariffs has caused stock prices to plummet and commodity prices to rise. As you have seen, ordinary people are also complaining and protesting in various places. So he can tell these blue-collar people who once supported him that it is other people’s fault and not his own problem.
Third, he really cannot bear the infamy of causing the collapse of the US economy. Even his good friend "Musk" has stayed away from him, not to mention officials from other government departments. It is impossible for him to replace all the officials who disobey him (especially Powell), and he has also compromised on the issue of Powell's stay or departure. He had always said that he wanted to replace Powell, but the Federal Reserve was not under his control, and Powell would not compromise. So he kept messing around, and when he couldn't get any benefits, he stopped the loss in time. Besides, he had also achieved certain political goals.
Therefore, it is highly likely that this trade war will not break out, so everyone will have confidence, hence the big rise!
2. ETF data rose
The Bitcoin ETF data showed net inflows on the 17th, 21st and 22nd, with inflows of 100 million, 380 million and 1 billion respectively. There was a large inflow on the 22nd. The figure below shows that the volume in the past 30 days has been very sluggish and most of it has been in an outflow state, but the 22nd was the largest single-day net inflow in the past month, indicating market confidence.
And according to institutional data, the three major BTC ETF funds, ARKB, IBIT, and FBTC, account for more than 75% of the market share, and their capital inflows are significantly negatively correlated with the gold ETF (GLD) (correlation coefficient -0.73).
The current gold price has exceeded 3,500 on April 22, which is already at a historical high. Therefore, some funds feel that gold is too expensive, and the current Bitcoin (digital gold) is in a price-performance range, so they turn to Bitcoin. Because the market value of gold has exceeded 24 trillion US dollars, a 10% increase is the market value of the entire Bitcoin, so even if 10% of the funds in gold flow in, it can pull it up a lot.
According to the BlackRock model, if the size of the ETF reaches 10% of the gold ETF (about US$180 billion) within three months, the price of Bitcoin needs to rise to US$145,000 to balance supply and demand.
3. Institutional buying
MicroStrategy has been buying continuously. Currently, MicroStrategy bought nearly 30,000 bitcoins on March 28 and several thousand more in April. Its current holdings have reached 530,000 bitcoins. Therefore, institutions do not even look at the price and just keep buying.
Another piece of news is that Tesla purchased $1 billion worth of Bitcoin in the first quarter.
Why do they dare to buy? In fact, institutions are just like us ordinary people. When the market plummeted before, MicroStrategy also said that if it keeps falling, sell it. In fact, it was telling everyone not to short sell, otherwise everyone will die together! MicroStrategy is also gambling, but as a retail investor, we really don’t dare to gamble.
4. Bitcoin market share rises to a four-year high
In the past few days, Bitcoin's market share reached 64.6%, a new high since February 2021. The higher the market share of Bitcoin, the more it shows that small currencies have fallen to the bottom. All retail investors who can run have run away, and those who haven't run have basically lost money and are lying flat. According to historical data, when Bitcoin's market share reached 60% in November last year, altcoins started a small bull market. In 2019 and 2021, Bitcoin's market share reached a high of 70%, followed by a magnificent general rise.
In recent days, the performance of Bitcoin has not been linked to the U.S. stock market. For example, it fell from April 11 to April 20, as shown in the figure below, which are all negative lines.
But Bitcoin did not fall. Bitcoin has been trading sideways and rising during this period, which means it can no longer fall. The price of 74,000 Bitcoin fell from 110,000. Those who could escape have escaped, and those who did not escape did not escape. In addition, as we have said in the previous analysis, people are currently more willing to hold Bitcoin for the long term.
Next market analysis
First, the current expectation for the Fed to cut interest rates in June is over 70%, with a high probability of a 25-50 basis point cut. If there is no cut in June, the probability of a cut in July will reach 100%, with a minimum of 25 basis points, and there will be two rate cuts this year.
Referring to the interest rate cuts in 24 years, there were three interest rate cuts from September to December, a total of 100 basis points. The bitcoin price rose from 70,000 to 110,000, an increase of more than 50%. So if the interest rate cuts this time are 75 basis points, the increase will not be less than 40%. Currently, 90,000 yuan and a 40% increase is 120,000 yuan, and this is the worst result. I think this time it will probably exceed 150,000 US dollars, and the best result is 200,000 US dollars!
Is there still a chance in the cottage season?
This question has been answered countless times. There are always opportunities in the copycat season. If you don’t believe it, just look at the rise of the AI sector yesterday. All of them rose by more than 100%. AI and AI agents, these projects have all been mentioned before. Once funds come in, these small currencies are very easy to pull and operate, and AI is the strongest narrative in this round.
To sum up, we have finally survived this most difficult time, but it is also the best and last time to buy. The bull market will start at the end of the year, so let us wait and see!