Author: 0xWeilan
The information, opinions, and judgments regarding the market, projects, currencies, etc., mentioned in this report are for reference only and do not constitute any investment advice.
In the March report, we indicated that "the reverse is the movement of the Dao" and pointed out that "the panic selling has been released to the maximum extent," forecasting that "Q2 will welcome a reversal market." Ultimately, in April, BTC experienced a strong rebound, rising 14.11% in a single month, recovering all losses since the "tariff war."
The "reciprocal tariff war," which dominates the trends in global financial markets, officially began in April, creating a fierce impact on the market, with panic sentiment soaring and asset prices significantly adjusted. However, after the emotional release, accompanied by Trump's "softening" stance and the release of relatively resilient U.S. economic and employment data, funds rushed into the U.S. stock and crypto markets.
BTC adjusted ahead of the U.S. stock market, and after the U.S. stock market completed its bottoming out, it surged under the drive of billions in buying funds. More importantly, after more than two months of adjustment, the chip structure has greatly improved, and the internal state has become more stable.
The S&P 500 and the crypto market have fully recovered all losses since the "reciprocal tariff war." With the "tariff war" still ongoing and uncertainty about whether the U.S. economy will enter a recession, the market trend remains very strong, continuously pricing in various new information. However, for the market to achieve a reversal, the "tariff war" must enter its third phase (reaching an agreement) and confirmation of U.S. economic data is needed. In the meantime, there are likely to be many twists and turns.
Macroeconomic Finance: "Reciprocal Tariff War" Expectation Trading Triggers Market Revisions
In the March report, we mentioned that "a new trading judgment framework was initially established at the end of February, and throughout March, the output of various economic, employment, and interest rate data was input into this judgment framework." April continued to evolve on this basis, with Trump's statements and actions regarding the "reciprocal tariff war" playing a major role. Coupled with relatively strong economic and employment data released in April, traders weakened their concerns about "economic recession," and ultimately, after the monthly revision trend came to a close, forward-looking trades betting that the tariff war would not lead to an economic recession dominated market trends. The Nasdaq and BTC, which initially fell and then rose, both recorded positive monthly returns.
On April 2, Trump announced a national emergency and initiated reciprocal tariffs; on April 3, a 10% tariff was imposed on global goods, and a 104% tariff on Chinese goods. Secretary of Commerce Wilbur Ross and Treasury Secretary Steven Mnuchin emphasized cooperation with allies to counter China.
From April 3 to 5, U.S. stocks experienced a panic sell-off, with all three major indices falling below their annual lines, and the S&P 500 dropping to January 2024 levels. High-valuation stocks like Tesla and Nvidia were halved. Both long-term and short-term U.S. Treasury bonds fell sharply, as traders sold stocks to seek refuge in the bond market and European stocks. Over the weekend, large-scale protests erupted across the U.S.
On April 7, Monday, the S&P 500 VIX index broke 60. The market sell-off entered its second phase, with U.S. Treasuries being heavily sold off. On the 9th, tariffs were officially implemented, with the 2-year U.S. Treasury yield rising above 4%, and on the 11th, the 10-year Treasury yield approached 4.6%. By the 21st, the sell-off spread to the foreign exchange market, with the dollar index falling to 97.911, surpassing the low point during last year's Carry Trade collapse. The Nasdaq fell into a technical bear market.
Trump's unexpected "reciprocal tariffs," indifference to the decline in financial markets, and the Chinese government's strong counterattack led to a brutal situation of "three kills" in U.S. stocks, bonds, and currencies. This situation triggered greater panic in the market, with criticism and protests from businesses and the financial sector boiling over, undermining fundamental market confidence, forcing Trump to make concessions.
First, he suspended tariffs on all countries except China for 90 days to ease tensions with allies and gain more negotiation time. On April 23, reports emerged that the Trump administration might significantly reduce the 104% high tariffs on Chinese goods, even by more than half, to ease tensions with China. During this period, Trump emphasized that he had been in contact with the Chinese government, but the Chinese government denied this.
