Source: Coinbase; Translated by Wuzhu, Golden Finance
Summary
The easing of US-China trade relations, along with a $600 billion business agreement between the US and Saudi Arabia, is boosting investor confidence and driving up Bitcoin and some altcoins.
The latest news on regulation includes bipartisan progress on the (GENIUS Act) and the discussion draft of the cryptocurrency market structure bill in the US House of Representatives.
The easing of US-China trade relations has boosted investor sentiment over the past week, with significant increases in Bitcoin and some altcoins reflecting this optimism. Earlier this week, the US government reached a $600 billion business agreement with Saudi Arabia, further confirming this optimism and indicating that trade diplomacy remains strong. Japan has hinted at possibly reaching an agreement before June, which could help alleviate concerns surrounding advanced semiconductors, easing investor worries about a potential economic recession in the US this year. Nevertheless, recent reports from the Financial Times suggest that Japan's stance may become tougher due to the Senate elections in July.
Recall that after the negative GDP data for the first quarter of 2025 was released on April 30 (a quarter-on-quarter decline of 0.3%), the possibility of a technical recession seemed greater, as the weak data suggested that the economy would shrink again in the second quarter of 2025. However, the Atlanta Fed's GDPNow forecast currently shows a real growth rate of 2.5%, up from 2.3% a week ago. From the perspective of the cryptocurrency market, the risk of recession lies in the fact that due to economic uncertainty suppressing spending, investment willingness tends to be lower during such periods, while saving willingness is higher.
Meanwhile, as ETH catches up with peers like BTC and SOL, ETH has experienced a surge primarily driven by technical factors, reflecting a significant amount of overpositioning, short covering, and subsequent re-arbitrage. We believe that ETH has lacked a meaningful narrative for some time, with many cryptocurrency-native institutional funds either reducing their holdings of ETH or shorting ETH as a portfolio hedge over the past 12-18 months. Therefore, we believe that ETH's recent performance has not reflected some significant positive factors, including the recent Pectra upgrade and proposals put forth by Vitalik Buterin (regarding RISC-V) or Ethereum Foundation researcher Dankrad Feist (EIP-9698).
In fact, so far this year, the net outflow of spot ETH ETFs has approached $140 million (compared to a net inflow of $6.1 billion for spot BTC ETFs), although these funds did attract $61 million this week (from May 8 to 14). However, we believe this indicates that, despite price trends, broader interest in allocating ETH remains relatively limited. It is worth noting that May 15 is the deadline for 13-F filings (for the first quarter of 2025), but only companies managing over $100 million are required to file. Preliminary signs indicate that some institutions' interest in US spot ETFs is waning (according to reports from Reuters), and the Wisconsin Investment Board has exited its positions. On the other hand, Brown University's endowment fund purchased $4.9 million worth of IBIT stock last quarter.
Regulatory dynamics
Recently, media reports on the US Senate stablecoin bill (GENIUS Act) have been somewhat misleading. Here's the situation: Last week (May 8), the Senate failed to advance the (GENIUS Act) in a motion to terminate debate (a vote to end debate on a bill or issue and proceed to a final vote). Many newspapers interpreted the result of this motion to terminate debate as an indefinite stalemate, potentially leading to a legislative policy vacuum.
In fact, the Democrats initially supported the bill in committee, but some Republican lawmakers later modified the bill using procedural means (Rule 14D), which was not accepted by some members of both parties. Since then, both parties have been working to reach an agreement and add new amendments to the bill to increase transparency for stablecoins. Subsequently, Senator John Thune of South Dakota has applied for another procedural vote on the (GENIUS Act) on Monday, May 19, and depending on the vote outcome, the bill may soon receive full passage.
In fact, Bo Hines, the executive director of the President's Advisory Committee on Digital Assets, stated this week that he believes stablecoin legislation and market structure legislation can be completed before the August 2025 recess. On May 5, French Hill (Arkansas), chairman of the House Financial Services Committee, and G.T. Thompson (Pennsylvania), chairman of the House Agriculture Committee, released a discussion draft of the cryptocurrency market structure bill. This means that the bill requires input from industry stakeholders, legal experts' comments, committee review, and possible amendments before formal legislation.
Overview of cryptocurrency and traditional assets
Coinbase Exchange and CES Insights
The momentum of Ethereum continues, having risen 15% in the past seven days. Although this trend coincided with the Pectra update, it seems primarily driven by technical supply and demand factors. Ethereum's performance has persisted for over a year, leading many cryptocurrency-native funds to reduce or even short the token to hedge against risks. The recent short squeeze is likely a result of funds chasing performance and covering positions. In other areas of the market, traders have been selling altcoins to lock in profits after the rise in April. BTC remains favored by various types of clients, with capital flows heavily skewed towards buyers.
Financing rates
