Original Article Title: "Trump's 'Major Announcement' + Fed Rate Cut Wind: On-Chain Data Previews Bitcoin Storm"

Original Article Author: Luke, Mars Finance

In May 2025, Bitcoin (BTC) price was like a wild horse breaking free, surging to a near two-month high of $97,900, then briefly pausing around $94,000, before quickly rebounding to around $97,000. This price frenzy ignited the passion of the crypto market and prompted investors to start asking: What is driving this surge? Is it Trump's high-profile trade declaration, or the Fed's monetary policy direction? Or is it Wall Street giants' accelerated embrace of crypto assets? The answer may be a combination of all three. This article will narrate and analyze how recent news has sparked Bitcoin's rise, delve into the subtle pulse of on-chain data, look ahead to market opportunities and concerns, and strive to be both engaging and professionally insightful.

Trump's Trade Gamble: The Market Sentiment Catalyst

On May 8, Trump announced that he would make a major statement in the Oval Office the next morning, related to a trade agreement with "a highly respected major country." The New York Times later revealed the mystery: the agreement partner was the UK. This news was like a spark that quickly ignited market speculation. Trump's trade policy has always been a global financial market barometer and this time is no exception. He also hinted that a "very major announcement" would be made before his trip to the Middle East next week, further stirring investors' nerves.

Trump's trade actions have already stirred waves in 2025. In early April, when he announced a 145% tariff on China, the price of Bitcoin fell to $77,730, and global stocks experienced the most severe turbulence since 2020. However, on April 10, he unexpectedly suspended some tariffs for 90 days, and market sentiment quickly reversed, with Bitcoin skyrocketing 7% to $82,350 in a single day. Now, the trade agreement with the UK is seen as a potential positive, which may ease global trade friction and boost the attractiveness of risk assets. JPMorgan strategist Bram Kaplan keenly captured this trend and advised investors to buy S&P 500 call options, stating that Trump's announcement could lift the market. This optimism quickly spread to the crypto field, accompanied by a surge in fund inflows.

The Fed's Delicate Game: The Rate Cut Expectation Catalyst

On the same day, Federal Reserve Chairman Jerome Powell threw out a significant signal at a press conference: the monetary policy outlook may include rate cuts, but the specific path will be anchored to economic data. He played down the significance of GDP fluctuations, emphasizing that the Fed will remain flexible. This statement injected a warm hue into the market, as rate cuts are often seen as a tailwind for risk assets.

In 2025, the Federal Reserve's policy had a particularly significant impact on Bitcoin. On April 23, Trump denied rumors of firing Powell, easing the market's nerves and causing Bitcoin to rebound. However, earlier in April, the tariff shock had plunged Bitcoin to a low of $81,500, highlighting the macro environment's influence on the crypto market. The rate cut expectations indirectly fueled Bitcoin's rally by reducing market liquidity costs, weakening the dollar's attractiveness, and enhancing inflation hedging demand.

However, Powell's cautious remarks also hinted at potential risks. He clearly stated that the policy would closely monitor economic data, and if inflation or job data exceeded expectations, rate cuts might be postponed. The market is delicately balanced, and slight changes in external variables could trigger significant volatility.

Wall Street's Crypto Ambition: Influx of Institutional Funds

On May 1, Morgan Stanley announced plans to launch crypto trading services on the E*Trade platform in 2026, marking a new phase in Wall Street's embrace of digital assets. Previously, its affluent clients could already invest in crypto assets through Bitcoin ETFs and futures, with advisors being allowed to promote ETFs since August 2024. Institutions like Charles Schwab are also following suit, planning to offer similar services. These moves drove Bitcoin to briefly surpass $97,000 on May 2.

The influx of institutional funds is reshaping the market ecosystem. The U.S. Bitcoin spot ETF has attracted $4.6 billion in the past two weeks, nearing the historical high of 1.171 million BTC in assets under management. In contrast, the sustained outflows from March to April had previously put pressure on the market, underscoring institutional funds' sensitivity to the macro environment. Institutional participation has not only boosted market liquidity but also paved the way for Bitcoin's mainstream adoption. However, in mid-April, amid the tariff turmoil, Bitcoin ETFs saw outflows of approximately $1 million for seven consecutive days, reminding investors that institutional funds are not invulnerable.

