In May 2025, the crypto market experienced a deep adjustment, with Bitcoin's price falling from a high of $100,000 to around $97,000, and mainstream coins like Ethereum and Sol generally declining by over 7%. This pullback is both a necessary technical correction and the result of multiple macro risk resonances.
Core Drivers of the Pullback
1. Federal Reserve Policy Game: Ahead of the FOMC meeting on May 7, market concerns about the interest rate path intensified. Although the Federal Reserve started a rate-cutting cycle in March, recent hawkish signals (such as an inflation expectation adjustment to 2.5%) and a deadlock in debt ceiling negotiations have led to tighter liquidity expectations, prompting investors to preemptively hedge by selling.
2. Technical Aspects and Leverage Liquidation: After Bitcoin fell below the key support level of $75,000, a 'death cross' was triggered (the 50-day moving average crossing below the 200-day moving average), leading to a chain liquidation due to high leverage contracts (with total positions exceeding $50 billion), resulting in liquidations amounting to $1.38 billion within 24 hours.
3. Geoeconomic Impact: The U.S. tariff policy increase in April heightened global stagflation risks, leading funds to shift from risk assets to traditional safe havens like gold, causing a one-day evaporation of over 10% in the crypto market's market cap.
Market Differentiation and Defensive Sectors
Despite overall market pressure, some sectors broke through against the trend:
SocialFi and RWA: TON rose against the trend by 4.49% due to the expansion of social application scenarios, while tokens like PENDLE and MKR benefited from the demand for real asset tokenization, with gains exceeding 3%.
AI Sector Resilience: AI-related tokens like Fetch.ai (FET) only fell by 2.3%, with trading volume surging by 30%, indicating a bet on long-term narratives.
Future Paths and Trading Possibilities (for reference only)
1. Short-term Key Level Contest: If Bitcoin holds the $95,000-$92,000 range, it may rebound to challenge the previous high of $105,000; if it fails to hold, it may test $90,000.
2. Policy Sensitivity Period Layout: Market volatility may intensify around the Federal Reserve meeting on May 7 and the CPI data release on the 14th. It is recommended to use options hedging (such as straddle strategies) and tighten stop-losses.
3. Long-term Value Anchoring: Although institutional funds have temporarily withdrawn (with a net outflow of $8.7 billion from Bitcoin ETFs), banks like Standard Chartered still maintain a target price of $200,000 for 2025, with RWA and DeFi innovations possibly laying the foundation for the next bull market.
Conclusion
The pullback is both a release of risk and a breeding ground for opportunities. Investors need to control leverage and diversify (such as BTC + defensive tokens), while closely monitoring the Federal Reserve's policy inflection points and geopolitical developments. As Arthur Hayes said, 'The tide of liquidity will eventually turn, and clearer routes often follow the storm.'