Gold emerged as the only winner, experiencing a strong rally starting from April 9, rising from $2970/ounce to a peak of $3499.93 (April 22). However, after the 23rd, following news that Trump was considering cutting high tariffs on Chinese goods, it entered a sustained adjustment, dropping to $3288.54/ounce by the end of the month. Nevertheless, it still recorded a significant monthly increase of 5.08%.
U.S. stocks temporarily rebounded strongly after hitting bottom on April 4, and the rebound continued after Trump's "softening" on the 23rd, with the Nasdaq and S&P 500 fully recovering the declines caused by the tariff war by the time this report was completed (May 2).
For the entire month, the Nasdaq rose 0.85%, the S&P 500 fell 0.76%, the Dow Jones fell 3.17%, and BTC surged 14.11%.
During this process, although the market once bet that the Federal Reserve would initiate a temporary rate cut, with expectations of a rate cut in May exceeding 80%, the Federal Reserve maintained a tough stance, only emphasizing again during the "three kills" of stocks, bonds, and currencies that it would intervene in the market if unexpected conditions arose in the labor market, releasing some "dovish" signals.
On April 10, the U.S. Bureau of Labor Statistics released data showing that, thanks to falling energy prices, the March CPI (Consumer Price Index) fell by 0.1% month-on-month (seasonally adjusted), marking the first monthly decline in nearly five years, below the market expectation of a 0.1% increase. The annualized CPI growth rate dropped from 2.8% in February to 2.4% (not seasonally adjusted). The core CPI (excluding food and energy) rose by 0.1% month-on-month (below the expected 0.2%), with an annualized growth of 2.8%, the lowest since March 2021.
On April 30, the U.S. Bureau of Economic Analysis released preliminary estimates for the first quarter, showing a 0.3% annualized quarterly decline in real GDP, the lowest level since the second quarter of 2022, far below the 2.4% growth rate expected for the fourth quarter of 2024, and also lower than the market expectation of 0.4% (Dow Jones consensus forecast) or 0.3% (median from a Wall Street Journal survey on April 12).
On May 2, the Bureau of Labor Statistics (BLS) released the April non-farm payroll report, showing an increase of 177,000 non-farm jobs, higher than the Dow Jones expectation of 133,000, but lower than the revised 185,000 in March (with February and March data revised down by 58,000). The average monthly increase over the past six months was 193,000 jobs, indicating that the labor market remains resilient. The unemployment rate in April held steady at 4.187% (compared to 4.152% in March), meeting expectations, and the labor force participation rate slightly increased, indicating a relatively robust market. Average hourly earnings rose by 0.2% month-on-month (below the expected 0.3%), with an annualized growth of 3.8% (below the expected 3.9%), indicating moderate wage pressure.
Inflation data showed signs of cooling, while employment data remained strong. This temporarily alleviated market concerns about an economic recession, and coupled with Trump's "softening," although the tariff war is still in the second phase ("negotiation"), funds from retail investors and active funds initiated forward-looking trades, significantly buying in and driving a strong rebound in U.S. stocks.
EMC Labs believes that the panic triggered by the tariff war in the medium to short term has been relatively fully released, and GDP data indicates that at least the U.S. economy has not suffered significant damage so far. Additionally, Trump's team seems to be returning from "out of control" to "rational," which is why forward-looking funds are willing to buy in large quantities. We tend to view the adjustments from February to April as a sharp correction of the overvalued U.S. stocks that have risen for two consecutive years under the impact of the "tariff war," a technical test of the bear market, but there is still no sufficient data to indicate that the U.S. economy will enter a recession. Currently, U.S. stock valuations have seen some downward pressure, but they are not cheap either, and market pricing has been relatively sufficient. If the market continues to rise, more supporting conditions are needed, such as further easing of the "tariff war" and a further decline in CPI. The outlook for interest rate cuts is not optimistic, as CME FedWatch shows that market expectations for a rate cut have been pushed back to July. After a significant rebound, we tend to hold a neutral judgment, closely monitoring the progress of the tariff war and economic data. If a trend of economic deterioration appears, there may be further downward revisions.
