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Bitcoin shook off some concerns about the upcoming Federal Reserve interest rate decision, buoyed by renewed optimism around a potential US-China trade deal, and reclaimed the $96,000 support level.
The shift in sentiment was evident across the market, with the total crypto market cap climbing nearly 3% to $3.11 trillion and the Crypto Fear and Greed Index rising back to “Greed” at 67, after starting the week in neutral territory.
Altcoin markets recovered only slightly, with most gains scattered across a handful of prominent projects.
Why is Bitcoin going up?
Much of the current momentum appears tied to a wave of fresh geopolitical and macroeconomic triggers.
Bitcoin briefly surged to $97,700 during early Asian hours on May 7, mirroring gold’s rally to $3,435.
Both assets spiked as traders digested reports of renewed US-China trade talks and rising tensions between India and Pakistan, two developments that injected volatility across risk markets.
The sudden upside also followed a sharp dip under $94,000, which marked Bitcoin’s May low.
That pullback seems to have reset short-term market structure, allowing bulls to step in aggressively amid improving risk sentiment.
Fueling this shift was a statement from US Treasury Secretary Scott Bessent, who confirmed plans to meet China’s Ministry of Commerce in Switzerland to discuss trade barriers.
China responded positively, signalling a willingness to engage, which brought in renewed optimism for risk assets like crypto.
Although markets remain sceptical, with Polymarket odds giving only a 25% chance of a deal by June, the headlines alone were enough to lift Bitcoin and other major assets.
Adding to the pressure on short sellers, over $83 million in BTC short positions were liquidated in the past 24 hours, outpacing long liquidations by a wide margin.
At present, traders remain cautious but engaged.
While the Federal Reserve is widely expected to hold rates steady, all eyes are on Chair Jerome Powell’s comments post-announcement.
His tone and forward guidance could shape risk appetite in the days ahead for the entire asset class.
Will Bitcoin crash?
For now, a major crash seems unlikely, but the road ahead could get bumpy.
Market watchers are closely eyeing the Federal Reserve’s next moves, with traders increasingly doubtful about any near-term rate cuts.
According to the CME FedWatch Tool, the odds of a cut in June have dropped to around 30%, down sharply from earlier expectations.
For Bitcoin, that means more volatility ahead, not necessarily a breakdown, unless sentiment flips sharply or macro conditions worsen.
However, according to analyst Rekt Capital, the recent rebound may have put an end to Bitcoin’s “Downside Deviation.” In a weekly chart, the analyst pointed out a recurring pattern where BTC wicks below key support levels before resuming its uptrend.
BTC/USD weekly chart by TradingView
The latest recovery back above $96,000 fits that structure neatly, suggesting bulls may have regained control.
Meanwhile, fellow analyst Crypto Caesar pointed out that the upper CME gap around $97,000 has now been filled.
Clearing this gap removes a major resistance area, potentially opening the door for a cleaner move toward six figures if bullish momentum continues.
Adding to the optimism, pseudonymous commentator The Crypto Monk believes Bitcoin is now prepping for its “next leg up,” eyeing a run at all-time highs.
$BTC is prepping for the next leg up. This one is aiming for ATH.
Yet not everyone is convinced. Scott Melker, also known as The Wolf of All Streets, offered a tongue-in-cheek reminder that Bitcoin has a history of sharp pullbacks, even in bullish cycles.
Referencing the 2021 pattern, he noted that a similar drop to the monthly 50-day moving average could theoretically drag BTC back to $49,000. However, he added that the chances of that happening were relatively low.
“I don’t think this will happen, but fun to post it,” the analyst said.
When writing, Bitcoin was hovering slightly above the $97,000 mark, with traders awaiting the upcoming Federal Reserve rate decision and Chair Jerome Powell’s commentary.
Crypto markets rally
In the past 24 hours, the total altcoin market rose 7.8%, hitting an intraday high of $1.24 trillion before cooling off to $1.18 trillion at the time of writing.
The Altcoin Season Index showed a score of 26, meaning Bitcoin is still calling the shots, with most altcoins’ prices mainly following the lead of the top crypto.
Ethereum (ETH), the biggest altcoin out there, was up about 3% during the period, trading at a bit over $1,800.
Other large-cap coins like Solana (SOL), Dogecoin (DOGE), Cardano (ADA), and Sui (SUI) also posted small gains of around 2-3%. Most of the top 100 cryptos were in the green too.
Stacks (STX) and EOS (EOS) stood out with double-digit gains of 14.5% and 13.6%, while Story (IP) was up over 8%. See below:
Source: CoinMarketCap
Meanwhile, analysts believe some early signs for the start of the next altcoin season could be emerging.
In a May 7 post on X, crypto analyst Moustache highlighted an ascending broadening wedge forming on the Market Cap USDT Dominance chart, noting that a similar pattern breakdown in November 2024 triggered a strong altcoin rally.
Market cap USDT Dominance chart. Source: Moustache.
“The signs of an impending altcoin season are getting closer and closer,” Moustache wrote.
Trader Michaël van de Poppe agreed, saying the altcoin market looks like it’s in an accumulation phase right now, similar to what happened before last November’s altcoin rally.
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