The market, project, cryptocurrency, and other information, opinions, and judgments mentioned in this report are for reference only and do not constitute any investment advice.
Written by 0xBrooker
Since March, the "reciprocal tariff war" has become the core factor affecting global financial markets, including the crypto market.
Using the progress and extent of the "reciprocal tariff war" as the primary parameter, and the secondary parameters such as asset allocation preferences, consumer confidence, economic and employment expectations, and future corporate profitability changes triggered by the tariff war, predicting or observing these parameter changes has become the primary method of market trading.
This week, with the initial tariff agreement reached between the US and UK, and the US and China "successfully" completing their first contact, the "reciprocal tariff war" has gradually entered its third stage (reaching an agreement).
Both US stocks and the crypto market have been dominated by forward-looking trading. Since the S&P 500 bottomed out on April 7th and continued to rebound, it has fully recovered the decline caused by the tariff war. BTC has been even more robust, rebounding sharply this week and approaching previous highs after recovering multiple technical indicators.
Against the backdrop of trading enthusiasm recovering driven by positive factors, Altcoins represented by ETH also launched a significant rebound this week. Previously weak ETH surged 39.01% in a single week, recording the largest weekly gain in this period. eMerge Engine data shows that Altseason has opened.
The rebound has been realized, but can market liquidity be restored to drive a market reversal in Q2?
Policies, Macroeconomic Finance, and Economic Data
On May 8th, US President Trump and UK Prime Minister Keir Starmer announced a "Economic Prosperity Agreement" via phone call. They lowered tariffs on UK cars and steel/aluminum, in exchange for the UK opening its market to US agricultural products, while maintaining the 10% base tariff. The US is expected to increase export opportunities by $5 billion (including $700 million in ethanol and $250 million in other agricultural products), while also gaining $6 billion in tariff revenue.
The agreement is seen as an initial success of Trump's "reciprocal tariff" policy and is interpreted by the market as a potential expectation of "10% tariff increase + certain US goods import commitments" for most countries. This expectation is undoubtedly considered basically acceptable by "reciprocal countries".
The betting of capital with higher risk appetite triggered by this judgment has pushed the oversold market to quickly rebound.
Additionally, US and Chinese trade representatives held their first public contact since the "reciprocal tariff war" in Switzerland over the weekend.
Before the contact, Trump and US Treasury Secretary Besent both headlined that excessive tariffs were effectively terminated and that the US and China would ultimately reach an agreement. After the contact, both sides announced "substantial progress". The timing and results of US-China negotiations may depend more on social and economic financial pressures in the US, rather than the will of either party. This gives us reason to believe that rationality will ultimately prevail over chaos.
Although investigative data was very poor, the economic and employment data for April were relatively good, and the performance of the "7 giants" financial reports did not show significant issues, providing basic support for the violent rebound of US stocks.
US stocks continued to rebound, US bond yields remained stable, and gold prices first rose and then fell.
Positive developments in US crypto asset policies also made important breakthroughs this week. On May 7th, 2025, the New Hampshire governor signed Bill HB302, authorizing state financial institutions to directly or through ETPs purchase digital assets like Bitcoin with a market cap over $50 billion (currently only BTC meets this standard). The bill allows up to 5% of state fiscal funds to be allocated to assets like Bitcoin and precious metals, expected to mobilize around $280 million. On May 11th, Arizona passed a reserve bill, becoming the second US state to establish a Bitcoin strategic reserve.
With breakthroughs in state-level BTC reserve bills, more states are expected to join. Passage of a Federal Reserve plan may just be a matter of time.
Crypto Market
Previously, BTC had rebounded for 4 consecutive weeks, and this week, with the "reciprocal tariff war" entering its third stage, industry internal positive factors, and compelling buying power, BTC rose over 10.46% this week.
On short-term moving average indicators, BTC has formed a uniformly upward arrangement. The 90-day moving average has turned upward, and the 360-day moving average continues to rise. More importantly, after returning to the "Trump bottom" last week, BTC strongly jumped above the "first upward trend line" of this cycle on May 8th. This means forward-looking traders have basically completed pricing corrections for the "reciprocal tariff war" impact and can be viewed as a phased turning point in the medium to long-term market.
The next stage's main price resistance comes from the upper edge of the "Trump bottom" - $11,000. Above that is the historical high.
Notably, after BTC's 5-week consecutive rebound, Altcoins saw a comprehensive surge this week, with ETH rising over 39.1% in a single week. If the Altcoin rebound continues and even reverses, it will mean the return of a liquidity-rich period.
Capital Inflow and Outflow
Following last week's significant capital inflow, stablecoins and BTC Spot ETF again showed dual-channel positive inflows this week, totaling $944 million, becoming the material support for the massive crypto market breakout.
Specifically, 6 out of 7 trading days last week recorded capital inflows, showing a very resolute intention to buy the dips and push prices higher.
Besides the large capital inflow, in-market leverage has also begun to increase, with borrowing rates and lending rates starting to rise. This means the market's risk appetite is increasing.
Selling Pressure and Sales
After three months of chip washing, cost reset, and transfer between long and short-term holders, the chip lock-up degree has significantly improved. We noticed that despite 5 consecutive weeks of rise, BTC's selling pressure has been gradually decreasing, meaning most short-term rebound traders have cleared out, and market reluctance to sell has intensified, making a short-term BTC rapid breakthrough to new highs highly probable.
Regarding long and short-term holders, as prices return to $100,000 and liquidity recovers, long-term holders have started selling again, and new short-term entrants are competing for chips. The "shark group" of big buyers this cycle continued to accumulate over 56,000 coins this week.
Currently, short-term holders have just exceeded 10% profit, with only 2% of chips in loss, putting the market in a very safe state, making a rapid BTC price breakthrough of previous highs highly likely.
Cycle Indicators
According to eMerge Engine, the EMC BTC Cycle Metrics indicator is 0.75, with BTC returning to an upward period.
EMC Labs was established in April 2023 by crypto asset investors and data scientists. Focusing on blockchain industry research and Crypto secondary market investment, with industrial foresight, insights, and data mining as core competencies, committed to participating in the booming blockchain industry through research and investment, and promoting blockchain and crypto assets' benefits to humanity.
For more information, please visit: https://www.emc.fund
