BTC hits a new historical high, waiting for interest rate cuts and further progress.

The risk equity market is performing strongly, leaving Wall Street hedge funds stunned and raising doubts about whether they have missed some implicit information.

After the rebound in April, the three major U.S. stock indexes continued to rise strongly, while BTC reached a historical high.

The reason behind this is that although the tariff dispute has eased, no substantial breakthrough has been made, and the Russia-Ukraine conflict remains at a stalemate.

However, the influx of funds is rapid, long-term holders are close to their peak positions, exchange holdings continue to decline, and the supply and demand for BTC is very strong.

In terms of policy, the state-level BTC reserve bill in the United States has achieved a historic breakthrough. The bill related to stablecoins has also passed a Senate vote.

The U.S. economic employment data is strong, inflation continues to decline, and GDP expectations are starting to be revised upward. This may be the fundamental reason for the market's strength. However, the tariff disputes remain unresolved, and concerns over the debt issues have not dissipated. The performance of U.S. stocks and BTC this month has already included the most optimistic expectations, and the market may experience fluctuations to eliminate uncertainty while waiting for interest rate cuts in the third quarter.

Macroeconomics: The impact of tariff disputes is driving the "moderate recession" in the US economy.

In April, we pointed out that "the most difficult period has passed, and as Washington and the Federal Reserve return to rational play, the market should be able to return to its own operational规律." It has been proven that global geopolitical games and the American democratic system have overcome certain radical proposals, and market expectations have ultimately returned to rationality, ushering in a sustained rebound with the most optimistic pricing.

The continuous "stock-bond-currency" triple hit has triggered severe fluctuations in the U.S. financial market, coupled with strong opposition from the business community, forcing a concession in tariff policies. By May, negotiations quickly entered a stage of progress, with the UK being the first to reach a tariff agreement.

In early May, the US and China held the first round of trade negotiations in Switzerland, pressing the pause button on a more than month-long intense tariff dispute. Both sides issued a joint statement on the 12th, committing to mutually reduce the previously imposed high tariffs over the next 90 days, and stated that they would continue to negotiate on economic and trade relations. On that day, the S&P 500 jumped 3.26%.

In early April, as tariff policies softened, the U.S. stock market launched a major counterattack, basically recovering previous losses. In May, with the formal engagement in negotiations between China and the U.S., the U.S. stock market received further support to continue its ascent. As of the 31st, the Nasdaq, S&P 500, and Dow Jones indices recorded monthly increases of 9.56%, 6.15%, and 3.94%, respectively.

The rebound of the US stock market in April can be seen as a reflection of the end of panic selling and a softening of policies, rapidly pricing in the conclusion of the first phase of the tariff dispute. The rise in May indicates optimistic pricing during the negotiation phase. Based on the current public information, this pricing is adequate and optimistic. Before new developments in tariff negotiations, interest rate cuts by the Federal Reserve, and further easing of geopolitical tensions, continuing to price in substantial increases may be imprudent.

The pricing in May has reflected the relatively "strong" performance of the U.S. economy and employment fundamentals.

Economic data released at the end of May showed that the U.S. economy contracted at an annual rate of 0.2% in the first quarter. This figure is slightly adjusted from the previously announced initial value (, which showed a contraction of 0.3% ), but it still indicates that the U.S. economy suffered some damage at the beginning of the year due to weak consumer spending and imports.

After being underestimated for the past few months, GDP soft data has rebounded. Data shows it returned above the zero axis since the end of April, reaching 3.8% by the end of May, reflecting optimism following the easing of trade disputes.

The PCE data, which the Federal Reserve is most concerned about, released in May shows that inflation continues to slow down. The annual PCE rate has dropped for three consecutive months to a low of 2.15%, and the core PCE has fallen to 2.52%, the lowest since the pandemic, gradually approaching the 2% that the Federal Reserve expects for interest rate cuts.

The employment data exceeded market expectations. Released in early May, the non-farm payrolls for April added 177,000 jobs, higher than the expected 138,000. As of the week ending May 24, the number of initial jobless claims was 240,000, an increase of 14,000 from the previous week, higher than the expected 230,000. The strong employment data alleviates market concerns about a recession in the U.S. economy and also allows the Federal Reserve to focus on the "inflation reduction" goal.

