Written by: 1912212.eth, Foresight News
The long-awaited major rally has finally arrived. On the evening of May 8th, BTC broke through the $100,000 mark and continued to rise, standing above $102,000, achieving a five-week consecutive increase. However, the most eye-catching performance was Ethereum, which has been heavily criticized, with a 24-hour increase of over 20%, breaking through the $2,000 mark and standing above $2,200. ETH/BTC returned above 0.02, rebounding over 14% from its low point.
Ethereum's breakthrough also led to a surge in the altcoin market. In the 24-hour period, re-staking token EUGEN rose over 40%, ETHFI increased over 28%, while OP and ARB both rose over 15%. In the public chain sector, SOL rose nearly 10%, SUI and BERA both rose over 19%. In the stablecoin sector, ENA rose over 28%, and LQTY increased over 39%.
The crypto market has been dormant for months since January this year. What are the influencing factors of this rally, and how will the subsequent market unfold?
Bitcoin Spot ETF Continues Net Inflows Since Mid-April
ETF data, an indicator of market capital inflow, shows that Bitcoin spot ETF has been experiencing continuous net inflows since April 15th.
The chart shows net inflows exceeding $900 million for 2 days, over $600 million for 1 day, and over $300 million for 5 days, with only 3 days of net outflows, which were far smaller.
Currently, the cumulative net inflow of Bitcoin spot ETF has reached $40.77 billion, with strong capital inflow laying a solid foundation for BTC price takeoff.
Listed Companies Like Strategy Continue Buying
Data shows that Strategy spent $555.8 million between April 14-20 to acquire 6,556 BTC at an average price of $84,785. Subsequently, they invested another $180.3 million to acquire 1,895 BTC at an average price of $95,167. Additionally, Strategy launched the bold "42/42 Plan", planning to raise $84 billion to purchase Bitcoin within two years, following last year's "$21/21 Plan" of $42 billion.
Japanese listed company Metaplanet added 145 BTC on April 24th and invested $53.4 million to acquire 555 BTC on May 7th. They also issued ordinary bonds worth $25 million for additional Bitcoin purchases. Metaplanet's CEO previously stated the company will continue to firmly advance its Bitcoin strategy, aiming to hold 10,000 BTC cumulatively by year-end.
Indian listed company Jetking, NASDAQ-listed Thumzup, and US medical technology company Semler Scientific are also purchasing or planning to purchase more Bitcoin.
Both Long-Term and Short-Term BTC Holders Increasing Positions
Glassnode data shows both short-term holders (STH) and long-term holders (LTH) are increasing their positions. LTH has been continuously accumulating since early March, while STH started increasing holdings in the past week. Glassnode defines LTH as investors holding BTC for over 155 days, and STH as those holding less than 155 days. According to their latest weekly report, LTH has accumulated over 250,000 BTC since early March, pushing their total holdings above 14 million.
This indicates market confidence is recovering, and accumulation momentum has exceeded investors' tendency to sell for risk aversion.
When BTC was near the local low of $74,000, over 5 million BTC were at a loss. However, with market recovery, this number has dropped to around 1.9 million BTC, indicating over 3 million BTC have returned to a profitable state.
Ethereum Spot ETF Continuous Net Inflows and Pectra Upgrade Benefits
Ethereum spot ETF data also looks optimistic. Since late April, it has achieved 7 days of net inflows, with 3 days exceeding $60 million, and the maximum daily outflow not exceeding $30 million.
Moreover, Ethereum has completed the Pectra upgrade, its first mainnet upgrade since the Cancun upgrade in March last year. It includes two collaborative updates: Prague execution layer hard fork and Electra consensus layer upgrade, planning to incorporate 11 Ethereum Improvement Proposals (EIPs). Key EIPs in this upgrade include EIP-7251 (increasing validator maximum effective balance), EIP-7691 (blob throughput improvement), and EIP-7623 (increasing call data fees).
This upgrade brings significant technical improvements to the Ethereum mainnet and ecosystem projects, directly reflecting in ETH price and ecosystem project sentiment.
USDT and USDC Market Cap Increases Over 4% in a Month
Stablecoin total market cap continues to reach new highs. According to defillama data, the current stablecoin total market cap is $242.226 billion, with a 7-day increase of over $16.078 million. USDT increased 3.75% monthly, with a market cap of $150.179 billion, while USDC increased 1.18%, with a market cap of $60.904 billion, slightly retreating from its late April high.
USDT Market Cap Chart
The increasing market cap of these two stablecoins represents continued capital injection into the crypto market.
USDC Market Cap Chart
Fed Rate Cut Possible in June-July, US-China Tariff War May Ease
On May 8th, the Federal Reserve maintained the federal funds rate between 4.25% and 4.5% after a two-day meeting. Powell stated that monetary policy prospects might include lowering short-term rates, depending on economic conditions.
Currently, there's a 30% possibility of a 25 basis point rate cut in June, and a 75% possibility of a rate cut by July. Recent central bank actions and global M2 liquidity increase suggest potential crypto asset capital inflow.
Regarding tariffs, amid market and domestic public opinion pressure, the US is showing willingness to negotiate with China. On May 7th, China's Foreign Ministry announced a high-level economic and trade consultation between Chinese and US officials.
Subsequent Market Trend
Raoul Pal, former Goldman Sachs executive, tweeted that BTC's dominance may have peaked, with daily, weekly, and monthly DeMark top signals appearing, potentially signaling the next phase of the "altcoin season".
Placeholder partner Chris Burniske, who has been constantly shouting that the bull market is not over, once again tweeted, "When the blockchain economy is thriving, it has the fastest economic feedback loop of any trillion-dollar system globally: activity - on-chain capital inflow - price - activity. When we fall into despair, we always forget this and then are surprised by how quickly wealth changes."
Jack Tan, co-founder of WOO X, said, "Bitcoin breaking through $100,000 again is not just a restoration of price confidence, but also a firm vote for the future vision of decentralized finance globally. As the impact of trade war-related news gradually weakens, the gold market has also entered a wait-and-see period, with risk appetite returning to dominance."
The most optimistic "shill king" Arthur Hayes, co-founder of BitMEX, stated that Bitcoin will reach $150,000 by the end of May.
