Trump "Major News" + The Federal Reserve (FED) Rate Cut Wind: on-chain data indicates a Bitcoin storm

2025, in May 2025, the price of Bitcoin (BTC) surged like a runaway wild horse, reaching a nearly two-month high of $97,900, then briefly paused around $94,000, before quickly rising back to around $97,000. This price frenzy ignited passion in the crypto market and prompted investors to start questioning: What is driving this wave of rise? Is it Trump's high-profile trade declaration, or the wind direction of The Federal Reserve's monetary policy? Or perhaps the accelerated embrace of crypto assets by Wall Street giants? The answer may be a combination of all three. This article will narrate how recent news has sparked Bitcoin's fire, deeply analyze the delicate pulse of on-chain data, and explore market opportunities and concerns, striving to be both engaging and professionally deep.

Trump's trade gamble: the igniter of market sentiment

On May 8, Trump announced that he would make a major statement in the Oval Office the next morning, regarding a trade agreement with "a respected major power." The New York Times then revealed the answer: the agreement is with the United Kingdom. This news acted like a spark, quickly igniting speculation in the markets. Trump's trade policy has always been a barometer for the global financial markets, and this time is no exception. He also previewed that he would announce a "very significant message" before visiting the Middle East next week, further tantalizing investors.

Trump's trade moves have made waves several times in 2025. In early April, when he announced a 145% tariff on China, the price of bitcoin fell to $77,730, and the global stock market fell into its worst volatility since 2020. However, on April 10, he unexpectedly suspended some tariffs for 90 days, and market sentiment quickly reversed, with Bitcoin surging 7% to $82,350 in a single day. Today, a trade deal with the UK is seen as a potential tailwind, potentially easing global trade frictions and boosting the attractiveness of risk assets. JPMorgan Chase & Co. strategist Bram Kaplan sensitively captured this direction and advised investors to buy S&P 500 call options, saying Trump's announcement could push the market higher. This optimism quickly spread to the crypto space, and a wave of inflows followed.

The Federal Reserve (FED)'s delicate chess game: catalysts for interest rate cut expectations

On the same day, Federal Reserve Chairman Jerome Powell sent a heavy signal at a press conference: the monetary policy outlook may include interest rate cuts, but the specific path will be anchored to economic data. He downplayed the significance of GDP fluctuations and emphasized that the Federal Reserve will remain flexible. This statement injected a warm tone into the market, as interest rate cuts are often seen as a spring breeze for risk assets.

In 2025, the Federal Reserve's policies had a particularly significant impact on Bitcoin. On April 23, Trump denied rumors of firing Powell, and the market breathed a sigh of relief, causing Bitcoin to rebound immediately. However, the tariff shock in early April had previously driven Bitcoin down to a low of $81,500, highlighting the macro environment's pull on the crypto market. The expectations of interest rate cuts indirectly fueled Bitcoin's rise by lowering market liquidity costs, weakening the dollar's attractiveness, and enhancing demand for inflation hedges.

However, Powell's cautious wording also lays the groundwork. He made it clear that policy will closely monitor economic data, and if inflation or employment data exceeds expectations, interest rate cuts may be delayed. The market is in a delicate balance, and slight changes in external variables could trigger significant volatility.

Wall Street's Crypto Ambitions: The Surge 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 wealthy clients could invest in crypto assets through Bitcoin ETFs and futures, and advisors have been permitted to promote ETFs since August 2024. Institutions like Charles Schwab are also following suit with plans to launch similar services. These moves pushed Bitcoin to briefly surpass $97,000 on May 2.

The influx of institutional funds is reshaping the market ecosystem. The U.S. spot Bitcoin ETF has absorbed $4.6 billion over the past two weeks, with assets under management approaching a historical high of 1.171 million BTC. In contrast, the continuous outflow from March to April had pressured the market, highlighting the sensitivity of institutional funds to the macroeconomic environment. Institutional participation not only enhances market liquidity but also paves the way for the mainstream adoption of Bitcoin. However, in mid-April, due to the tariff turmoil, the Bitcoin ETF experienced an outflow of about $1 million for seven consecutive days, reminding investors that institutional funds are not a monolithic entity.

on-chain data: a delicate portrayal of the market pulse

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

First, the Realized Cap of Bitcoin has climbed to a historic high of $889 billion, growing by 2.1% over the past month. This metric measures the cumulative net capital inflow, reflecting the strong momentum of fund injections. The net realized profit/loss indicator further shows that in recent weeks, daily net capital inflows have exceeded $1 billion, indicating that buyers are willing to absorb sell orders at current prices, with strong demand. In contrast, realized losses account for only 1-2% of total trading volume, suggesting that most investors who bought at high levels are still holding onto their coins, and market sentiment leans towards optimism.

Secondly, the significant price recovery has alleviated financial pressure on investors. At the recent low of $74,000, over 5 million BTC were in a state of unrealized loss. As the price rebounded to $97,000, about 3 million BTC returned to profit, especially the portfolios of short-term holders (STH) were restored. The unrealized loss indicator shows that the financial pressure on short-term holders has fallen from the +2σ high during the August yen arbitrage trading collapse and the market downturn in early 2025 to a neutral level. This improvement is directly reflected in trading behavior: the proportion of profitable trades by short-term holders surged, marking a turning point where the market shifted from loss-dominated to profit-dominated.

In addition, the behavior of long-term holders (LTH) is also worth noting. Since the low point, over 254,000 BTC have been held for more than 155 days, demonstrating long-term investors' confidence in the current price. The Realized Supply Density indicator further reveals that a large number of BTC with similar cost bases are concentrated near the current price. These coins were mainly accumulated between December 2024 and February 2025, and despite undergoing the recent low point test, they have not been sold. The existence of this supply increases the market's sensitivity to price fluctuations, as small changes may trigger large-scale transactions.

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

Market Inflection Point: Underlying Concerns Amidst the Hype

The rise of Bitcoin is in full swing, but the market is standing at a delicate tipping point. The price hovers around the cost basis of short-term holders (approximately $95,000), a level that has historically been a touchstone for upward momentum. If this support can be maintained, the market may push further upward; if it breaks down, the recent momentum may be hindered.

On-chain and options market signals further exacerbate this uncertainty. High supply density means the market's sensitivity to price fluctuations has increased, while low implied volatility suggests that investors may be underestimating future volatility risks. External catalysts—such as Trump's trip to the Middle East or interpretations of economic data by The Federal Reserve (FED)—could become the spark that ignites volatility.

Epilogue: Bitcoin's Opportunities and Mysteries

The Bitcoin market in 2025 is like a dramatic play with peaks and troughs. Trump's trade policies inject vitality into risk assets, the Federal Reserve's interest rate cut expectations ignite market imagination, and Wall Street's encryption layout endorses the long-term value of Bitcoin. On-chain data intricately outlines the picture of capital inflow, restoration of investor confidence, and increased 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 Federal Reserve (FED)'s policy path, and the flow of institutional funds will be key clues in the short term. In the long run, Bitcoin's decentralized characteristics and scarcity remain its core appeal, but uncertainties in the macroeconomy, regulatory pressures, and competition from traditional safe-haven assets may pose challenges.

For investors, this is a moment of both opportunity and risk. A remark from an on-chain analyst may be worth pondering: "The value of Bitcoin lies in the sovereignty it grants individuals, rather than the fleeting price fluctuations." In this digital wave, rationality and patience will be the best beacons. Regardless of how the market fluctuates, maintaining a clear judgment may lead to a farther destination than chasing trends.