What Happened?
U.S. officials anticipate a thaw in relations, and Trump claims tariffs will be significantly reduced. Recent developments in U.S.-China trade relations have become increasingly optimistic, coupled with a resurgence in institutional investor interest, leading to a strong rebound in Bitcoin prices, which briefly surpassed $93,000.
Despite the price surge, on-chain analysis indicates underlying concerns within the market, including weak demand momentum from new investors, relatively insufficient market liquidity, and still low participation rates among retail investors. Analysts point out that this round of price increases is primarily driven by high leverage in the futures market, rather than broad-based support from the spot market. This structure may render the rally unstable; should market sentiment shift or prices experience a minor retracement, it could trigger a chain reaction of liquidations, posing a challenge to the sustainability of the uptrend.
Trade Optimism and Institutional Fund Inflows Propel Bitcoin Above $93,000
The cryptocurrency market has recently demonstrated strong momentum, with Bitcoin (BTC) experiencing a significant price surge yesterday (22nd), briefly breaking through the $93,000 barrier, with a nearly 7% increase within 24 hours.
This wave of price gains is primarily fueled by renewed investor optimism and expectations of thawing tensions in U.S.-China trade relations, creating a lively market atmosphere. The market index CoinDesk 20 rose between 5.2% and 7% in the past 24 hours, with Ethereum (ETH) rising 8% to break $1,700, and Dogecoin (DOGE) and SUI recording increases of 8.6% and 11.7%, respectively.
The main catalyst for this market sentiment comes from U.S. government officials’ comments. U.S. Treasury Secretary Scott Bessent stated during a closed-door event that the current tariff deadlock with China is “unsustainable” and expects a thaw “in the near future,” although he cautioned that a comprehensive agreement may take years to achieve.
Subsequently, President Donald Trump informed reporters that U.S. tariffs on China would “greatly decrease” from the current 145%, alleviating market concerns about an escalating trade war. Trump also indicated no intention to dismiss Federal Reserve Chair Jerome Powell.
In addition to favorable macroeconomic news, institutional investor interest appears to be reawakening. The recent decline of the U.S. dollar index is partially attributed to President Trump’s dissatisfaction with Powell’s reluctance to cut interest rates amid tariff-induced inflation pressures, raising concerns about the independence of the Federal Reserve.
Against the backdrop of challenges facing the traditional monetary system, Bitcoin, as a decentralized asset with a fixed supply and not controlled by any single entity, is garnering increasing attention for its value storage and hedging characteristics. Analysts from hedge fund QCP Capital noted that funds are flowing from dollar-denominated risk assets into Bitcoin and gold as hedging or inflation-resistant assets. According to data, U.S. spot Bitcoin ETFs saw a net inflow of $381 million on April 21, reversing a previous outflow trend.
On the corporate front, MicroStrategy, which has consistently purchased Bitcoin, announced the acquisition of an additional 6,556 BTC, bringing its total holdings to 538,200 BTC (worth approximately $4.84 billion).
$MSTR has acquired 6,556 BTC for ~$555.8 million at ~$84,785 per bitcoin and has achieved BTC Yield of 12.1% YTD 2025. As of 4/20/2025, @Strategy holds 538,200 $BTC acquired for ~$36.47 billion at ~$67,766 per bitcoin. source — Michael Saylor (@saylor) April 21, 2025
Japan’s Metaplanet company also followed suit, increasing its holdings by 330 BTC.
Metaplanet has acquired 330 BTC for ~$28.2 million at ~$85,605 per bitcoin and has achieved BTC Yield of 119.3% YTD 2025. As of 4/21/2025, we hold 4855 $BTC acquired for ~$414.5 million at ~$85,386 per bitcoin. source — Simon Gerovich (@gerovich) April 21, 2025
Potential Risks and Market Fragility
While Bitcoin’s price has recently rebounded significantly due to favorable news, and market sentiment is generally optimistic, on-chain data analytics firm CryptoQuant has issued warnings, indicating that the current market rally conceals vulnerabilities that could limit further gains or even trigger a retracement.
Significantly weakened demand momentum: Insufficient follow-through buying pressure. CryptoQuant points out that the “demand momentum indicator,” measuring interest from new investors, has deteriorated to its lowest level since October 2024, indicating declining market attractiveness for new funds. Although the net decrease in Bitcoin demand over the past 30 days (approximately 146,000 BTC) shows improvement compared to the sharp contraction in March, overall demand remains negative.
In other words, despite the price increase, the actual inflow of new buying power into the market, forming long-term holding or accumulation, is relatively weak. Without sustained new demand to absorb potential profit-taking selling pressure, the foundation for further price increases may not be solid enough.
Market liquidity remains insufficient: Capital inflow has yet to be abundant. The growth in the market capitalization of the stablecoin USDT is often viewed as an important reference indicator for overall liquidity in the cryptocurrency market, as it is one of the primary mediums for entering and exiting the crypto market.
Data shows that over the past two months, the market capitalization of USDT has only increased by $2.9 billion, a growth rate that not only falls below its 30-day average but is also far below the historical threshold of over $5 billion commonly seen during large-scale, sustained Bitcoin rebounds.
Insufficient liquidity indicates that market depth may be inadequate, making it challenging to absorb large trading orders without causing significant price fluctuations, especially when facing potential sell-off pressures. The market may appear more fragile, lacking sufficient “fuel” to support sustained and substantial price increases.
Low participation rates among retail investors: Market breadth needs strengthening. Data analysis shows that the net buying volume of the group representing small investors (with individual purchase amounts between $0 and $10,000) is currently still in negative territory (below 0%).
Historically, retail investors often only begin to enter the market gradually after price trends are established, but their widespread participation is crucial for solidifying upward trends and providing ongoing buying momentum. The current absence of retail investors suggests that this round of gains may lack broad market foundational support, being predominantly driven by institutions or large traders. Should these dominant forces change their stance, the market may be more susceptible to rapid declines without retail investors to absorb the selling pressure.
Heightened concerns over leverage-driven dynamics: Risks of an overheated futures market. Analysts and data from Glassnode indicate that the recent surge in Bitcoin prices has largely been driven by leveraged trading in the derivatives market (especially in futures), rather than actual buying in the spot market.
The dramatic increase of $2.4 billion in Bitcoin futures open interest in less than 36 hours is clear evidence of this. Over-reliance on leverage-driven price gains inherently carries high risks as it amplifies market volatility. A slight price retracement could trigger widespread forced liquidations of long leveraged positions, leading to a chain reaction that results in a sharp price drop.
A healthy rally requires confirmation and support from spot buying, and the existing gap between the heated futures market and the relatively calm spot market may increase the risk of a market correction if it continues to widen.
Whether Bitcoin can sustain its upward trajectory will depend on whether spot buying can keep pace, whether institutional interest persists, and whether the market can overcome current resistance and potential vulnerabilities.
References: coindesk, cointelegraph, cointelegraph