Written by: White55, Mars Finance
- Price Stalemate: A Dual Game of Technical and Sentimental Factors
(1) The “psychological spell” of $110,000: Misalignment between historical peaks and market expectations.
After surpassing $100,000 in April 2025, Bitcoin began a new upward cycle, hitting an all-time high of $111,957 in mid-May. However, since then, the price has been oscillating in the $105,000-$112,000 range and has failed to form a valid breakout. This phenomenon is in stark contrast to the rapid rally of the market when it crossed $100,000 in December 2024, and reflects the complex contradictions of the current market.
Technically, the Bitcoin weekly RSI indicator has entered the overbought area, and the MACD momentum column continues to narrow, indicating the attenuation of short-term upward momentum. On-chain data shows that the proportion of long-term holders (LTH) holdings has dropped to 72% from 76% at the beginning of the year, and some “old miners” and early investors have begun to take profits, resulting in an increase in net inflows into the exchange. There are parallels between this loose chip phenomenon and the characteristics of the end of the bull market in 2021.
On the other hand, the derivatives market reveals a completely different signal. As of May 26, the annualized basis rate for Bitcoin futures remains at 8%, far lower than the extreme level of 20% when it breaks $100,000 in December 2024, indicating that leveraged longs are not overly aggressive. Meanwhile, the Delta skew index in the options market (-6%) shows that put options are trading at a discount, which is a typical characteristic of a bullish market structure, contrasting with the +15% skew during the bear market of 2024.
Image 1: Bitcoin 2-month futures annualized basis rate.
(2) The “Ice and Fire” of market sentiment: the influx of institutions and the caution of retail investors.
The continuous influx of institutional funds has become the core force supporting the market. According to the data, net inflows into US spot bitcoin ETFs reached $2.75 billion in the week of May 19-25, the highest weekly high since Trump’s election in December 2024. Among them, BlackRock IBIT and Fidelity FBTC ETFs account for 80% of the share, indicating that traditional asset management giants are becoming the dominant players in the pricing power of Bitcoin.
It is worth noting that JPMorgan announced on May 19 that it would allow clients to purchase spot Bitcoin ETFs through brokerage accounts. Although this move does not directly involve custody services, it opens up a potential entry point for its $6 trillion in client deposits, which could trigger a “catfish effect”—institutions like Goldman Sachs and Citigroup may be forced to follow suit to remain competitive.
In contrast, retail investors are exhibiting a cautious attitude. The cryptocurrency fear and greed index has dropped from 78 (extreme greed) at the beginning of May to 65 (greed), while the popularity of Google searches for the keyword “Bitcoin bubble” has increased by 320% year-on-year. This divergence reflects the anxiety of ordinary investors regarding high-level fluctuations, which sharply contrasts with the institutional strategy of “buying the dip.”
II. Macroeconomic Variables: The Trio of Trump Policies, Fed Shift, and Tech Stock Correlation
(1) Trump’s “Tariff Game”: How Geopolitics Reshapes the Pricing Logic of the Crypto Market
On May 26, Trump announced the postponement of a 50% tariff on EU imports until July 9, a decision that superficially alleviated the risk of escalating trade wars but actually hinted at political maneuvering. Historical data shows that tariff policies during Trump’s term are highly volatile—on February 2025, he suddenly announced a 25% tariff on EU cars, leading to a 12% single-day drop in Bitcoin.
The current market is more focused on the progress of its cryptocurrency strategic reserve plan. Although the White House summit in March only proposed a stablecoin legislative framework, the draft “National Bitcoin Reserve Act” introduced by Senator Lummis has entered the legislative process. This bill requires the U.S. Treasury to purchase 5% of the circulating supply of Bitcoin (approximately 1.05 million coins) over the next five years, which, if implemented, would directly create nearly $100 billion in demand.
(2) The Federal Reserve’s “Inflation Puzzle”: PCE data may become a key catalyst for breakthrough
The market is highly sensitive to the PCE inflation data to be released on May 30. Current CME interest rate futures show that traders are betting on a 68% chance that the Federal Reserve will cut rates by 25 basis points in June, but if the core PCE year-on-year growth exceeds 2.9% (previous value 2.8%), it could reverse the easing expectations. Notably, the 90-day correlation coefficient between Bitcoin and the Nasdaq index has dropped from 0.75 at the beginning of the year to 0.32, indicating that it is moving away from the traditional risk asset framework and aligning more with the “digital gold” narrative.
(3) The “Butterfly Effect” of Nvidia’s Financial Report: The Secret Connection Between the AI Computing Revolution and the Crypto Market
NVIDIA will release its quarterly earnings report on May 28, and its performance may impact Bitcoin through two pathways:
Computing Power Competition: If the demand for the new generation of AI chips exceeds expectations, it may drive up GPU prices, indirectly increasing the cost of updating Bitcoin mining machines and squeezing miners’ profit margins.
Capital diversion: If technology stocks rise due to favorable earnings reports, it may attract some capital from the crypto market to shift towards the traditional stock market, exacerbating short-term volatility of Bitcoin.
- Institutional Shadow War: MicroStrategy’s “Hodl Economics” and the Evolutionary Theory of ETFs
(1) MicroStrategy’s “extreme measures”: the strategic ambitions behind the balance sheet reconstruction
Michael Saylor’s MicroStrategy increased its holdings of 4,018 BTC at an average price of $106,237 from May 19-25, bringing its total holdings to 324,000 (worth about $34.5 billion). Interestingly, the coupon rate at which the company raised funds through convertible bonds has soared to 6.25% from 0.625% in 2024, indicating that the capital markets are pricing in risk for its aggressive strategy.
