TLDR:
- The data continues to come in relatively strong, although this is pre-tariff data.
- Our expectations are for the FED to remain on pause on Wednesday, and they may suggest they're not looking to cut rates in June either.
- Recent market rallies are very typical of prior bear market rallies, and hence, that's all we're expecting this to be: a bear market rally.
- For now, we're remaining patient as we expect much lower prices in the coming 1-2 months.
- Data This Week.
- The FED Meeting.
- Bear Market Rallies.
- Cryptonary's Take.
Disclaimer: This is not financial or investment advice. You are responsible for any capital-related decisions you make, and only you are accountable for the results.
Data this week
The key data points for this week are ISM Services, which came out on Monday (yesterday), and the FED Meeting on Wednesday.The ISM Services came out at 51.6, well above the forecasted 50.3, suggesting an expansion in the US Services sector. New Orders and Inventories also jumped higher, however, the concern is that this is a front-running of tariffs. We can particularly see this when the Prices Paid component increased to 65.1 from 60.9. This is a large increase, and it suggests a dash to buy, hence it's potentially a front-running of tariffs.
What's next
This rally feels good on the surface—but so did 2022, right before a brutal collapse. With the FED boxed in and tariffs set to hit, we're nearing a moment where the bottom could fall out fast.The Fed meeting & Fed speakers
This Wednesday, we have the May FED Meeting. The expectation is that the FED will keep interest rates unchanged, and we're in agreement with this view. Therefore, what the market will be looking for is Powell's forward guidance for future meetings.Currently, the setup is that no one really knows the effects of tariffs, but the expectation is that they'll be inflationary.
Now, if you pair that alongside the fact that the hard data has come in relatively strongly (the pre-tariff data), this unequivocally puts the FED in a position where they can't cut yet, and they'll have to see the effects of the tariffs come through first.
How can they cut rates into inflationary pressures that may then mean they have to raise them again? They just won't get caught up doing this.
This is despite how much pressure Trump wants to put on Powell to cut rates. Powell won't be pressured by Trump.
This setup means that the FED is likely to be late to the rate-cutting party. The FED will likely react (begin cutting interest rates) when/if the data meaningfully deteriorates. It's possible we begin to see this in the June prints (May's data), however, it may take more time, so there is the potential that this doesn't show up until July, maybe even August. So, with that being said, when does that open the door for the FED to cut?
Simplified: May won't happen. June was at a 65% chance, although that has now been dialled back to 50%. July's FED Meeting is possible for a rate cut, but our base case is that the first rate cut comes in September.
Bear Market Rallies:
Bear market rallies can be substantial in percentage gains. For context, let's look back at 2022, and the bear market rally we saw from late February 2022 to late March 2022, yes, a one-month rally.
In this time, BTC had pulled back 52% from the all-time highs over a 3-month period. We then saw a bear market rally of 40.60%, only for BTC to pull back another 63% over the next 10 weeks/2.5 months. From a zoomed-out perspective, these are big moves in relatively short periods of time.
BTC 2022 price action:
If we now look at the recent price action, price pulled back 31.90% from the all-time highs over a 10-week time period, and then price has seen a 31.1% rally over the following month (what we're witnessing currently). Alongside this, the macro aligns with a pullback here. The environments are different. 2022 saw a strong tightening environment.
Now, we don't have tightening, but we do have huge uncertainty, which has similar effects, less spending and patience from companies on investing in the future and growth.
Look at the above chart of BTC from 2022, and the chart from today.
BTC 2025:
For further context, we can also look at ETH and SOL. In 2022, ETH's bear market rally saw a 54.6% increase in price in 1 month, before the price dropped a further 75.1% over the next 2.5 months. In 2025, ETH's rally was just 35.0%.
ETH 2022:
For SOL, in 2022, the price rallied 89.4% in its bear market rally over just a single month, before priced then corrected 82.2% in the 2.5 months that followed. In 2025, SOL's rally was 63.0%.
SOL 2022:
Cryptonary's take
Our analysis of the market leads us to the same conclusion as we've come to recently, in which we still strongly expect that this is a bear market rally. BTC rallied slightly more than we initially estimated, but it still fits the bear rally structure. ETH and SOL haven't really put in strong bounces, particularly when we compare these rallies to the 2022 bear market rallies, from a percentage performance wise.If we then pair the above with the macro setup we have going forward, it's very likely that tariffs will be implemented, and sure at lower rates than what has been quoted, but there is still likely to be tariffs, and that onshoring will take time.
Our expectation is that this will induce an economic slowdown, which could begin to show up in the data in the next 4-6 weeks. This'll bring the FED to the interest rate cutting table, but it's not going to be at the May or June FED Meeting's and it may not even be at the July Meeting.
We do, however, expect the FED to be cutting by September, and to be doing back-to-back cuts, which fuels a major risk-on rally.
Our game plan remains the same; we'll look to buy the weakness that we expect to show up in the coming 4-6 weeks, and the lower prices that will likely be a result of that in the month that follows that (call it July time).
We then believe we'll be positioned well going into the end of Q3 and Q4 where we're expecting trade deals to be behind us, and risk assets to be fueled higher by back-to-back interest rate cuts, whilst at the same time, the majority of the headwinds will be behind us.
This would mean our potential drawdown/downside (once we've bought) is likely to be limited, whilst we're set up and well-positioned to take advantage of a strong risk-on rally going into Q4 and year-end.
BTC:
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