Crypto market rebounds V-shaped: Is the bull market still on the way?

On February 3, the crypto market experienced a waterfall-like decline. Bitcoin once plunged to $91,000, and Ethereum plunged to below $2,100, reaching its lowest level since November. Other altcoins fell even more severely, with an average drop of more than 15%. Just as investors were panicking, funds returned during the North American trading session, and the market rebounded in a V-shaped manner. In the early hours of this morning, Bitcoin once reached $102,500, completely recovering yesterday's losses.

Before and after the Spring Festival holiday, Bitcoin has experienced short-term sharp declines many times. But it is worth noting that despite the large decline, Bitcoin has been able to recover quickly every time, showing amazing market resilience.

DeepSeek hits the market hard

On the eve of the Lunar New Year, the download volume of the domestic AI model DeepSeek surpassed ChatGPT and topped the US APP Store list, attracting the attention and coverage of the global technology, investment industry and media. Since the model is extremely low-cost, but the effect is comparable to the AI ​​products of American companies such as OpenAI, it has brought a great shock to the global market, shaking the foundation of the AI ​​industry that has always believed in "great strength to create miracles". A stone stirs up a thousand waves, and US technology stocks immediately suffered a heavy blow, and Nvidia's stock price once fell by nearly 17%.

The crypto market was not immune to the impact, with Bitcoin and Ethereum falling by 6% and 7% respectively, and some altcoins suffering double-digit losses. However, after the plunge, the market rebounded quickly, and mainstream currencies such as Bitcoin and Ethereum quickly recovered their losses, showing strong market bullish confidence.

Trump's tariff policy triggers market panic

During the Spring Festival, the tariffs promised by Trump during his campaign for the US presidency have gradually been implemented. On February 2, US President Trump signed an order to impose a 25% tariff on Mexican and Canadian imports and a 10% tariff on China. The US trade volume with these three countries is about 1.6 trillion US dollars. The relevant countries have also vowed to take retaliatory actions. The tariff war has officially started, shaking the global financial market.

The market is worried that a full-scale trade war will disrupt the global supply chain, raise inflation, cause the Federal Reserve to raise interest rates again, and drag down the economy. Cryptocurrencies have fallen sharply, with Bitcoin once plunging to $91,000 and Ethereum plunging to below $2,100. Many altcoins have hit all-time lows.

After the global financial market was in turmoil, Trump said on Monday that after talking to the leaders of Canada and Mexico, he agreed to postpone the plan to impose a 25% tariff on the two neighboring countries for one month and continue negotiations. Market sentiment eased, and the crypto market rebounded in a V-shaped pattern. Bitcoin once reached $102,500, completely recovering yesterday's losses.

Is the bull market still on the way?

During this period, Bitcoin has experienced several sharp declines. Although each decline was quickly recovered, these fluctuations have also continuously shaken investors' confidence, making market sentiment increasingly weak, and triggering debate on whether the bull market is still going on. Overall, this round of bull market still has continuity, mainly based on the following points:

1. Tariff policies may only be a negotiating tool. During Trump's first term, tariff policies changed frequently and were erratic. The tariff threat was more of a bargaining chip than a long-term strategy. After Trump announced the imposition of tariffs on Mexico and Canada, the limited decline in technology stocks was a reaction to this. The market believed that Trump's "fake shot" was intended to allow the Mexican and Canadian governments to crack down on drugs and illegal immigrants entering the United States. Sure enough, the next day, Trump said on social media that Mexico agreed to send 10,000 soldiers to the border to control illegal immigrants and drugs, and Canada would also take corresponding measures. The suspension of the tariff policy once again supported this view. Now it seems that Trump's wishful thinking is going well, and the negotiations with Mexico and Canada have yielded results.

2. Trump's campaign promises are being fulfilled. Trump's crypto-friendly policies are being promoted and have been partially realized, such as the appointment of cryptocurrency-friendly officials and the issuance of executive orders, and there is also further news about the Bitcoin national strategic reserve, which is generally of most concern to the market.

On Monday, Trump signed an executive order instructing the Treasury and Commerce departments to submit plans for a new U.S. sovereign wealth fund within 90 days to be established within the next 12 months. Although Bitcoin was not explicitly mentioned when it was signed, the fund could become a tool for the government to purchase and hold cryptocurrencies. Cynthia Lummis, who first proposed the establishment of a strategic reserve of Bitcoin in the United States and was appointed by the Trump administration as the chair of the U.S. Senate Banking Digital Assets Subcommittee, posted on X and used the Bitcoin symbol, suggesting that it was related to the Bitcoin strategic reserve.

3. BTC's multiple escape indicators have not appeared. In all the previous bull markets, Bitcoin has shown obvious escape indicators. Currently, none of the 30 escape indicators recognized by the mainstream market, including the rainbow chart, ahr999 and other core indicators, have hit. In addition, all the bull market tops in history are not flat, but a needle, which does not give retail investors too much time to think. Now Bitcoin has stayed near $100,000 for more than a month, which is usually a sign that the bull market is still continuing.

Overall, although the market volatility in early 2025 is intense, there are many signs that the current bull market still has the potential to continue to rise. Investors should remain cautiously optimistic and pay attention to policy changes and market indicators to cope with possible fluctuations and opportunities.