Trump temporarily sets aside the tariff stick, Bitcoin surges to $95,000, but trade negotiation prospects remain unclear; key data is about to be released, and early May might be an important liquidity window. This issue's guest HTX Research Chloe (@ChloeTalk1) will join you in deciphering the macroeconomic landscape and exploring the trends and undercurrents of the crypto market.
Trump's Second Hundred Days New Policy: Fulfilling Positive Expectations, Riding the Trend
The Trump administration has quickly implemented several crypto-friendly policies in its first hundred days, influencing some traditional enterprises to become first-time Bitcoin buyers. These include improving stablecoin regulatory frameworks, appointing a crypto-friendly SEC chair, and reducing government spending through Doge. Moving forward, the White House will focus on trade agreement negotiations and Russia-Ukraine peace efforts, while advancing the "Beautiful Big Bill" with massive tax cuts, strong border security, and regulatory relaxation, and implementing the FIT21 bill in the Senate to provide a clear framework for digital asset regulation.
Last Week's Market Review: Decoupling and Driving Factors
Last week, the crypto market initially decoupled from US stock trends, primarily boosted by the continuous weakening of the US dollar index. Combined with traditional enterprises and financial institutions accelerating crypto asset purchases, on-chain stablecoin issuance continuing to rise, and Bitcoin ETFs recording consecutive net inflows, Bitcoin prices briefly rose to $88,000. Subsequently, Trump and Besant's softened stance on tariff policies further boosted market sentiment to $95,000. However, while trade agreement discussions released positive signals, truly reaching an agreement will take months. Meanwhile, strong tariff hawks within the Trump administration continue to significantly influence its decisions, becoming a major uncertainty in future trends.
Key Data Outlook: Short to Medium-Term Volatility Watershed
This week will see the US Q1 GDP preliminary value and core PCE price index (Beijing time Wednesday, April 30, 8:30 PM), as well as April non-farm employment and unemployment rate data (Beijing time Friday, May 2, 8:30 PM), with investors needing to pay attention to hedging and risk aversion before and after data release.
The market expects GDP growth to drop from 2.4% last year to 0.2%–0.4%, with core PCE year-on-year comparison dropping from 2.8% to 2.6%, non-farm employment potentially decreasing from 228,000 to 130,000, and unemployment rate remaining at 4.2%. If data shows overall weak growth but cooling inflation, it will strengthen mid-year rate cut expectations and drive risk assets to rise simultaneously; if data significantly exceeds expectations, it may delay rate cuts or reignite rate hike concerns, suppressing the crypto market in the short term. In extreme cases, if GDP shows weak growth accompanied by employment collapse, it could trigger panic selling, followed by recovery due to rate cut expectations; if inflation surges while growth stagnates, it faces stagflation risks.
Federal Reserve Remains Passive: Technical Ability to Cut Rates but Choosing "Self-Preservation"
Currently, the Federal Reserve's reserve balance is about $3.3 trillion, overnight reverse repo balance is around $94 billion, and the Treasury's general account is also at a high level, technically capable of further monetary easing through rate cuts. However, in the 2024 fiscal year, the Federal Reserve will pay $226.8 billion in interest on reserve and reverse repo tools, yet only earn $158.8 billion from Treasury and MBS, resulting in an annual net loss of $77.5 billion. If rashly cutting rates by 0.3 percentage points, the $6.7 trillion asset portfolio would lose about $20 billion in annual income, further expanding losses and significantly reducing Treasury income. Therefore, the Federal Reserve chooses to maintain stable rates to preserve its fiscal sustainability and political independence.
Liquidity Window and Summer Risks: Best Positioning Opportunity
If this week's data meets expectations, a short-term liquidity window may appear in May, with funds potentially flowing back into the crypto market. However, after the debt ceiling is approved, expected in June-July, the Treasury will issue new debt to replenish the TGA to $50-60 billion, withdrawing equivalent market liquidity, causing short-term interest rates to rise and pressuring risk assets. Historically, after significant TGA replenishment, Bitcoin and the overall crypto market have dropped about 5%-10% in the following weeks. Between policy dividends and liquidity tightening, project parties and investors need to seize the early May window while preparing hedges for summer TGA replenishment.
Against the backdrop of policy factors and liquidity changes, short-term operations should focus on key data points and liquidity windows; medium to long-term attention should be on the implementation of regulatory frameworks like FIT21 and further expansion of stablecoin applications. Simultaneously, track the accelerating penetration of traditional institutional funds into Bitcoin (BTC) and non-BTC assets like Solana.
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Note: This content is not investment advice and does not constitute any investment product offer, solicitation, or recommendation.