On-Chain Data: A Nuanced Portrayal of Market Pulse

On-chain data provides us with a window to peek into the inner dynamics of the Bitcoin market. The recent price rebound has triggered a series of significant changes, revealing the subtle evolution of investor behavior and market structure.

Firstly, Bitcoin's Realized Cap has surged to a historic high of $889 billion, growing 2.1% over the past month. This metric measures the cumulative net inflows of capital, reflecting a strong influx of funds. The Net Realized Profit/Loss further indicates that daily net capital inflows have exceeded $1 billion in recent weeks, showing that buyers are willing to absorb sell orders at the current price, signaling robust demand. In contrast, realized losses only account for 1-2% of total trading volume, implying that most investors who bought at higher levels are still holding onto their coins, with market sentiment leaning towards optimism.

Secondly, the significant price recovery has greatly relieved investors' financial pressure. At the recent low of $74,000, over 5 million BTC were in an unrealized loss state. With the price rebounding to $97,000, about 3 million BTC have returned to a profit, especially in the portfolios of Short-Term Holders (STH). The Unrealized Loss indicator shows that the financial pressure on short-term holders has dropped from the +2σ high point during the August Yen carry trade collapse and early 2025 market slump to a neutral level. This improvement is directly reflected in trading behavior: the proportion of profitable trades by short-term holders has surged, marking a turning point in the market from loss dominance to profit dominance.

Additionally, the behavior of Long-Term Holders (LTH) is also noteworthy. Since the low point, over 254,000 BTC have been held for over 155 days, demonstrating long-term investors' confidence in the current price. The Realized Supply Density indicator further reveals that a significant amount of BTC with a similar cost basis has congregated near the current price. These coins were primarily accumulated between December 2024 and February 2025 and have not been sold despite the recent lows. The presence of this supply increases the market's sensitivity to price fluctuations, where minor changes could trigger large-scale trades.

Finally, the options market provides an external perspective on volatility. The 1-week and 1-month ATM implied volatility has fallen to its lowest level since July 2024, reflecting investors' underestimation of future volatility. Historically, low volatility often heralds the onset of a high volatility period. Combined with the high on-chain supply density, the market may be brewing a storm.

Market Inflection Point: Concerns Beneath the Surface

Bitcoin's uptrend is in full swing, but the market is currently at a delicate inflection point. The price is hovering around the Short-Term Holder cost basis (approximately $95,000), a level that has historically been a litmus test for uptrends. If this support can be held steadily, the market may further advance; if breached, the recent momentum could be thwarted.

Signals from the on-chain and options markets further exacerbate this uncertainty. High supply density implies an increased sensitivity to price fluctuations, while low implied volatility suggests that investors may be underestimating the risk of future volatility. External catalysts—such as Trump's Middle East journey or the Fed's economic data interpretation—could potentially ignite volatility.

Epilogue: Bitcoin's Opportunity and Fog

The 2025 Bitcoin market is like a drama of successive climaxes. Trump's trade policy injects vitality into risk assets, the Fed's rate cut expectations ignite market imagination, and Wall Street's crypto strategy endorses Bitcoin's long-term value. On-chain data, with delicate strokes, outlines a scene of fund inflows, restored investor confidence, and heightened market sensitivity.

However, beneath the frenzy lies a fog. The market is at a critical juncture, where subtle changes in external variables could disrupt the fragile balance. Trump's next move, the Fed's policy path, and institutional fund flows will be key clues in the short term. Looking ahead, Bitcoin's decentralization and scarcity remain its core allure, but macroeconomic uncertainty, regulatory pressure, and competition from traditional safe-haven assets may pose challenges.

For investors, this is a moment of coexisting opportunity and risk. A word from on-chain analysts may be worth pondering: "Bitcoin's value lies in the sovereignty it grants individuals, not in temporary price fluctuations." In this digital wave, rationality and patience will be the best compass. Regardless of market fluctuations, maintaining clear judgment may lead further than chasing frenzies.

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