The information, opinions, and judgments regarding the market, projects, cryptocurrencies, etc., mentioned in this report are for reference only and do not constitute any investment advice.

Since March, the "Tariff War" has become the most critical factor affecting global financial markets, including the crypto market.

Using the progress and extent of the "Tariff War" as the main parameter, and the changes in asset allocation preferences, consumer confidence, economic and employment expectations, and even corporate profit forecasts triggered by the "Tariff War" as secondary parameters, predicting or observing changes in these parameters has become the primary method of market trading.

This week, with the preliminary agreement on tariffs between the US and the UK, and the "successful" initial contact between the US and China, the "Tariff War" has gradually entered its third phase (agreement reached).

Whether in the US stock market or the crypto market, forward-looking trading has dominated the market. Since the S&P 500 hit bottom on April 7, it has continued to rebound, recovering all the losses caused by the tariff war. BTC has been even stronger, rebounding sharply this week after recovering multiple technical indicators, approaching previous highs.

Against the backdrop of renewed trading enthusiasm driven by positive news, Altcoins, represented by ETH, also initiated a significant rebound this week. Previously weak ETH surged 39.01% in a single week, marking the largest weekly increase since this cycle began. eMerge Engine data indicates that Altseason has begun.

The rebound has been achieved; can market liquidity be restored to drive a reversal in Q2?

Policy, Macro Finance, and Economic Data

On May 8, US President Trump and UK Prime Minister Keir Starmer announced via phone that they had reached an "Economic Prosperity Agreement." This reduced tariffs on UK cars and steel/aluminum in exchange for the UK opening its market to US agricultural products, while retaining a 10% baseline tariff. The US is expected to gain $5 billion in export opportunities (including $700 million in ethanol and $250 million in other agricultural products) while also collecting $6 billion in tariff revenue.

This agreement is seen as an initial success of Trump's "reciprocal tariffs" policy and is interpreted by the market as the expectation that "10% tariff increase + a certain amount of US goods import commitment" could be the US's expectation for tariff wars with most countries. This expectation is undoubtedly considered "acceptable" by the market for "reciprocal countries."

This judgment has led to higher risk appetite capital betting, driving the already oversold market to rebound rapidly.

Additionally, over the weekend, US and Chinese trade representatives held their first public contact since the "Tariff War" in Switzerland.

Before the contact, both Trump and US Treasury Secretary Yellen stated that excessive tariffs had effectively ended extreme trade imbalances, and that the US and China would ultimately reach an agreement. After the contact, both sides announced that "substantial progress" had been made. 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 survey data is very poor, the economic and employment data for April is relatively good, and the performance of the "Big Seven" earnings reports has not shown significant discrepancies, providing fundamental support for the strong rebound in the US stock market.

The US stock market continues to rebound, US Treasury yields remain stable, and gold prices rise and then fall.

The positive developments in US crypto asset policies also made significant breakthroughs this week. On May 7, 2025, the Governor of New Hampshire signed the "HB302 Bill," authorizing state financial institutions to purchase digital assets with a market value exceeding $500 billion, such as Bitcoin, directly or through exchange-traded products (ETPs) (currently only BTC meets this standard). The bill allows state financial funds to allocate up to 5% to Bitcoin, precious metals, and other assets, potentially mobilizing around $280 million. On May 11, Arizona passed a reserve bill, becoming the second state in the US to establish a Bitcoin strategic reserve.

With the breakthrough of BTC reserve bills at the state level, more states are expected to join. The passage of a federal reserve plan may just be a matter of time.

Crypto Market

Previously, BTC had rebounded for four consecutive weeks. This week, with the "Tariff War" entering its third phase, positive news within the industry and strong buying pressure led BTC to rise over 10.46% again.

In terms of short-term moving averages, BTC has formed a uniformly rising 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 surged strongly on May 8, jumping above the "first upward trend line" of this cycle. This indicates that forward-looking traders have basically completed the pricing correction of the "Tariff War" impact, which can be seen as a phase shift in the medium to long-term market.

The main price resistance in the next phase comes from the upper edge of the "Trump Bottom"—$11,000. Above this level lies the historical high.

It is worth noting that after BTC's five consecutive weeks of rebound, Altcoins experienced a comprehensive surge this week, with ETH rising over 39.1% in a single week. If the rebound of Altcoins can be sustained or even reversed, it will signify the return of a liquidity-rich period.

Capital Inflows and Outflows

Following significant capital inflows last week, this week saw stablecoins and BTC Spot ETFs again showing positive inflows through dual channels, totaling $944 million, providing substantial support for the explosive growth of the crypto market, including BTC.

Specifically, in the last week, six out of seven trading days recorded capital inflows, indicating a strong will to bottom-fish and push prices higher.

In addition to the large capital inflows, leverage in the market has also begun to increase, with both borrowing rates and lending rates starting to rise. This indicates that the risk appetite of market participants is increasing.

Selling Pressure and Liquidation

After three months of chip cleaning, cost reordering, and the transfer of long and short hands, the degree of chip locking has significantly increased. We note that although BTC has risen for five consecutive weeks, selling pressure has gradually decreased, indicating that most short-term rebound traders have cleared their positions, and the market is experiencing heightened reluctance to sell, making a significant short-term surge in BTC to break new highs a high-probability event.

In terms of long and short hands, as prices return to $100,000 and liquidity recovers, long hands have begun to sell again, while newly entered short hands are competing for chips. Meanwhile, the major buyers of this cycle—the "shark" group—continued to increase their holdings by over 56,000 coins this week.

Currently, short hands have just exceeded 10% in floating profits, with only 2% of chips in a loss state, indicating that the market is in a very safe state, and BTC prices are very likely to achieve a rapid breakthrough of previous highs.

Cycle Indicators

According to eMerge Engine, the EMC BTC Cycle Metrics indicator is at 0.75, indicating that BTC has returned to an upward phase.

EMC Labs (Emerging Labs) was established in April 2023 by crypto asset investors and data scientists. It focuses on blockchain industry research and crypto secondary market investment, with industry foresight, insights, and data mining as its core competitiveness, aiming to participate in the thriving blockchain industry through research and investment, promoting the benefits of blockchain and crypto assets for humanity.

For more information, please visit: https://www.emc.fund

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