This month, the Federal Reserve decided to keep interest rates unchanged for three consecutive months. Although certain "dovish" statements were made during the financial market turmoil, they maintained their stance under pressure after the market stabilized, emphasizing that the uncertainty caused by tariffs may lead to a rebound in inflation.

The strong performance of the financial markets, coupled with the ongoing trade disputes and the potential rebound in inflation, makes it unlikely that the Federal Reserve will restart rate cuts in the first half of the year. Recent data shows that traders expect only two rate cuts this year, in September and December, each by 25 basis points. This expectation effectively limits the space for liquidity to drive significant increases in US stocks and crypto assets.

Based on current data and circumstances, it is expected that the US stock market and BTC will likely remain volatile in the next two months until expectations of interest rate cuts in August may drive new historical highs. This judgment includes an optimistic resolution to the tariff dispute and a relatively "mild" recession in the US economy.

The US GDP recorded a decline of -0.21% in Q1, and the drop in consumer confidence and market turmoil caused by the tariff dispute in Q2 could lead to a slight decline in Q2 GDP, reaching the standard of a "mild recession". Therefore, starting interest rate cuts in September may be a more cautious expectation.

Crypto Assets: Strong Capital Inflows Drive BTC to New All-Time High

In May, BTC opened at 94182.55 USD, closed at 104645.87 USD, with an increase of 10463.33 USD accounting for 11.11% for the month, a volatility of 19.79%, and trading volume decreasing for two consecutive months.

From a technical indicator perspective, after the BTC price returned to the range of 90000~110000 USD in April, it set a new historical high of 112000 USD and surged above the "first bullish uptrend line."

In a high interest rate environment, retail investors have not formed a true decisive buying power. In fact, since March of last year, the daily new addresses for BTC have fallen to a low.

In the rebound since April, the decisive force comes from institutions.

According to publicly available data, a certain company has increased its holdings by 133,850 BTC since 2025, bringing its total holdings to 580,250 BTC.

Since the approval of 11 BTC Spot ETFs in January 2024 and the passage of related legislation in May 2024, crypto assets and blockchain technology have been gradually established as key development areas in the United States. Subsequently, the adoption of crypto assets, represented by BTC, has further mainstreamed in the U.S.

In March 2025, the United States established a "Strategic Bitcoin Reserve," using approximately 200,000 BTC held by the government as national reserve assets.

Subsequently, more than 20 states in the United States began proposing state-level Bitcoin reserve bills. On May 7, New Hampshire became the first state in the nation to officially incorporate cryptocurrency into its strategic reserves. The bill allows the state treasurer to invest up to 5% of state government funds in cryptocurrency. Related bills in Texas and Arizona have also passed Senate voting and are awaiting signature to take effect.

In the blockchain and Web3 sector, on May 19, a bill to regulate the development of stablecoins was passed in the Senate with 66 votes in favor and 32 against in a procedural vote. In the same month, on the 21st, the Hong Kong Legislative Council officially passed a draft ordinance to establish a licensing system for fiat stablecoin issuers.

Several major U.S. banks are exploring collaboration to launch a joint stablecoin, involving multiple well-known banks.

Stablecoins with an issuance scale exceeding 240 billion USD will enter the era of compliant development. Besides BTC, stablecoins are expected to become the second widely adopted crypto asset and may also become the first killer application in the Web3 space to exceed 1 billion users. This lays the foundational use case for the vigorous development of blockchain, especially for smart contract platforms.

After being integrated into the compliance system, BTC and blockchain are becoming the technological high ground that the United States must occupy. The investment and speculation sentiment triggered by this trend is spreading. Many companies are launching accumulation plans for BTC and other crypto assets.

The expansion of use cases, along with the FOMO sentiment and purchasing power driven by regulatory breakthroughs, has become the fundamental driving force behind the price increases of BTC and other crypto assets.

