4E Observation: Bitcoin falls below 107,000, rare meeting with Trump

On Thursday (May 29), the financial markets experienced turbulence, with uncertainty surrounding U.S. trade policy becoming the focal point. The U.S. Court of Appeals temporarily stayed the previous trade court's ruling that deemed Trump's tariff measures invalid, meaning that the relevant tariffs are temporarily back in effect. This dramatic reversal triggered market fluctuations, with the 10-year U.S. Treasury yield briefly rising to 4.53% during the day, but then retreating to close at 4.42%, down 5 basis points from the previous day.

In contrast to the fluctuations in U.S. Treasuries, Bitcoin exhibited a downward trend throughout the day, breaking below the critical support level of $107,300. Analysts pointed out that this highlights the willingness of Bitcoin bulls to take profits and remain on the sidelines after a significant prior increase. Some believe that Bitcoin (BTC) is gradually shifting from being a risk asset similar to tech stocks to a dollar asset alternative more akin to gold. Therefore, if market concerns about U.S. and Japanese Treasuries ease while inflation risks remain elevated, high U.S. Treasury yields (if maintained above 4.5%) may continue to exert pressure on Bitcoin prices.

Inflation Outlook and Fed's Hawkish Tone Resurfaces

On the same day, Federal Reserve Chairman Jerome Powell met with U.S. President Trump at the White House for their first meeting since Trump began his second term in January. They discussed topics such as economic growth, employment, and inflation. Powell reiterated the Fed's "independence," emphasizing that interest rate decisions will be based on "non-political" analysis. Trump expressed a differing view, stating that not lowering interest rates is a "mistake."

Meanwhile, Dallas Fed President Lorie Logan made hawkish remarks, indicating that the Fed "may need to keep short-term rates unchanged for quite some time" and emphasized the need for more time to observe changes in risk balance. Since cumulatively lowering rates by 100 basis points in the second half of last year, the Fed has maintained the federal funds rate target range at 4.25%-4.5%. Although the U.S. April CPI year-on-year increase was 2.3%, indicating that the current interest rate level remains restrictive and theoretically has room for adjustment (if inflation does not rebound), the market still needs to be cautious: if inflation rises, its debt-diluting effect combined with the expanding fiscal deficit may undermine investors' confidence in U.S. Treasuries as a "super safe" asset.

Market Outlook: Focus on Inflation Data, Weakening Technicals for Bitcoin

Market attention is shifting towards key economic data, especially the U.S. core PCE price index to be released on Friday (May 30), which will provide clearer clues for the inflation outlook.

On the daily chart, Bitcoin has effectively lost the critical support level of $107,300, indicating a significant increase in short-term selling pressure. If this level cannot be quickly regained, Bitcoin is likely to have entered a high-level consolidation phase, and the risk of a pullback cannot be ignored in the short term. Investors need to closely monitor the defense of key support levels. However, from a mid-term perspective, the overall upward trend of Bitcoin has not been broken, and the long-term structure remains upward.

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