Overall Pattern: Structural Bullish + Short-term Volatility Consolidation.
Since entering May, macroeconomic benefits have continued, inflation data has cooled more than expected, the tariff war has gradually eased, and combined with the Federal Reserve's phased release of net liquidity, Bitcoin has returned above $100,000, with ETH and SOL and other mainstream assets strengthening in sync. However, behind the strong rebound, the market also harbors volatility risks.
In this issue of HTX DeepThink, HTX Research Chloe (@ChloeTalk1) will help you analyze macro drivers, institutional behavior, and market structure to jointly assess the sustainability of this round of market trends.
Strengthened Rate Cut Expectations, Federal Reserve Net Liquidity Rebounds, Market Gains Support
The U.S. April CPI data released on May 13, 2025, shows that U.S. inflation has further cooled, reinforcing market expectations for a rate cut by the Federal Reserve within the year. The overall CPI year-on-year rate recorded 2.3% (expected 2.4%, previous value 2.6%), the lowest since March 2021; the core CPI year-on-year rate was 2.8% (in line with expectations, previous value 3.0%). Goldman Sachs analysts pointed out that some companies preemptively stocked up in large quantities to cope with the Trump tariffs implemented in early April, temporarily delaying the transmission of costs to consumer prices. In April, commodity prices remained flat month-on-month, and excluding food and energy, only increased by 0.1%, indicating that the current tariff impact is still relatively mild. However, retailers have indicated that they may have to raise prices in the future, and the PCE inflation (2.3% in March) that the Federal Reserve is more concerned about is still above the 2% policy target.
The phased release of macro liquidity has also provided support for the market. The Federal Reserve's total assets slightly rebounded from $6.70 trillion on April 30 to $6.73 trillion in early May, while FED Net Liquidity (balance sheet + TGA-RRP) rose from $4.89 trillion to $4.94 trillion during the same period, releasing about $50 billion in net liquidity. The U.S. Treasury's TGA balance rose to $583 billion, while the RRP balance fell to a historical low of $78 billion. This round of liquidity improvement is mainly driven by the Federal Reserve's QT slowdown (the cap on Treasury redemptions was lowered to $5 billion), the return of fiscal funds during tax season, and the outflow of funds from RRP to money market funds. It should be noted that if a debt ceiling agreement is reached in July-August and the Treasury conducts large-scale replenishment of TGA, combined with the RRP buffer pool nearing depletion, it may tighten system liquidity again, putting pressure on risk assets.
Institutions Continue to Increase Positions, but On-chain and Options Data Suggest Risks
Driven by optimistic macro sentiment, funds have significantly flowed back into the crypto market. Bitcoin (BTC) futures open interest (OI) remains high, with CME data showing about 660,000 BTC, accounting for 3.4% of the spot circulation, indicating continued institutional allocation. The open interest on crypto trading platform BTC also increased by 12%, with positions mainly concentrated around $100,000. The derivatives markets for Ethereum (ETH) and Solana (SOL) also rebounded strongly, with ETH OI growing by 15% since the first week of May and SOL rebounding by 18% since the end of April. On-chain data shows that the proportion of profitable addresses among short-term ETH holders has risen to about 90%, while SOL is at 88%, nearing the historical top threshold (>90% usually serves as a warning for a temporary top), increasing the risk of profit-taking.
Deribit data shows that the implied volatility (IV) in the BTC options market has dropped from 65% before the CPI announcement to 58%, reflecting the market's expectation of stabilized short-term volatility, with some institutions beginning to sell options to earn premiums. The Ethereum options market, on the other hand, shows a bullish structure for longer-dated options, with active trading in high strike call options expiring in December at $4,000-$5,000, indicating that institutional investors are positioning for the next round of upward trends at lower levels.
Overall Pattern: Structural Bullish + Short-term Volatility Consolidation
In summary, the release of macro liquidity, the cooling CPI reinforcing rate cut expectations, continued institutional allocation, and the recovery of risk appetite in the derivatives market have jointly driven a strong rebound in core crypto assets such as BTC, ETH, and SOL in May. However, in the short term, the high proportion of profitable short-term holders of BTC and ETH, combined with concentrated derivative leverage positions, may trigger concentrated profit-taking and forced liquidation chain reactions if prices break through or fall below key technical levels, leading to significant volatility. The overall market pattern remains dominated by mid-term structural bullish + short-term volatility consolidation.
SEC Proposes Tokenized Securities Exemption
Meanwhile, following our previous analysis of the Trump Media Group's plan to launch the "DJT Token," SEC Commissioner Hester Peirce publicly disclosed that the SEC's special working group on crypto assets is studying a "tokenized securities registration exemption mechanism." According to the draft, this mechanism will allow certain companies to issue, trade, and settle eligible tokenized securities through distributed ledger technology (DLT) without completing the traditional securities registration process.
To ensure market safety and compliance, the exemption system still has strict conditions: companies must comply with basic regulations against fraud and market manipulation, provide users with sufficient disclosure regarding platform operations, smart contract structures, conflicts of interest, and potential risks, accept supervision and inspection by SEC staff, and possess adequate operational financial resources; at the same time, participants providing crypto custody services must establish on-chain security strategies and disclose custody arrangements. In the initial phase, there will also be restrictions on the types, issuance scale, and trading liquidity of tokenized securities, and only after the pilot operation is stable and regulatory goals are achieved may the applicable scope be gradually relaxed. If this mechanism is implemented, it will provide dual support in terms of policy legitimacy and institutional innovation for practical tokens like DJT, which have strong political backgrounds and application scenarios.
Note: The content of this article is not investment advice and does not constitute any offer, solicitation, or recommendation of investment products.
About HTX DeepThink
HTX DeepThink is a crypto market insight column created by Huobi HTX, focusing on global macro trends, core economic data, and hot topics in the crypto industry, injecting new thinking power into the market, helping readers "find order in chaos" in the ever-changing crypto world.
About HTX Research
HTX Research is the exclusive research department under HTX Group, responsible for in-depth analysis of a wide range of fields including cryptocurrencies, blockchain technology, and emerging market trends, writing comprehensive reports, and providing professional assessments. HTX Research is committed to providing data-driven insights and strategic foresight, playing a key role in shaping industry opinions and supporting informed decision-making in the digital asset space. With rigorous research methods and cutting-edge data analysis, HTX Research always stands at the forefront of innovation, leading the development of industry thought and promoting a deeper understanding of the ever-changing market dynamics.
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