Don’t get off the train before the main uptrend of Bitcoin appears

On May 19, Bitcoin failed to hit a record high of 109,600, and then quickly fell back by nearly 5%, resulting in the liquidation of about $800 million of long positions, and the market's bullish sentiment instantly fell to the bottom. From the perspective of trading, there are two main reasons for the rapid cooling of bullish sentiment: First, when Bitcoin hit 109,600, the volume-price divergence was obvious, and the MACD high-level death cross was obvious, and the behavior of inducing long positions was obvious; second, the cumulative increase of Bitcoin in this round of rebound has reached 45%, and the benefits of the tariff war have been gradually realized,The willingness to close the profit-taking positions has increased significantly. Some market participants even worry that 107,100 and 109,600 have formed a historic double top structure.

Although Bitcoin faces periodic adjustment pressure, under the dual support of the strengthening of institutional consensus and the resonance of macro-favorable factors, the market is more likely to complete a moderate adjustment by exchanging time for space. Even if there is a demand for leverage cleaning, it is expected that the pressure will only be released by a quick "pin" during the trading session, and the probability of a sustained deep correction is low.

First,Since November 2024, the balance of Bitcoin exchanges has been declining rapidly. According to Coinglass data, the balance of Bitcoin exchanges has dropped from 2.44 million on November 6, 2024 to 2.15 million on May 21, 2025, a decrease of 290,000 in half a year. If this trend continues, the available supply of centralized exchanges may drop below 1.5 million by early 2026, further exacerbating the supply crunch in the market.

In fact, the expansion rate of Bitcoin demand may be far faster than expected.

Among the many institutions that have deployed Bitcoin, Twenty One is particularly worthy of attention, as it may become a "super money-eating beast" in the future. The company is jointly invested by Tether, Bitfinex and SoftBank, and was listed through a reverse acquisition of Cantor Equity Partners. Currently, Twenty One holds 42,000 bitcoins (about $4.5 billion) and plans to raise a further $1.17 billion to increase its holdings, demonstrating its strong ambition to expand in the market.

Historical experience shows that once a market group trend is formed, it often has a strong inertia - unless it experiences sufficient bullish catharsis, it is difficult to reverse.  For example, during the gold run crisis in April this year, 3 million ounces of gold flowed out of the New York vault in a single month, completely igniting the market's FOMO sentiment and pushing the gold price into a major uptrend. Therefore, I believe that before the end of the Bitcoin market, there will definitely be a period of tight liquidity and a major upward trend.

Secondly, the disturbance of the US debt crisis to the market may be very short-lived, and may even become a catalyst for a new round of Bitcoin gains in the medium and long term. After Moody's downgraded the US sovereign credit rating, US debt suffered a fierce sell-off, and the yield on 30-year US debt once soared to 5%. What is more serious is that the United States will face a "borrowing new to repay old" pressure of up to 6.5 trillion US dollars in June, which may further exacerbate the selling tide of US debt. Looking back at April, it was the violent fluctuations in the U.S. Treasury market that put hundreds of billions of basis arbitrage funds at risk, which in turn triggered a chain reaction in the U.S. stock and crypto markets.

However, during the window period when cracks appeared in the liquidity of U.S. Treasury bonds, the Federal Reserve quietly completed the purchase of $43.6 billion in U.S. Treasury bonds. On May 8 alone, the Federal Reserve purchased $8.8 billion in 30-year U.S. Treasury bonds. Although the Fed claimed that the operation was just to reinvest the proceeds of maturing bonds to avoid a rapid contraction of the balance sheet, around May 8, Ethereum, altcoins, Russell 2000 and other liquidity-sensitive assets continued to rise. In other words, smart funds in the market have keenly realized that the crisis of US debt will force the "hard-mouthed" Fed to be "honest in body."

JPMorgan Chase's recent forward-looking research also holds the same view. Its latest model shows that in order to ease debt pressure, the Federal Reserve may cut interest rates more than 7 times in 2026, and the S&P 500 index may reach 6,500 points by then. The current market has entered an atypical cycle, and "going long on US assets (except the US dollar)" has become an institutional consensus.

Under the dual impact of the U.S. debt crisis and the tariff war, the bearish sentiment on the U.S. dollar in the foreign exchange options market has soared to a historical extreme. The one-year risk reversal indicator of the Bloomberg Dollar Index composite proxy fell to -27 basis points, the lowest level since records began in 2011, and even more pessimistic than the low point during the market turmoil at the beginning of the epidemic. This extreme data means that the U.S. authorities are facing a difficult choice - in order to maintain the stability of the bond market, stock market and even the overall economy, moderately sacrificing the stability of the U.S. dollar exchange rate may have become an inevitable price. (From 2020 to 2024, the yen depreciated by 54%, but the Nikkei rose by 140%, and Japan's manufacturing and consumption recovered.) This is also the reason why the United States, from the federal government to the state government, is promoting Bitcoin as a strategic reserve.

In short, in terms of operation, before seeing the main upward wave of Bitcoin, every decline is an opportunity to buy on dips. At the same time, in the window period when liquidity margins warm up, altcoins are likely to perform well, and the phased increase of some head altcoins is also conducive to amplifying the returns of the investment portfolio.