China and the United States officially start negotiations, Bitcoin aims at $100,000

Author: Bright, Foresight News

On the morning of May 7, the cryptocurrency market rebounded from the continuous decline at the end of the May Day holiday, and the secondary market rebounded with BTC. BTC rose all the way from yesterday's low of $93,390 to $97,732, an increase of more than 4.4%, regaining the decline in the past five days. As of press time, Bitcoin is now at $96,866.

ETH rebounded to $1,850 from $1,751.45, making up 5.6%. SOL rose from US$141.41 and rebounded to US$149.54, an increase of 5.74%.

The total market value of cryptocurrencies rebounded by more than 2%, and rebounded again to exceed US$3 trillion. Bitcoin's market share exceeded 65%, setting a new high since January 2021. The Fear and Greed Index climbed to 67, which represents greed. At the same time, US cryptocurrency stocks rose simultaneously after the market, and Coinbase stopped falling and rebounded to US$200 after the market, an increase of 1.58%; the micro-strategy closing price reached US$393.89, an increase of more than 2.15%.

In terms of liquidation data, according to Coinglass, a total of more than 1.37,600 people have been liquidated in the past 24 hours, with a total liquidation of US$311 million, and both bulls and bears have exploded. The stock price was US$40.972 million in the past hour, and the short position price was US$38.002 million. The largest single liquidation on CEX was ETH-USDT, which occurred at Binance, worth $8.053 million.

What exactly catalyzes the sharp rise in the early trading of the cryptocurrency and even the global risk asset market?

On the morning of May 7, the Chinese Foreign Ministry announced that Vice Premier He Lifeng will visit Switzerland from May 9 to 12, and will hold talks with the United States during this period. This news greatly boosted risk appetite, and the RMB once rose by 100 points and exceeded 7.20. The three major U.S. stock indexes rose sharply, among which Nasdaq futures rose by more than 1%. Spot gold fell more than 1.9%, setting a new daily low of $3,370 per ounce.

The tariff stick is unsustainable

The subtle shift in Sino-US relations has become a key turning point in market sentiment. Following the Trump administration's 104% tariff on Chinese goods in April triggering sharp fluctuations in global risk assets, the Chinese Foreign Ministry announced on May 7 that Vice Premier He Lifeng will visit Switzerland from May 9 to 12, during which he held formal talks with US Treasury Secretary Becent and Trade Representative Dai Qi. This is the first time that China and the United States have face-to-face consultations on economic and trade issues since the 2024 G20 Summit, which is interpreted by the market as a clear signal that both sides have "suspended tariff escalation."

Historical data shows that during the window period of Sino-US trade negotiations in January 2024, Bitcoin rose 22% in a single month due to the improvement in cross-border capital flow expectations. 48 hours before the news was launched, the cryptocurrency market had digested the sentiment of tariff suppression in advance. When US stocks plummeted on May 6, BTC fell only slightly by 0.3%, significantly lower than the Nasdaq's 0.87%, showing the "desensitization" characteristic of geopolitical risks.

The latest data released by the U.S. Department of Commerce on May 6 showed that the U.S. trade deficit surged to $123.4 billion in March, the highest level since record in 1992, mainly because companies rush to stockpile imported goods before tariffs take effect. This data forces the Trump administration to reassess the practical effect of the "tariff pressure" strategy.

According to Bloomberg, if the current tariff rate is maintained, U.S. retailers' annual profits will shrink by 15%, and inflation may rebound to 5.5%. "The marginal improvement of tariff policies is essentially a process of repricing of "de-dollarized" assets by global capital. "Bitwise Chief Investment Officer Matt Hougan pointed out in a morning call that when US dollar credit is damaged by trade conflicts, BTC's "digital neutrality" becomes the optimal solution to cross-border value store.

Institutional "regular investment" and policy assistance

When the market is immersed in the easing short-term positive news of China and the United States, institutions seem to have long reshape the cryptocurrency valuation system by "regular investment in BTC". According to SoSoValue data, on May 6, the total net inflow of BTC spot ETF was US$425 million, the total net asset value of BTC spot ETF was US$110.685 billion, the ETF net asset ratio (market value compared to the total market value of BTC) reached 5.91%, and the historical cumulative net inflow has reached US$40.662 billion.

According to Lookonchain monitoring, on May 6, BlackRock's BTC spot ETF (iShares Bitcoin Trust ETF) purchased 5,613 BTC again, worth about US$529.5 million, and currently holds 620,252 BTC, worth about US$58.51 billion. Since April 21, BlackRock has purchased a total of 47,064 BTC worth approximately US$4.44 billion. Moreover, over the past week, BlackRock ETF has been targeted inflows of $500 million per day, causing speculation about its "high-level increase" behavior here.

In terms of policy, the strategic reserves of cryptocurrencies at the state level in the United States have been well implemented. New Hampshire Governor Ayote signed the HB302 bill, the first state bill in the United States to use cryptocurrencies as a strategic reserve. This also represents the Hampshire Treasury Secretary investing up to 5% of state funds in precious metals and cryptocurrencies with a market capitalization of at least $500 billion. Based on the Hampshire total budget of $15.4 billion, 5% is about $770 million, and at the general fund of $5.6 billion, 5% is about $280 million. As a result, the state's potential cryptocurrency investment amount is between $280 million and $770 million, setting the flag for subsequent state legislation to establish a strategic reserve of cryptocurrency.

The Fed's meeting remains deep in the "fuse"

Despite the short-term recovery in sentiment, the Federal Reserve's May interest rate decision is still like the high "Sword of Damocles". CME interest rate futures show that the current market believes that the probability of a 25 basis point cut in May is only 3.1%. The probability of a 25 basis point cut in June is only 65% ​​(10 percentage points lower than the April peak), and the 10-year U.S. Treasury yield accelerated to 3.75%, reflecting investors' concerns about the "policy lag effect" - 177,000 new non-farm employment in April, and the core PCE price index rose 4.7% year-on-year, indicating that the US economy is still resilient and may postpone the time point of interest rate cuts.

The cryptocurrency market faces a delicate balance. If the Fed keeps interest rates unchanged, high capital costs may suppress the valuation of risky assets (historical data shows that for every 1 percentage point interest rate is maintained, Bitcoin’s implicit volatility will increase by 12%); if dovish signals are released, the logic of BTC as an "anti-inflation asset" will be quickly strengthened.

The current market divergence lies in the Fed's "rate rate cut rhythm". In the latest "Economic Forecast Summary" released by the Federal Reserve, 12 officials supported a rate cut of only 50 basis points in 2025, and 7 supported a rate cut of 100 basis points, forming a rare "eagle dove standoff". When the traditional financial system falls into a "stagflation spiral" (stubborn inflation + slowing growth), Bitcoin's network effect (12 million daily active addresses) and market capitalization (over $1.9 trillion) make it a "necessary" for institutions to hedge policy risks. It is worth noting that the scale of the Federal Reserve's overnight reverse repurchase has dropped to $1.2 trillion for three consecutive days, indicating that the problem of excess liquidity in the banking system has eased and may indirectly affect the scale of leveraged funds in cryptocurrencies.

However, although BTC has rebounded above the $97,000 mark, its dominance has exceeded 65%, indicating a strong sense of risk aversion for funds. Combined with BTC's recent extremely low volatility, there may be significant price fluctuations after the Fed's meeting. This time, Powell's "releases the eagle" or "releases the pigeon" will be crucial.