Rising stablecoin volumes, investor inflows, and a dovish Fed spark renewed optimism in Bitcoin and Ethereum markets.

A sharp increase in stablecoin trading volume is pointing to renewed bullish sentiment across the crypto market. On May 7, 2025, well-known crypto analyst Crypto Rover flagged this trend as “mega bullish.” Data backs the claim: Tether (USDT) recorded over $50 billion in 24-hour volume, up 15% week-on-week, while USD Coin (USDC) rose 12% to hit $8.2 billion. Traders often use stablecoins as a bridge between fiat and volatile assets, so such a rise typically signals incoming capital and investor confidence. With this surge, market participants are positioning for potential upward moves in key cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH).

Rate Cuts Fuel Risk-On Sentiment Across Markets

A dovish policy shift by the U.S. Federal Reserve has added fuel to the fire. The Fed’s 0.25% interest rate cut on May 6, 2025, has encouraged a broad risk-on sentiment. The S&P 500 responded with a 1.2% gain, closing at 5,800 points. This momentum is spilling into the crypto space. As investors search for higher returns in a lower-rate environment, digital assets are seeing renewed inflows. Institutional data from IntoTheBlock shows $500 million in net inflows into crypto funds post-rate cut, signalling strong interest from professional investors.

Trading Volume and Price Action Show Strength

On the technical front, crypto markets are showing signs of strength. Bitcoin was trading at $68,500 on May 7, pressing against the 50-day moving average resistance at $68,800. A confirmed breakout could pave the way toward the $70,000 mark. Ethereum is also on the move, priced at $3,200 and eyeing the 200-day moving average at $3,250. Binance trading volumes reflect this growing activity: BTC/USDT saw $2.1 billion in trades, up 10% in 24 hours, while ETH/USDT hit $1.3 billion, an 8% jump. Meanwhile, USDT transfer volume on Ethereum hit $25 billion—up 20%—showing rising on-chain engagement.

Cross-Market Correlations and Key Risks

Despite the optimism, caution remains. Bitcoin’s 30-day correlation with the S&P 500 stands at 0.75, underlining the crypto market’s sensitivity to equity moves. A reversal in stock prices—due to weak earnings or macro shocks—could trigger swift pullbacks in digital assets. Technical traders are advised to watch resistance levels closely, especially S&P 500’s next ceiling at 5,850 points. The broader picture suggests that stablecoin flows can serve as an early signal for crypto momentum, but external market risks must be factored into any strategy.