Crypto Assets: Solid Chip Structure + Long-Term
After a crash at the beginning of the month, there was a significant rebound by the end of the month. The BTC trend in April is a model of "reverse trading," buying in fear and waiting for asset prices to rebound rapidly as the situation calms down.
In April, BTC opened at $82,534.31, fell to a low of $74,420.69, and closed at $94,182.54, rising 14.11% for the month, with a monthly volatility of 26.12%.
BTC Price Daily Trend
The monthly trend showed a pattern of falling first and then rising, with the lowest point occurring on April 7, "Black Monday," and after the official implementation of the "reciprocal tariffs," it bottomed out and gradually rose. Calculating based on daily fluctuations, the number of rising days far exceeded the number of falling days over the 30 trading days.
Technically, BTC confirmed its long-term trend by retesting the annual line three times during the sharp decline linked to the U.S. stock market, and on April 22, it strongly broke through the 200-day line with a 6.82% surge, returning to the "Trump bottom" (the box structure formed after Trump's victory) and approaching the "first upward trend line" of this bull market (green dotted line in the above image).
Compared to the U.S. stock market, BTC's performance has been very strong, thanks to the price correction that began in March, the accumulation by long-term holders and large investors, and favorable support at the policy and use case levels.
Since Trump signed the executive order to establish a "strategic Bitcoin reserve" in March, multiple states in the U.S. have continued to advance their respective "Bitcoin reserve bills." On April 30, the Arizona House passed two Bitcoin reserve bills, which are currently awaiting the governor's signature. If the bills take effect, Arizona will become the first state in the U.S. to allow state finances to hold Bitcoin. Once the Arizona bill is officially enacted, it is believed that the pace of advancement in other states will also accelerate.
The expansion of BTC's use cases and price increases are in a continuous feedback loop that reinforces each other. The turmoil and revisions in the global financial markets triggered by Trump's tariff war in March and April temporarily interrupted this process. However, the internal holding structure of the crypto market and market movements remain intact and stable. Once the panic sentiment dissipates, BTC will regain its upward momentum. In the future, with the potential turbulence from the tariff war and macro finance, BTC prices will still experience fluctuations, and breaking through previous highs will depend on the resolution of the tariff war and whether the U.S. economy falls into recession.
Chip Structure: Long Hands, Sharks Increasing Holdings, Long-Term Buyers Sweeping Up
On October 4, 2024, as funds surged into the market, long hands initiated the second wave of selling in this cycle. The strong inflow of funds absorbed the selling pressure and continued to push prices close to $110,000.
Long Hands, Short Hands, and Exchange Holdings of BTC Scale
After entering March, with the loss of liquidity, BTC prices fell sharply. Subsequently, the long hands once again played the role of a "stabilizer," shifting from selling to increasing holdings.
Additionally, one of the large holders with holdings between 100-1000 BTC, known as "sharks," also continued to increase their holdings during the decline and accelerated their buying in late April, adding over 80,000 BTC throughout the month, becoming a key force in reversing the trend. It is noteworthy that this group was also the main buyer that drove BTC prices from $70,000 to the $100,000 range in October to December 2024. Based on the characteristic that this group’s buying scale far exceeds their selling scale in this cycle, it can be inferred that their behavior aligns with that of long-term investors, and their recognition of this price range contributes to price stability.
After various buyers swept up, the exchange's BTC inventory decreased by about 60,000 BTC in April.
