Original Title: "Is $106,000 the 'Death Threshold'? US-China Handshake Truce, Why Did Bitcoin Experience a Cliff Dive"

Original Author: Lawrence, Mars Financial

Chapter One: Protocol Implementation: "Seesaw Effect" under Risk Preference Shift​​

On May 12th Beijing time, China and the US reached a tariff truce in Geneva, pressing the "pause button" on the ongoing trade friction for several years. The agreement includes a 90-day suspension of the 24% reciprocal tariffs, retaining a 10% base tariff rate, and establishing a third-country consultation mechanism. This development directly stimulated a 3% surge in the S&P 500 index futures and a 4.35% rise in the Nasdaq. However, Bitcoin unexpectedly fell back to a low of $100,700 after reaching $105,720, forming a rare "Stock-Coin Divergence" pattern. At the time of writing, BTC has rebounded to $102,600.

​​· Data Insights:​​

Bitcoin/USD (Orange) compared to S&P 500 Index Futures (Red) and Gold (Blue). Source: TradingView

​​· Short-Term Fund Flow:​​ Over the past 30 days, Bitcoin has risen by 24%, while the S&P 500 has only increased by 7% during the same period, and gold prices have remained stable. With the trade agreement reducing market uncertainty, some funds have flowed back from crypto assets to the traditional stock market, causing Bitcoin's 30-day correlation with the traditional market to rise to a historical high of 83%1.​​

· Institutional Holding "Double-Edged Sword":​​ MicroStrategy and its affiliated institutions have recently increased their BTC holdings by 13,390 coins, with a total holding of 1.19 million coins (6% of the circulating supply). Although this is seen as a long-term positive, the market is concerned that their concentrated holdings may pose a "price manipulation" risk, especially as the average cost climbs above $100,000, increasing expectations of short-term selling pressure.

​​Chapter Two: Technical Battle: $106,000 as the "Bull-Bear Watershed"​​

On May 12th, Bitcoin briefly broke through $105,800 before quickly falling back to $101,400, with the 1-hour candlestick chart showing the price dropping below the lower boundary of the ascending channel.

Bitcoin Alpha Price Level. Source: X.com

Alphractal CEO Joao Wedson pointed out that there is a "Alpha Price" resistance zone near $106,000, where long-term holders may take profit.

· Key Risk Indicator:

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· Liquidation Magnetic Pull: CoinGlass data shows that if the price falls to $100,000, approximately $3.4 billion of long leverage positions will face liquidation risk, creating short-term downside pressure.

· Support Range Validation: The four-hour chart shows that $99,700-$100,500 is the recent "Fair Value Gap" (FVG), and if broken, it may further test the $97,363-$98,680 range, with a pullback of up to 8%.

Three. Macro Variables: CPI Data and the "Butterfly Effect" of the Dollar Index

The U.S. April CPI data released on May 13 became a market focus. Previously, the March CPI was recorded at 2.4% (below the expected 2.5%). If the April data continues the downtrend, it could strengthen the Fed rate cut expectations, benefiting risk assets. Conversely, if inflation rebounds, the Dollar Index (DXY) may break above the 30-day high, creating resistance for Bitcoin.

Relationship Logic:

Gold/USD (left) vs. Dollar Index (right). Source: TradingView

· Gold and BTC as "Safe Haven Alternatives": On May 12, gold fell by 3.4%, and DXY rose to a 30-day high, reflecting investors shifting from scarce assets to the dollar and the stock market. This rotation validates the short-term positive correlation between Bitcoin and gold.

· Long-Term Narrative in the Erosion of Dollar Dominance: Despite short-term setbacks, the "Local Currency Settlement Pilot" clause in the agreement may weaken the US dollar's trade settlement status. Historical data shows that during the 2018-2020 trade war, Bitcoin, after an initial pullback, eventually broke through $20,000, drawing attention back to its "decentralized settlement tool" attribute in the medium to long term.

​​IV. Market Sentiment Divergence: Whale Retreat and ETF Inflows Divergence Signal​​

On-chain data shows a decrease of 12 addresses holding over 10,000 BTC and a 1.8% decrease in exchange reserves, indicating that some whales have chosen to take profits.

However, the US Bitcoin spot ETF saw a net inflow of $2 billion from May 1-9, with institutional funds still exhibiting a "buying the dip" trend.

​​Structural Contradiction Analysis:

​​· Retail Leveraged Risk: The current trading volume of altcoins has surged by 280%, but HTX Research points out that their leverage ratio is still within a safe range. In contrast, Bitcoin futures positions are concentrated around $98,000-$100,000, making them susceptible to a "long and short squeeze."

· Institutional "Support" Logic: Wall Street giants like BlackRock establish a liquidity monopoly through ETFs, reducing Bitcoin's daily volatility from 18% to 9% and gradually shifting pricing power towards traditional capital.

​​V. Future Projection: Short-Term Volatility and Long-Term Paradigm Shift​​

​​· Scenario One (Optimistic): If CPI data is lower than expected and coupled with rising expectations of a Fed rate cut, Bitcoin may quickly recover above $105,000 and challenge the $120,000 level. Institutional holdings and ETF inflows will establish a "moat," reducing the probability of falling below $100,000 to less than 20%.

· Scenario Two (Cautious): If a CPI rebound triggers a stronger US dollar, BTC may test support levels at $97,000-$99,000. However, MicroStrategy's $21 billion raised capital provides it with "ammunition," limited selling pressure from long-term holders, and a post-correction range-bound movement between $90,000 and $110,000.

​​Conclusion: Seeking Certainty in Uncertainty​​

The short-term volatility of Bitcoin is essentially a tug-of-war between traditional finance and the crypto ecosystem's pricing power. For investors, it is necessary to be wary of leverage risks and policy variables, but even more important to focus on the evolution of its underlying logic: as tariff barriers collide with blockchain technology, Bitcoin is transforming from "digital gold" into a "cross-border value transfer protocol."

The true victory of Bitcoin lies not in defeating fiat currencies, but in proving that humanity needs a diversified anchor of value.

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