Global Market Sentiment Improves Amid Fed Rate Stability and Easing US-China Trade Relations
As the Federal Reserve maintains interest rates, adjusts market inflation expectations, and eases US-China trade relations, global market sentiment has significantly improved in mid-May. US stocks have risen continuously, and cryptocurrency assets have simultaneously warmed up, with Bitcoin’s price at one point nearing $112,000, setting a new historical high. The retreat of gold, the weakness of the dollar, and employment data slightly below expectations have collectively created a “risk asset-friendly” short-term environment. This week’s market restoration has a clear structural causality: macro stability signals strengthen capital confidence, while on-chain data and price momentum showcase a new round of rotation in mainstream assets.
Macroeconomic Environment and Bitcoin Resonance: Policy Expectations, Institutional Accumulation, and ETF Fund Reflows Support Each Other
Source | BingX
Bitcoin Price Analysis
On May 7, the Federal Reserve maintained interest rates between 4.25% and 4.5%. ### Powell stated that although inflation remains slightly above target, the overall economic performance is robust, and there is no urgency to adjust monetary policy. Meanwhile, Trump continues to pressure the Fed, calling for early interest rate cuts to stimulate the economy ahead of the presidential election, creating an uncertain tension between politics and monetary policy. Market expectations for rate cuts beginning in July or later have intensified, enhancing the attractiveness of risk assets.
The trend of inflation is the core observation indicator for this round of rebound. Early May CPI expectations are set at 3.4%; if it can actually retreat, it will further solidify expectations for policy easing. Meanwhile, April non-farm payrolls added 177,000 jobs, with the unemployment rate and hourly wage growth slightly below expectations, suggesting that the labor market is gradually cooling, paving the way for rate cuts. These data shape an “economy neither too hot nor too cold” environment, which is favorable for the recovery of risk assets. Since mid-May, Bitcoin’s price has continuously broken through key levels, once nearing $112,000, setting a historical high. Behind this trend, institutional capital momentum has clearly strengthened. MicroStrategy announced a further accumulation of $840 million, becoming a symbolic signal of the stabilization of policy confidence. According to SoSoValue data, on May 20, Bitcoin ETF saw a net inflow of $243 million in a single day, reaching a high since mid-March, with a weekly cumulative net inflow surpassing $460 million, compared to an average daily inflow of $58 million in April, indicating a significant rebound in capital momentum.
On-chain structures also show simultaneous improvement. Exchange Bitcoin reserves continue to decline, and the realized market cap has reached a historical high, indicating that chips are continuously shifting into the hands of long-term holders. The Bitcoin RSI index reached 72.8; although technically overbought, there is no significant divergence, showing that the current upward momentum still has continuity.
Nevertheless, the short-term market may still face consolidation pressure. If the May CPI data or Fed minutes lean hawkish, it will become a potential catalyst for high-level fluctuations. Investors need to pay attention to whether ETF funds can continue to flow back and whether the policy truly enters a loosening cycle as a basis for the continuation of subsequent trends.
Ethereum and Market Structure: Mainstream Assets Lead, Initial Rotation of Altcoins Appears
Source | BingX
Ethereum Price Analysis
The price of Ethereum showed a strong rebound this week, rising from a low of $1,764 on May 6 to $2,660 on May 23, with an increase of over 50% within the month. The upward momentum in this round comes from three major catalysts: first, the progress of the Ethereum Pectra upgrade is clear, expected to optimize execution efficiency and improve development experience, enhancing overall Ethereum network performance; second, the activity of Layer 2 has surged, with Arbitrum’s daily active users returning to over 600,000, and Base chain transaction volume exceeding 240 million; third, on-chain activities have warmed up, and capital confidence has rebounded.
On-chain data also indicates a revival of market activities. The proportion of ETH non-exchange active addresses has increased, with average Gas fees rising to 0.0018 ETH per transaction, reflecting simultaneous growth in network congestion and usage demand. Net inflows of ETH to exchanges have decreased, indicating a slowdown in selling pressure and an increase in the proportion of long-term holders.
Several institutions have also expressed optimistic expectations. Research organizations like Messari believe that if policies and technical aspects align, Ethereum may have the chance to challenge historical highs in the second half of the year, with projections suggesting it could reach between $3,200 and $5,000 within the year. Especially after Bitcoin’s main upward segment, Ethereum has the potential to attract capital rotation and could become the new main character in the mainstream narrative.
In contrast, the altcoin market, while showing initial signs of rotation, has not yet formed systematic advancement of capital. The non-BTC/ETH asset index rose 2.4% this week, with slight rebounds in mainstream coins like BNB, SOL, and LINK. However, RWA, modular, and AI blockchain projects have not seen significant recovery, and NFT and GameFi remain sluggish.
The overall market TVL remains stable at high levels, but the intensity of usage in the DeFi application sector has not yet returned to bull market highs. If the altcoin narrative cannot restart the main storyline, the market structure may continue to maintain a pattern of mainstream assets leading, waiting for the resonance point of capital and narrative to emerge.
Market Sentiment and Structural Observations: Greed Rising but Momentum Divergence, Awaiting Clear Catalysts
Source | CoinMarketCap
The Fear and Greed Index rose to 76 this week, entering the extreme greed zone, indicating a significant increase in investors’ risk appetite. However, from on-chain and technical observations, market upward momentum is not consistent, showing restored capital confidence but still leaning towards caution.
Regarding ETF fund flows, there was a slight net outflow on May 23, and the weekend’s capital momentum did not continue, indicating that most funds are still in a wait-and-see mode and have not formed breakthrough momentum. The futures market’s open interest has also not seen significant expansion, with leveraged capital maintaining a neutral level.
At the same time, apart from Ethereum, altcoin ETFs still lack policy clarity, preventing small and medium-sized projects from attracting incremental capital. Although TVL is stable, the capital distribution across various chains remains highly concentrated, and insufficient liquidity supply constrains price performance.
In summary, market sentiment is warming, but it is still necessary to observe the May CPI data, the Fed minutes, and the continuity of ETF fund flows as key judgment indicators for whether risk appetite can continue to recover. If data and policies mutually support, the cryptocurrency market is expected to further break through high-point ranges in June.
Conclusion and Outlook
In mid-May 2025, the cryptocurrency market shows structural recovery under the resonance of stable macro policies and capital momentum reflows. Bitcoin sets a historical high, and Ethereum rebounds strongly, reflecting the market’s optimistic attitude towards policy shifts and institutional adoption. However, technical indicators and sentiment indices have already entered high levels, and there is no shortage of fluctuation risks in the short term.
The key observation points for the next one to two weeks will focus on the upcoming US inflation data (CPI), the Fed’s open market committee minutes, and whether ETF funds continue to flow in. If relevant data and policy positions support the continuation of market risk appetite, cryptocurrency assets may have the opportunity to break through the consolidation range, opening a new round of main upward segments. Conversely, if sentiment reverses or capital retreats, caution against high-level correction risks will be necessary.
At this stage, it is recommended that investors adopt an “observe and verify” strategy, paying attention to the synchronous changes in policy data and on-chain activity, avoiding chasing high operations while maintaining confidence and preparation for medium to long-term capital structure improvements.
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