Rebound expectations after crypto market fluctuation

Recently, the crypto market has seen a significant decline, raising concerns among some investors about the "May Crisis." However, such price fluctuations were actually anticipated. Factors such as the U.S. tax season, uncertainty in Federal Reserve policy, Bitcoin halving, and the slowdown in the growth of U.S. Bitcoin ETF assets have all contributed to this necessary market adjustment.

Short-term investors may choose to take a wait-and-see approach, but long-term holders will continue to accumulate mainstream encryption assets like Bitcoin and Ethereum, as well as some high Fluctuation altcoins.

The Federal Reserve recently announced that it will reduce the scale of quantitative tightening at the May 2024 meeting. By lowering the QT pace from $95 billion per month to $60 billion per month, it effectively adds $35 billion in dollar liquidity each month. Combined with other factors such as reserve balance interest, reverse repo payments, and Treasury interest, the reduction in QT actually increases the scale of stimulus flowing into the global asset market each month.

The U.S. Treasury Department stated in its latest quarterly financing announcement (QRA) that it expects to borrow $243 billion in privately held net market debt in the second quarter of 2024, which is $41 billion higher than previously anticipated. This is mainly due to a decrease in cash revenue. The Treasury plans to increase the issuance of short-term bills as the market struggles to bear rising long-term interest rates.

In addition, certain banking events have also raised concerns about deposit insurance. The actions of regulators have essentially expanded the scope of protection for bank deposits, which may lead to increased monetary liquidity.

Overall, while these policy changes have not had an immediate huge impact, they will gradually increase market liquidity, which is beneficial for the stabilization and rebound of asset prices. It is expected that the price of Bitcoin may begin to rise slowly after hitting the bottom in the near future, fluctuating between 60,000 and 70,000 USD in the coming months.

For investment strategies, now may be a good time to increase positions in high Fluctuation assets such as alternative coins like Solana. At the same time, some projects with long-term potential can also be considered. Overall, May may be a good time to accumulate, and then patiently wait for the market to fully react to the impact of the latest monetary policy.