Proactive trading drives the market: A large influx of funds leads to a strong BTC rebound.

In the March report, we hinted at "reverse thinking" and pointed out that "the decline and panic have been released to the greatest extent," stating that "the second quarter will welcome a rebound market." Ultimately, in April, BTC experienced a strong rebound, rising 14.11% in a single month and recovering all previous losses.

The trade dispute that has dominated the trends in global financial markets officially began in April, causing a huge impact on the market, with panic sentiment surging and asset prices plummeting. However, after the emotional release, accompanied by a more relaxed attitude from decision-makers and the release of relatively resilient U.S. economic and employment data, a large amount of capital flowed into the stock market and the cryptocurrency market.

BTC adjusted ahead of the stock market, and after the stock market completed its bottoming out, it surged sharply under the push of a large amount of capital. More importantly, after more than 2 months of adjustment, the holding structure has greatly improved, and the internal state is more stable.

Major stock indices and the cryptocurrency market have fully recovered all losses since the trade dispute began. In relation to the unresolved trade issues and the uncertainty of whether the U.S. economy will fall into recession, the market performance is very strong, continuously pricing in various latest information. However, for the market to achieve a reversal, trade issues need to be resolved and U.S. economic data needs to be confirmed. In the meantime, several ups and downs are expected.

Macroeconomics: Market Volatility Triggered by Trade Dispute Expectation Trading

In the March report, we mentioned that "the new trading judgment framework was initially established at the end of February, and throughout March, the outputs of this judgment framework were based on the various economic, employment, and interest rate data continuously released." In April, this framework continued to evolve, with the decision-makers' "softening" stance and actions on trade issues 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 a monthly adjustment, forward-looking trades betting that trade disputes would not lead to an economic recession dominated market trends. Both the NASDAQ, which fell and then rose, and BTC recorded positive monthly returns.

At the beginning of April, the decision-making body took a hardline stance, triggering a panic sell-off in the market. The stock index fell below the annual line, and high-valuation stocks plummeted significantly. The bond market and European stocks became safe-haven choices. A large-scale protest occurred over the weekend.

On April 7th, the market fear index broke 60. The sell-off spread to the bond and currency markets. The Nasdaq fell into a technical bear market.

The hardline stance of the decision-making body and the dire situation in the market have triggered greater panic, with continuous criticism and protests from all sectors shaking the fundamental confidence in the market, forcing the decision-making body to make concessions.

The decision-making body has started to soften its stance, pausing some tariff measures and indicating that it may significantly reduce high tariffs. Market sentiment has improved accordingly, and the stock market has strongly rebounded.

Gold has become the only winner, rising 5.08% in the month. However, it has adjusted following news that trade disputes may ease.

Looking at the whole month, the Nasdaq rose 0.85% in April, the S&P 500 fell 0.76%, the Dow Jones fell 3.17%, and BTC surged 14.11%.

The Federal Reserve has consistently maintained a tough stance, only releasing a small amount of "dovish" information during the "triple kill" of stocks, bonds, and currency.

Economic data released in April showed that inflation has cooled while employment remains strong. This temporarily eased market concerns about a recession and boosted the stock market rebound.

We believe that the panic caused by trade disputes has been relatively fully released in the short term. Current economic data indicates that the US economy has not yet suffered significant damage, and the decision-makers seem to be returning to rationality, which is why forward-looking funds dare to buy heavily. We tend to think that the adjustment in February to April is a severe correction of the stock market, which has been overvalued for two years, under external shocks, and a technical test of the bear market. However, there is still no sufficient data to indicate that the US economy is about to enter a recession. Currently, the stock market valuation has seen some decline, but it is not cheap either; the market pricing has been relatively full. If it continues to rise, more supportive conditions are needed. After a significant rebound, we tend to make a neutral judgment and need to closely monitor the progress of trade disputes and economic data. If a trend of economic deterioration occurs, it may lead to another downward revision.

Crypto Assets: Solid Holding Structure + Long-term

At the beginning of the month, there was a collapse-like decline, but by the end of the month, there was a significant rebound. The BTC trend in April is a model of "reverse trading," where one buys during panic and waits for the situation to stabilize, leading to a rapid rebound in asset prices.

In April, BTC opened at $82,534.31, fell to a low of $74,420.69, and closed at $94,182.54, resulting in an increase of 14.11% or $11,648.22 for the month, with a monthly volatility of up to 26.12%.

The monthly trend showed a decline followed by a rebound, with the lowest point occurring on April 7th, after which it rebounded and gradually rose. Based on the daily fluctuations, the number of rising days in the 30 trading days far exceeded the number of falling days.

Technically, BTC has confirmed the long-term trend by touching the annual line three times during the sharp decline linked to the stock market. On April 22, it surged 6.82%, forcefully breaking through the 200-day line, returning to the previous bottom and approaching the first upward trend line of this bull market.

Compared to the stock market, BTC's performance is very strong, thanks to the price correction that began in March, the increase in holdings by long-term holders and large investors, as well as favorable support from policies and applications.

Multiple states are advancing Bitcoin reserve bills. On April 30, a state house passed two Bitcoin reserve bills, and if the bills take effect, that state will become the first in the U.S. to allow state finances to hold Bitcoin. This could accelerate the progress of other states.