In late February, prices began to decline, and by the end of April, prices returned to the levels seen in late February. Accompanied by market fluctuations, the chips were fully exchanged. Comparing the chip distribution on January 31 and April 30, it can be seen that the center of gravity for chips in the $74,000 to $100,000 range has significantly shifted downward, with some chips priced above $100,000 moving down to the $74,000 to $94,000 range.
BTC Chip Distribution (January 31 vs April 30)
The market turbulence over the past two months, from the perspective of chip distribution, indicates that the FOMO (Fear of Missing Out) chips from new entrants were forced to sell during the sharp decline, while the previous shortage of chips in the $74,000 to $94,000 range has been replenished. According to eMerge Engine data, the current short positions have moved out of floating losses, while the BTC in floating loss across the entire chain has dropped to 14%. The market selling pressure triggered by panic and losses has greatly improved.
Funds: Rescuing the Situation with Over $10 Billion in Buying
Around mid-month, under the pressure of the "tariff war" and macroeconomic panic, overall funds showed an outflow trend in the first half of the month. However, stablecoin funds have continued to flow in since April, and by mid-month, with Trump's "softening" and the stabilization and rebound of U.S. stocks, funds from the BTC Spot ETF channel also began to rush in, quickly pushing BTC prices above $94,000.
Crypto Market Fund Inflow and Outflow Statistics (Daily)
From a monthly perspective, the ETF channel funds that held short-term pricing power in February and March showed an outflow trend that pushed BTC prices downward, while the overall fund inflow in April reached $8.4 billion, making it the sixth largest inflow month in this cycle.
Crypto Market Fund Inflow and Outflow Statistics (Monthly)
The above statistics do not include the accumulation data from Strategy Company. According to their announcement, Strategy Company conducted three rounds of accumulation through fundraising in April, purchasing a total of 25,370 BTC, investing over $2.2 billion. Thus, the total inflow of funds into the market in April exceeded $10 billion.
The price trend of BTC reflects the inflow and outflow of funds in the market. Currently, the inflow of funds can be categorized into three types: one is the BTC Spot ETF channel funds, which often follow the fluctuations of U.S. stocks; the second is the fundraising from Strategy Company, which has shown good continuity; and the third is stablecoin channel funds, which are essentially on-site funds. Since October 2023, there has only been one month of net outflow, while all other months have shown positive inflows (not all stablecoin funds flow into the crypto market).
Although the crypto market experienced significant volatility from February to April, technically entering a bear market at one point, based on a comprehensive analysis of funds and the trend of long-hand distribution, we believe the market cycle is still in an upward phase, i.e., a bull market. EMC Labs believes that after the adjustment, the chips have returned to long hands and large holders. This downward adjustment helps to strengthen the chip structure. As the impact of the tariff war gradually diminishes and market trading enthusiasm reignites, BTC prices are likely to break upward again.
Conclusion
In the March report, we pointed out that "after experiencing the storm of the first quarter, the outlook for the second quarter remains unclear, but the most painful moments may have passed. Once Washington and the Federal Reserve return to a rational game state, the market should return to its operational norms."
In April, the market performance initially proved this judgment, supported by Trump's "softening" and relatively strong U.S. economic data.
After several months of market adjustment and chip redistribution, the internal structure of the crypto market has become more solid, with long hands holding more chips, short hands relieved of floating loss pressure, and floating profits yet to appear, with only 14% of Bitcoin in floating loss. This internal state provides solid support for market upward movement.
However, the external uncertainty, especially regarding the "reciprocal tariff war," is very high. Additionally, the potential for the "reciprocal tariff war" to trigger a U.S. economic recession and rising inflation could lead to another downward revision of U.S. stock valuations and further delays in Federal Reserve interest rate cuts. This point requires particular attention.
Market trends are the result of dynamic interactions among trading parties under changing conditions. We are confident in BTC's performance in the second half of the year and its long-term trajectory, but we must remain vigilant about the unpredictable damage that the "reciprocal tariff war" may inflict on funds, sentiment, and the global economy.
免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。
