On May 13, the U.S. April CPI data was released. The phrase 'inflation is cooling' basically set the current macro expectations for the market—there is a clear trend of inflation cooling, and the probability of rate cuts within the year has significantly increased. Meanwhile, the market reacted quickly, with Bitcoin approaching $105,000, and Ethereum surging more than 50% in just one week, reigniting market enthusiasm.
This time, we need to calmly review the underlying logic and, more importantly, judge what truly impacts the market's main line.
1. Tariffs returning to normal, event-driven bearish factors gradually clearing
After the U.S.-China trade negotiations achieved phased progress, the uncertainty brought by tariffs has significantly decreased. Previously, the market was worried about further expansion of geopolitical risks leading to global liquidity tightening, but now it has basically returned to a stable state.
This means that tariffs are no longer the variable driving short-term market fluctuations, and investors' attention is shifting to new key indicators.
2. The macro main line refocuses: Inflation and economic expectations are the core
The CPI data for this time is as follows:
Core CPI rose by 0.2% month-on-month, lower than the expected 0.3%;
Overall CPI year-on-year fell to 2.3%, reaching a new low since February 2021;
Core year-on-year remained at 2.8%, in line with market expectations.
These three data points convey a message to the market: Inflation pressure is easing, giving the Federal Reserve more room to initiate rate cuts within the year.
From the pricing of CME interest rate futures, the market has begun to factor in the possibility of the first rate cut in September. For risk assets, especially crypto assets, this expectation of liquidity warming is often a catalyst for market movements.
After the CPI was released, it showed that inflation did not heat up, strengthening the market's expectations for the Federal Reserve's rate cuts this year, with Bitcoin again approaching $105,000. Ethereum was even stronger, breaking through $2,700 this morning, with a 24-hour increase of over 8%, and a weekly surge of 50%, aiming for $3,000. SOL broke through $180 this morning, with a 24-hour increase expanding to 4.79%.
Driven by ETH, ETH ecosystem tokens, as well as previous meme leaders, have started to rise significantly. For example, the leading staking token Ethfi increased by 30% in 24 hours, and Bome's token Squirrel (punt) rose by 33% in 24 hours. Additionally, the AI sector also experienced substantial increases.
The core logic driving Ethereum's rise comes from multiple dimensions:
1. Pectra upgrade is approaching, technical aspects reshaping network value
The Pectra upgrade launched on May 7 introduced the key EIP-7702 (account abstraction), significantly enhancing user experience; at the same time, the staking mechanism upgrade increased the validator staking limit from 32 ETH to 2048 ETH, resolving the long-standing technical bottleneck issue for institutional entry.
2. Giants enter the market, supported by RWA
Financial giants like BlackRock are exploring practical applications of the Ethereum network through RWA tokenization, with ETH evolving from an 'asset' to an 'infrastructure' role; moreover, some analysts suggest that Ethereum is expected to officially receive SEC approval for staking ETFs this year, enhancing both liquidity and compliance.
3. Market expectation resonance: Long-term target for ETH raised
Analyst VirtualBacon recently predicted: If BTC reaches $200,000, ETH could surpass $10,000. This long-term pricing logic is attracting more capital inflow.
Trump pressures Powell again
Early this morning, Trump wrote on the social platform Truth Social, 'There is no inflation anymore! The prices of gasoline, energy, groceries, and almost all other goods are falling!!!'
'The Fed must lower interest rates, just like Europe and China have already done.' Trump added, 'What is going on with 'Mr. Delay' Powell? Isn't this unfair to the soon-to-soar U.S. economy?'
Trump concluded, 'Let the rate cuts happen, it would be a wonderful thing!'
In conclusion
What we are experiencing is a structural capital flow back process. Instead of focusing on short-term fluctuations, it is better to understand the logic behind the trend:
Macroeconomic environment: Rate cuts approaching, liquidity restarting
Main narrative: Ethereum upgrade + RWA + institutional entry
Rotation rhythm: Meme, AI, and staking sectors are taking turns
Opportunities are not lacking; it all depends on whether you dare to take a position when the trend is emerging.