Bitcoin's price surged past $99,300 on May 8, 2025, inching closer to the much-anticipated $100,000 milestone. This significant rise, occurring during early trading hours, is attributed to growing optimism surrounding a major trade deal anticipated to be announced by US President Donald Trump.
The cryptocurrency, which is the largest by market capitalization, gained over 2.5% as news of the trade agreement spread, buoying investor sentiment. Trump hinted at the announcement via a post on his social media platform, Truth Social, indicating that a "major trade deal with representatives of a big, and highly respected, country" would be revealed during a news conference later that day.
Bloomberg reported that sources familiar with the matter suggested the trade deal is expected to be with the United Kingdom. The agreement is anticipated to include tariff reductions on key sectors such as automotive and digital services, marking the first significant trade agreement for Trump's administration since imposing sweeping tariffs on various trading partners last month.
The positive news surrounding the trade deal has not only impacted the cryptocurrency market but has also reverberated through US equity markets. Pre-market gains were observed, with Dow futures rising by 0.55%, S&P 500 futures up 0.78%, and Nasdaq futures climbing 1.09%.
Meanwhile, the Federal Reserve's decision on May 7 to hold interest rates steady in the range of 4.25% to 4.5% has contributed to the current market dynamics. Analyst Iliya Kalchev from Nexo pointed out that while risk assets, including cryptocurrencies, may enjoy short-term support due to the trade deal, the Fed's ongoing commitment to quantitative tightening could limit the sustainability of any rally.
Kalchev stated, "Bond yields, particularly on the long end, may edge higher in response to the sustained runoff, while the US dollar could see modest strengthening as expectations for a dovish pivot fade." He further emphasized that tighter financial conditions remain a concern for growth stocks and cryptocurrencies in the medium term.
As Bitcoin's price approached the $100,000 mark, analysts noted that investors have been aggressively taking profits, suggesting that the cryptocurrency might be nearing a local peak. Analyst Kripto Mevsimi, writing for the CryptoQuant blog, highlighted that the net profit realized over a seven-day period (7DMA) has remained robustly positive since the start of 2024.
Mevsimi pointed out that the local peak of 7DMA was reached in November 2024 when Bitcoin's price surpassed $90,000, followed by a lower peak in December when it hit an all-time high of $108,000. In January 2025, Bitcoin reached a new all-time high of $109,000 before experiencing a notable decline.
Despite the recent surge, Mevsimi cautioned that the current conditions could lead to increased short-term volatility. He noted, "If we look back at similar cycles, this phase has often preceded a local peak or a sharp correction, especially when profit-taking has remained high and ongoing." However, he clarified that this does not signal a complete macro top but rather a caution zone.
Interestingly, the launch of spot Bitcoin ETFs in January 2024 has altered the market structure, though investor psychology appears unchanged. This consistency in behavior could lead to similar outcomes as seen in previous cycles, albeit on a larger scale.
Comparatively, the macroeconomic landscape in 2021 was markedly different from today's environment. Mevsimi suggested that the current trends bear more resemblance to 2017, the first year of Trump's presidency, when Bitcoin experienced significant price fluctuations.
The cryptocurrency market overall reacted positively to the trade agreement news, with Bitcoin's rise contributing to a broader risk-on sentiment. The total cryptocurrency market capitalization surpassed $3 trillion, resulting in the liquidation of 71.4% of leveraged short positions, according to Coinglass.
In the last 24 hours alone, over 106,273 traders were liquidated, with total liquidations amounting to $291.90 million. The largest single liquidation order occurred on Binance, valued at $10.59 million. This wave of liquidations reflects the heightened volatility and speculation surrounding Bitcoin's price movements.
As Bitcoin continues to trade above $99,000, technical analysis indicates immediate resistance near the $98,250 level, with further key resistance at $98,500 and $98,800. On the downside, major support levels are identified around $97,000 and $96,400.
With the cryptocurrency market responding vigorously to global economic developments, investors remain on high alert for the upcoming announcement from Trump regarding the trade deal. The implications of this agreement could have far-reaching effects not only on Bitcoin's price but also on the broader financial landscape.
As the day unfolds, all eyes will be on the news conference scheduled for later today, where Trump is expected to provide further details on the trade agreement and its potential impact on the economy and financial markets.