Capital: Optimistic Pricing + Scale Expansion

During the sharp decline of the US stock market in March and April, the inflow of BTC Spot ETF came to a sudden halt, causing BTC to adjust over 30% along with the US stocks, marking the largest correction of this cycle (. However, since April and May, with a strong rebound in the US stock market, the buying power of BTC Spot ETF has also strongly recovered, with inflows of $605 million and $2.775 billion respectively, pushing BTC to recover all its losses and reach a new high of $112,000.

In terms of stablecoins, there has also been an expansion, with inflows of 5.375 billion and 5.567 billion USD in April and May respectively, but the changes in funds for the BTC Spot ETF channel are relatively small.

Previously, we pointed out that the pricing power of BTC has been transferred from on-exchange funds to the funds of the BTC Spot ETF channels and similar institutions. These types of institutions exhibit a long-term subjective bullish attribute, which is primarily due to the continuous breakthrough progress of BTC and crypto assets at the policy level in the United States. This is not only the reason why BTC was able to rebound quickly and reach new highs in April and May, but also the underlying logical support that can be viewed positively in the long term.

However, it should be noted that the U.S. stock market has currently priced in the tariff dispute with extreme optimism, and it may imply that the U.S. economy will not experience a significant recession. Currently, it is difficult for the U.S. stock market to break new highs, and fluctuations are inevitable. Although institutions continue to invest, the BTC Spot ETF finds it hard to develop an independent trend that differs from the Nasdaq, making it overly optimistic to expect BTC to reach new highs in the medium to short term.

![EMC Labs May Report: BTC Hits New Historical High, Waiting for Rate Cuts and Further Ascension])https://img-cdn.gateio.im/webp-social/moments-39e622e5baf08e93d78bc5c8135dbdf9.webp(

Chip Structure: Exchange BTC Inventory Continues to Decline

In the decline from March to April, long-term investors in BTC have once again started to increase their holdings, which objectively plays a balancing role in reducing market selling pressure.

By the end of May, the large holders had a total of 14.4199 million coins, near a historical high, while the stock of centralized exchanges continued to decline, currently only remaining at 2.9882 million coins, close to the level at the end of November 2020.

During the previous cycle, the surge in liquidity and the long positions choosing to sell objectively restrained the price increase. However, when the price declines during the cycle, long positions will slow down their selling or even switch to increasing their holdings, and this cycle is no exception.

The difference from previous cycles is that in the past, the "secondary sell-off" by long holders would end the bull market, whereas after this round of "secondary sell-off," the market chose to continue rising. We understand this as the addition of institutions to the long holder structure, which has led to changes in market trends. Whether this change is permanent or temporary needs to be closely monitored.

![EMC Labs May Report: BTC Hits All-Time High, Waiting for Rate Cuts and Further Advances])https://img-cdn.gateio.im/webp-social/moments-cb26e6a36b1a8f9b2f5a6c95493a3c4f.webp(

![EMC Labs May Report: BTC Hits New All-Time High, Waiting for Interest Rate Cuts and Further Advances])https://img-cdn.gateio.im/webp-social/moments-f0c6f5d6dc48de1fbdacd07e2ca627bf.webp(

![EMC Labs May Report: BTC Hits All-Time High, Awaiting Rate Cuts and Further Gains])https://img-cdn.gateio.im/webp-social/moments-391c00a200a566a09f7960a5c50cc839.webp(

Conclusion

Although we are optimistic about the expansion of BTC's use cases and its long-term trends based on long-termism, the strength of BTC's price and the intensity of its movement in the short term still exceed even the most optimistic estimates.

The reason lies in the excessive optimism of risk markets, including the US stock market, as well as the investment and speculation frenzy triggered by BTC's significant use case expansion in the United States. We are confident about the latter, but we believe the market's pricing of the tariff dispute is overly optimistic, and there will still be many twists and turns in between. In addition, we have lowered our expectations for the Federal Reserve to cut interest rates.

In the March report, we expected BTC to start a reversal trend in the summer, but the market reaction was beyond expectations, with a new high reached in May. Considering various uncertainties and the delay in liquidity expectations, we believe that in the next two months, BTC is likely to fluctuate along with the U.S. stock market, while reaching new price levels is a low-probability event.

If everything goes smoothly, the next step should be the third quarter.