See our full XRP forecast here.
While XRP struggled, Bitcoin’s reaction diverged.
Bitcoin Reacts to US Data and Trade News
XRP’s recent decline did not dampen Bitcoin’s (BTC) demand on Monday, May 5. The cryptocurrency experienced a temporary dip due to stronger-than-expected US economic data, which pushed BTC to a session low of $93,639.
The ISM Services PMI indicated a growth increase from 50.8 in March to 51.6 in April, surpassing a consensus prediction of 50.6. This rise in service-related activities could be a key player in inflation, with the Prices Index also jumping to 65.1, reflecting a significant 4.2 point increase. Such trends may discourage expectations for a Federal Reserve rate cut in the first half of 2025, suggesting a more hawkish approach to controlling tariff-induced inflation. The implication of this shift may raise borrowing costs, posing potential challenges for riskier assets like cryptocurrencies.
The market reaction extended beyond cryptocurrencies; the Nasdaq Composite Index closed Monday down 0.74%, while the price of gold surged by 2.86%, settling at $3,332. Additionally, developments in trade, particularly President Trump’s announcement of 100% tariffs on movies produced outside the US, contributed to a risk-off atmosphere.
MicroStrategy Doubles Down on BTC at Sub-$100,000
As the broader market wrestles with potential policy shifts, MicroStrategy (MSTR) has made a bold move by acquiring a substantial amount of Bitcoin. Chairman Michael Saylor announced that the company purchased 1,895 BTC for about $180.3 million at approximately $95,167 per Bitcoin. He noted:
“MSTR has acquired 1,895 BTC for ~$180.3 million at ~$95,167 per bitcoin and has achieved BTC Yield of 14.0% YTD 2025. As of 5/4/2025, we hodl 555,450 $BTC acquired for ~$38.08 billion at ~$68,550 per bitcoin.”
This acquisition comes directly on the heels of a previous purchase of 15,355 BTC just a week prior. The significant inflows into US BTC-spot ETFs, combined with MicroStrategy’s investment, appear to have strengthened Bitcoin’s market position, helping it recover toward the $94,000 mark. Notably, US BTC-spot ETF issuers reported net inflows totaling $1,805 million for the week ending May 2, and $2,942 million for the entire month of April.
BTC Price Outlook: Policy and Legislation in Focus
On May 5, BTC managed to rebound slightly, gaining 0.41% to close at $94,774, partially offsetting a 1.67% drop experienced on the preceding Sunday. Looking ahead, the near-term pricing trajectory for Bitcoin will hinge on several critical factors, including trade developments, Federal Reserve policy signals, updates on the Bitcoin Act, and trends in ETF flows.
Here’s a look at potential price scenarios:
- Bearish Scenario: An escalation of the US-China trade war, hawkish indications from the Fed, concerns over a potential US recession, resistance to the Bitcoin Act, and renewed outflows from ETFs could drive Bitcoin below the $90,000 threshold.
- Bullish Scenario: Decreased tensions in US-China trade relations, a more dovish Fed stance, solid economic data from the US, supportive legislation for cryptocurrencies, and sustained ETF inflows could propel Bitcoin above the $100,000 mark.
The implications of legislative developments cannot be overstated. The progress—or lack thereof—of the Bitcoin Act in Congress will be crucial for Bitcoin’s supply-demand dynamics. Recently reintroduced by Senator Cynthia Lummis, the Bitcoin Act proposes that the US acquire one million BTC over a five-year period, with a suggested 20-year holding timeline. Should this bill advance, it could have a profound impact on the long-term outlook for Bitcoin.
Moreover, May 5 witnessed President Trump reaffirming the government’s pro-crypto position, asserting:
“I want crypto. Crypto is important because if we don’t do it, China will.”
These comments come in the aftermath of Arizona Governor Katie Hobbs’ veto of a bill aimed at allowing the state to invest up to 10% of public funds in digital assets like Bitcoin.
