HTX DeepThink: Tariff Shift, Capital Repatriation, the Crypto Market May Welcome a Brief Window Period

Trump temporarily sets aside the tariff stick, Bitcoin surges to $95,000, but the outlook for trade negotiations remains unclear; key data is about to be released, and early May may be an important liquidity window. This issue's guest HTX Research Chloe (@ChloeTalk1) will analyze the macro situation and delve into the opportunities and undercurrents in the crypto market.

Trump's Second Hundred Days New Policy: Delivering Good News, Opportunities Reemerge

The Trump administration has quickly implemented several crypto-friendly policies within its first hundred days, influencing some traditional companies to become first-time Bitcoin buyers, including improving the regulatory framework for stablecoins, appointing a crypto-friendly SEC chairman, and reducing government spending through DOGE. Next, the White House will focus on trade agreement negotiations and promoting peace between Russia and Ukraine, while advancing the "Beautiful Big Bill" of "massive tax cuts, strong border security, and deregulation" and implementing the FIT21 Act in the Senate to provide a clear framework for digital asset regulation.

Last Week's Market Review: Decoupling and Driving Factors

Last week, the crypto market initially decoupled from U.S. stock trends, mainly boosted by the continued weakening of the dollar index, coupled with traditional companies and financial institutions accelerating their purchases of crypto assets. The issuance of on-chain stablecoins continued to rise, and Bitcoin ETFs recorded consecutive net inflows, pushing Bitcoin's price to rise to $88,000. Subsequently, comments from Trump and Bessent regarding tariff policies turned more conciliatory, further boosting market sentiment to $95,000. However, while discussions about trade agreements released positive signals, reaching a real agreement will still take months, and there remain strong hawkish forces within the Trump administration regarding tariffs, which will significantly influence its decisions and become a major uncertainty in future trends.

Key Data Preview: Short to Medium-Term Volatility Watershed

This week will see the release of the initial U.S. Q1 GDP and core PCE price index (April 30, Wednesday, 8:30 PM Beijing time), as well as April's non-farm employment and unemployment rate data (May 2, Friday, 8:30 PM Beijing time). Investors need to pay attention to hedging and risk aversion around the data release.

The market expects GDP growth to drop from last year's 2.4% to 0.2%--0.4%, with core PCE expected to decrease year-on-year from 2.8% to 2.6%. Non-farm payrolls may fall from 228,000 to 130,000, while the unemployment rate is expected to remain at 4.2%. If the data overall shows weak growth but cooling inflation, it will strengthen expectations for rate cuts mid-year, driving risk assets to rise simultaneously; if the data exceeds expectations across the board, it may delay rate cuts or reignite concerns about rate hikes, suppressing the crypto market in the short term; in extreme cases, if weak GDP growth is accompanied by a collapse in employment, it could trigger panic selling, followed by a recovery due to rate cut expectations; if inflation surges while growth stagnates, it will face stagflation risks.

Federal Reserve Holds Steady: Technical Ability to Cut Rates but Choosing "Self-Protective" Considerations

As of now, the Federal Reserve's reserve balance is approximately $3.3 trillion, with overnight reverse repos at about $94 billion, and the Treasury's general account also at a high level, technically allowing for further monetary easing through rate cuts. However, in the 2024 fiscal year, the Fed will pay a total of $226.8 billion in interest on reserves and reverse repos, while only earning $158.8 billion from Treasury bonds and MBS, resulting in a net loss of $77.5 billion for the year; if it hastily cuts rates by 0.3 percentage points, the $6.7 trillion asset portfolio would lose about $20 billion in annual income, further expanding losses and significantly reducing remittances to the Treasury. Therefore, the Fed chooses to maintain stable interest rates to preserve its fiscal sustainability and political independence.

Liquidity Window and Summer Risks: Optimal Timing for Positioning

If this week's data meets expectations, a liquidity window may appear in early May, with funds potentially flowing back into the crypto market. However, after the debt ceiling approval, it is expected that between June and July, the Treasury will replenish the TGA to $50-$60 billion by issuing new debt, withdrawing an equivalent amount of liquidity from the market, raising short-term rates, and putting pressure on risk assets. Historical data shows that after each significant TGA replenishment, Bitcoin and the overall crypto market tend to drop by about 5%--10% in the following weeks. Amidst the interplay of policy dividends and tightening liquidity, project teams and investors need to seize the early May window while preparing for hedging against the summer TGA replenishment.

In the context of intertwined policy factors and liquidity changes, short-term operations should focus on key data points and liquidity windows; in the medium to long term, attention should be paid to the implementation progress of regulatory frameworks like FIT21 and the further expansion of stablecoin applications. Additionally, continuous tracking of traditional institutional funds' accelerated penetration into Bitcoin (BTC) and other assets (such as Solana) is necessary.

"HTX DeepThink: Finding Order in Chaos"

Note: The content of this article does not constitute investment advice, nor does it represent any offer, solicitation, or recommendation for investment products.