This “debt-driven coin hoarding” model is forming a demonstration effect. Data shows that as of May, 17 companies in the S&P 500 have publicly held Bitcoin, with a total scale of 48.7 billion dollars. Companies like Tesla and Block have even begun to explore using Bitcoin to pay for supply chain payments, driving its evolution from a reserve asset to a medium of exchange.
(2) The “Matthew Effect” of the ETF ecosystem: Market reconstruction under the dual giants of BlackRock and Fidelity
Since the approval of the US spot Bitcoin ETF in January 2024, the total assets under management (AUM) have surpassed $120 billion. Among them, BlackRock’s IBIT ($48.6 billion) and Fidelity’s FBTC ($39.2 billion) account for 72% of the share, forming an absolute monopoly. This trend of centralization may raise regulatory concerns—the SEC is studying whether to propose new rules for ETF issuers regarding “reserve asset transparency,” requiring the disclosure of custody addresses and on-chain verification mechanisms.
The deeper impact is that ETFs are changing the volatility characteristics of Bitcoin. According to the daily net inflow/outflow data, the explanatory power of ETF fund flows on Bitcoin price fluctuations has reached 38%, which means that the opening hours of traditional financial markets (Eastern Time 9:30-16:00) are becoming the main battleground for Bitcoin price volatility, creating a paradox with the earlier 24/7 continuous trading “decentralized” feature.
Figure 3: Bitcoin price drops as funds flow out of spot Bitcoin ETFs
- Technological Revolution: The Explosive Growth of Layer 2 Ecosystem and the Feasibility Experiment of ‘Bitcoin Standard’
(1) Lightning Network 2.0: The “Singularity Moment” in the Payment Track
The upgraded version of the Bitcoin Layer 2 solution, the Lightning Network 2.0 (LN2.0), achieved a major breakthrough in May:
Channel capacity突破 8000 BTC,同比增加 320%；
Supports Atomic Multi-Path Payments (AMP), with single transaction processing capability increased to 0.1 BTC;
Collaborating with Visa to pilot cross-border remittances, with fees reduced to below 0.3%.
These advancements are changing the utility boundaries of Bitcoin. The Salvadoran government announced that 20% of civil servants’ salaries will be distributed through the Lightning Network, and Amazon Mexico has accepted Bitcoin Lightning payments. If this dual function of “micro high-frequency payments + value storage” can be solidified, Bitcoin may truly challenge traditional payment giants like Visa and PayPal.
(2) The “Smart Contract Breakthrough” of the RGB Protocol: Challenging the Secret War of Ethereum
The RGB protocol based on the Bitcoin UTXO model completed its v0.5 version upgrade in May, achieving Turing-complete smart contract functionality for the first time. Although the current ecosystem is still small (with a total locked amount of only $120 million), its architecture, which utilizes client-side validation and off-chain computation, demonstrates unique advantages in privacy and scalability. Notably, MakerDAO founder Rune Christensen has announced plans to explore transferring a portion of DAI’s reserves into the RGB protocol, which could become a landmark event for DeFi funds flowing back into the Bitcoin ecosystem.
V. Future Scenario Simulation: The Fate of Bitcoin Under Three Different Paths
(1) Bull Market Scenario (2025 Year-End Target: $180,000 - $250,000)
Trigger condition:
U.S. PCE inflation data is below 2.6%, and the Federal Reserve will initiate a rate cut cycle in June;
The national Bitcoin reserve bill has been passed, and the Ministry of Finance has launched a monthly coin purchasing plan;
The locked position of the Bitcoin Layer 2 ecosystem has surpassed 10 billion USD, with over 50 million users in payment scenarios 37.
Technical Form: The weekly level will form a “cup and handle” pattern, accelerating upward after breaking through $112,000, replicating the momentum effect seen in December 2024 when it broke through $100,000.
(2) Oscillation Scenario (Price Range: $100,000 - $140,000)
Core Variables:
Nvidia’s earnings report shows weak demand for AI chips, while a pullback in tech stocks drags down risk assets;
Trump’s tariff policy repeatedly triggers market risk aversion.
ETF capital inflow speed has dropped to an average of less than 1 billion dollars per week.
Market characteristics: Increased selling pressure from miners, extended adjustment period for mining difficulty, and continuously low funding rates for derivatives.
(3) Bear Market Scenario (Retracement Target: 74,000 - 85,000 USD)
Risk Catalyst:
The U.S. SEC conducts a surprise investigation into the ETF reserve custody situation, triggering a crisis of trust;
The escalation of geopolitical conflicts in the Middle East has pushed up oil prices, reversing global inflation expectations;
Quantum computing breakthroughs raise concerns about the security of Bitcoin’s encryption algorithms 89.
On-chain signals: The net inflow of exchanges has exceeded 50,000 BTC for three consecutive weeks, and the holding ratio of long-term holders has dropped below 70%.
Conclusion: Seeking certainty in uncertainty
Bitcoin’s $110,000 tug-of-war is essentially a micro-mapping of the collision of the old and new financial order. From Trump’s tariff game to MicroStrategy’s balance sheet revolution, from the Lightning Network’s payments infiltration to the institutionalization of ETFs, multiple forces are reshaping the economics of this experiment. Historical experience shows that whenever Bitcoin’s “death obituary” floods the media, it is often a good opportunity for long-term investors to reverse their position. When the market is lost in the hustle and bustle, perhaps it is better to return to the original vision of Satoshi Nakamoto’s white paper - “a pure peer-to-peer electronic cash system”. In this sense, the price fluctuations of 2025 are just a footnote to this great social experiment, and the real revolution has long been quietly growing in code and consensus.
