The long-awaited significant rally has finally unfolded. On the evening of May 8th, BTC broke through the $100,000 mark and continued rising, 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 surge 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 massive rally in the altcoin market. Within 24 hours, the re-staking token EUGEN surged over 40%, ETHFI rose over 28%, while OP and ARB both increased over 15%. In the public chain sector, SOL rose nearly 10%, SUI and BERA both surged 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. What are the influencing factors of this rally, and how will the subsequent market unfold?
Bitcoin Spot ETF Continuously 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's price takeoff.
Strategy and Other Listed Companies Continue Buying
Data shows that Strategy spent $555.8 million to acquire 6,556 BTC between April 14-20, at an average price of $84,785. Subsequently, they invested an additional $180.3 million to acquire 1,895 BTC at an average price of $95,167. Moreover, 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 further 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, targeting to hold 10,000 BTC cumulatively by year-end.
Indian listed company Jetking, NASDAQ-listed Thumzup, and US-listed medical technology company Semler Scientific are also purchasing or planning to purchase more Bitcoin.
Both Long-Term and Short-Term BTC Holders Increasing Purchases
Glassnode data shows both short-term holders (STH) and long-term holders (LTH) are increasing purchases. LTH has been continuously accumulating since early March, while STH started purchasing 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, with accumulation momentum exceeding 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.
Continuous Net Inflows of Ethereum Spot ETF Coupled with 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 single-day outflow not exceeding $30 million.
Additionally, Ethereum has completed the Pectra upgrade, its first mainnet upgrade since the Cancun upgrade in March last year. This 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 Total Increase Exceeds 4% Monthly
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's monthly increase is 3.75%, with a market cap of $150.179 billion, while USDC's monthly increase is 1.18%, with a market cap of $60.904 billion, slightly declining after reaching a high point in late April.
The increasing market cap of these two stablecoins indicates continued capital injection into the crypto market.
Fed Rate Cut Potentially in June-July, US-China Tariff War May Be Resolving
On the morning of May 8th, the Federal Reserve maintained the federal funds rate between 4.25% and 4.5% after a two-day meeting, marking the third consecutive meeting without a rate cut since January and March. Powell stated that the monetary policy outlook "might include" lowering short-term rates, depending on economic conditions.
Currently, the probability of the Fed cutting rates by 25 basis points in June is 30%, slightly higher than the earlier 27%. According to futures prices, the likelihood of a rate cut by July is around 75%. Recently, the Bank of England and China's central bank have cut rates, and global M2 liquidity continues to rise. The expected Fed rate cut may promote capital inflow into crypto assets.
Regarding tariffs, facing market and domestic public opinion pressure, Trump has shown willingness to negotiate. On May 7th, China's Ministry of Foreign Affairs announced that Vice Premier He Lifeng will visit Switzerland from May 9-12, meeting with US Treasury Secretary and Trade Representative to discuss economic and trade issues, which is interpreted as a signal to "pause tariff escalation".
Subsequent Market Trend
Raoul Pal, former Goldman Sachs executive and Real Vision founder, tweeted that he believes BTC's dominance has peaked today. Daily, weekly, and monthly DeMark top signals have appeared, with top levels lower than the 2021 high, which was lower than the 2017 high. If this judgment holds, it will mark the next stage of the "Banana Zone" (altcoin season). Let's wait and see.
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 fund inflow - price - activity. When we fall into despair, we always forget this point 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, and the gold market enters a wait-and-see period, risk appetite is returning to dominance."
Arthur Hayes, the most optimistic "shill king" and co-founder of BitMEX, stated that Bitcoin will reach $150,000 by the end of May.
