The change in market conditions last week was very indicative for Bitcoin and the cryptocurrency market. Market funds have finally regarded Bitcoin as 'digital gold' and are gradually decoupling from the trends of U.S. stocks. Price fluctuations rapidly overlapped with gold, pushing Bitcoin's price directly up to $94,000, with a weekly increase of 12%. Although U.S. stocks rebounded, the trends clearly diverged significantly from cryptocurrencies.
Due to uncertainties surrounding U.S. tariffs, fiscal policy, and the economy, central banks around the world may gradually reduce their reliance on U.S. Treasury bonds and instead seek alternative assets such as gold and Bitcoin, which has also driven up the prices of gold and Bitcoin.
The market is changing the way it values Bitcoin. Instead of following the fluctuations of U.S. tech stocks, it is gradually redefining it as a safe-haven option outside of the dollar, positioning it closer to gold and other store of value tools. After a period of correction, the cryptocurrency market has regained vitality, sparking speculation about a trend reversal.
But it cannot yet be asserted that a full recovery has occurred.
The confidence of U.S. investors seems to be recovering. Since April 21, Bitcoin has begun to show signs of a trend reversal. Large investors are becoming active buyers again, particularly the accumulation of whales on Binance often signals a market rebound. Subsequently, U.S. investors on Coinbase also exhibited similar behavior. Notably, the Coinbase premium, which represents U.S. retail sentiment, has remained positive, indicating stable demand in the U.S. market. This recovery has already shown structural changes.
As uncertainties regarding U.S. tariff policies continue to ferment, combined with the freezing of $300 billion in assets by the Russian central bank due to the invasion of Ukraine, this event has led medium-sized countries to rethink their reserve policies. Rather than using foreign exchange to purchase U.S. Treasury bonds, it may be better to invest in Bitcoin or gold and other store of value tools. This sentiment applies to other emerging countries as well, leading to an increasing demand for assets unrelated to traditional markets. Bitcoin and gold are viewed as safe-haven assets, and global investors are seeking assets that perform differently in times of crisis.
The correlation between Bitcoin and U.S. stocks is gradually decreasing, indicating that it is developing into a global store of value asset. Bitcoin is gradually acquiring a safe-haven function similar to gold, attracting institutional investors.
Trump's posture has softened, and Bitcoin's upward momentum may take a pause.
Regarding the U.S.-China tariff war, the U.S. is definitely at a disadvantage, as they rely quite heavily on low-cost goods. Last week, Trump continuously sent signals indicating that both sides are communicating. First, Trump stated that he might reduce tariffs on specific goods, and then rumors about potentially reducing tariffs on China were leaked through the White House and media. If the opponent does not respond or refuses, it can also be dismissed as a rumor to save face and not harm one's own negotiating chips.
But now the ongoing tariff tensions between the U.S. and China remain the focus, with Wall Street hoping for signs of easing relations between the two countries. Reports on Friday indicated that China quietly canceled some tariffs on U.S. semiconductors, easing pressure on its domestic tech industry.
If trade negotiations make progress, China may exempt tariffs on U.S. ethane and liquefied petroleum gas (LPG).
Despite China publicly showing a tough stance, Trump's attitude was relatively mild last week. Trump stated that the U.S. has always been in contact with China, showing that the U.S. is very eager to negotiate with China and is demonstrating goodwill and weakness.
The expected end of the tariff war may come sooner than anticipated, which is not particularly beneficial for Bitcoin's current positioning as digital gold, hindering its continued rise. This is considering Trump's stance and a series of weakening actions, as well as the general estimate from the three major U.S. suppliers that current retail shelf inventories can support about two months of sales, after which costs will rise significantly due to tariffs. It is evident that Trump must reach negotiation agreements with various countries within a limited time.
This is also why Trump suddenly announced that if no agreement is reached within 2 to 3 weeks, he will re-implement reciprocal tariffs on countries that have not reached an agreement, rather than the previously promised 90-day exemption period, because the U.S. side is under time pressure. If the tariffs drag on too long, U.S. costs will rise significantly due to tariffs, pushing U.S. prices to soar, which will surely lead to a spike in public discontent.
Assuming this is the case, it is almost impossible for Trump to win next year's midterm elections, so the U.S. side's time is counting down, and the challenges are quite high. This will definitely push back against major economies like China and the EU. Therefore, it is believed that Bitcoin's current rising point is a good profit-taking point. Confidence in the dollar will gradually recover after the tariff war ends, at which point Bitcoin's positioning as digital gold may actually hinder its rise.