The application expansion and price rise of BTC are currently in a continuous feedback process of mutual reinforcement. From March to April, the turmoil in the global financial markets triggered by trade disputes temporarily interrupted this process. However, the internal holding structure and market movement of the cryptocurrency market remain intact and smooth. Once the panic subsides, BTC will regain its upward momentum. In the future, with the potential turbulence of trade disputes and macro-financial issues, the price of BTC will still experience fluctuations, and breaking through previous highs depends on the resolution of trade disputes and the U.S. economy not falling into recession.

Holding Structure: Long-term Holders, Large Investors Increasing Holdings, Long-term Buyers Sweeping Up

On October 4, 2024, accompanied by a massive influx of funds into the market, the long-term holder group initiated the second wave of selling in this cycle. The strong capital inflow absorbed the selling pressure and continued to push the price up to nearly $110,000.

After entering March, accompanied by a loss of liquidity, the price of BTC fell sharply. Subsequently, the long-term holders group once again played the role of a "stabilizer", shifting from selling to increasing their holdings.

In addition, the group of large holders with holdings between 100 and 1000 BTC has continued to increase their positions during the decline, accelerating their buying in late April, with total additions exceeding 80,000 BTC throughout the month, becoming the backbone force to reverse the situation. It is worth noting that this group is also the main buyer of BTC as the price rises from $70,000 to $100,000 between October and December 2024. Based on the characteristic that this group's buying during this cycle far exceeds the selling, it can be concluded that their behavior aligns with the characteristics of long-term investors, and their recognition of this price range contributes to price stability.

After buyers from all sides made purchases, the exchange's BTC supply decreased by about 60,000 coins in April.

In late February, the price started to decline, and by the end of April, the price returned to the levels seen in late February. Along with market fluctuations, a sufficient exchange of chips occurred. Comparing the chip distribution on January 31 and April 30, it can be observed that the focus of chips in the range of $74,000 to $100,000 has significantly shifted downward, with some chips priced above $100,000 moving down to the range of $74,000 to $94,000.

The market fluctuations over the past two months, from the perspective of chip distribution, show that the FOMO new entrants were forced to sell their chips during the sharp decline, while the situation of insufficient chips in the range of 7.4-9.4 has been refilled. According to certain data, the short-term holders have already exited from floating losses, while the BTC that is still in a floating loss across the entire chain has dropped to 14%. The market selling pressure caused by panic and losses has significantly improved.

Capital: Striving to Turn the Tide, Over 10 Billion Capital is Seizing Opportunities

Dividing the month in half, under the pressure of trade disputes and macro financial panic, overall capital flow in the first half of the month exhibited an outflow trend. However, since April, stablecoin funds have continued to flow in. By mid-month, with a easing attitude from decision-makers and a stabilization rebound in the stock market, capital for the BTC spot ETF channel also began to rush in, rapidly pushing the BTC price above 94,000 dollars.

From a monthly perspective, the ETF channel funds that held short-term pricing power in February and March showed an outflow trend, pushing BTC prices down, while in April, the overall capital inflow reached as high as $8.4 billion, making it the sixth-largest inflow month of this cycle.

The above statistics do not include the accumulation data of a certain company. According to its announcement, the company conducted three rounds of accumulation in April through fundraising, purchasing a total of 25,370 BTC and investing over 2.2 billion USD. As such, the total inflow of funds in the market exceeded 10 billion USD in April.

The price trend of BTC reflects the inflow and outflow of funds in the market. Currently, the recorded fund inflows can be categorized into three types: one is the funds from the BTC spot ETF channel, which often follows the fluctuations of the stock market; the second is fundraising from a certain company, which has shown good sustainability in its inflow; the third is the funds from stablecoin channels, which refer to on-site funds. Since its inflow began in October 2023, there has only been one month of net outflow, while all other months have shown positive inflows.

Although there was a severe fluctuation in the cryptocurrency market from February to April, technically it briefly entered a bear market. However, based on the analysis of comprehensive funds and the distribution trend of long-term holders, we believe that the market cycle is still in the ascending phase, which is a bull market. We think that after the adjustment, the chips will return to long-term holders and large accounts. This downward adjustment will help strengthen the holding structure. Once the impact of trade disputes gradually diminishes and market trading enthusiasm revives, the BTC price is highly likely to break upward again.

Conclusion

In the March report, we pointed out that "after experiencing a turbulent first quarter, the outlook for the second quarter is still not clear, but the most painful moments may have passed. Once the decision-makers return to a rational game state, the market should be able to return to its own operational规律."

In April, the market performance initially proved this judgment, backed by the easing attitude of the decision-making level and the relative strength of the U.S. economic data.

After several months of market adjustments and chip redistribution, the internal structure of the cryptocurrency market has become more solid. Long-term holders possess more chips, the pressure of unrealized losses on short-term holders has been eliminated, and unrealized gains have not yet appeared, with only 14% of BTC in a state of unrealized losses. This internal condition provides solid support for market upward movement.

However, the external market, especially the uncertainty of trade disputes, is very significant. In addition, the potential economic recession in the United States and the rise in inflation triggered by trade disputes may lead to a further downward adjustment of stock market valuations and a delay in interest rate cuts. This point requires particular attention.

The market trend is the result of the dynamic game of various trading parties under dynamic conditions. We are confident about the BTC trend in the second half of the year and in the long term, but we must be wary of the unpredictable damage that trade disputes can cause to capital, sentiment, and the global economy.