Crypto's new run 'has legs' says analyst citing Trump's press on policy, institutional adoption

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TL;DR

Analyst Owen Lau suggests crypto's recent 44% drawdown may end the downturn, citing improved sentiment from U.S. policy progress and institutional adoption. However, some warn of a potential bull trap due to market risks.

Key Takeaways

•Analyst Owen Lau believes the crypto market's 44% drawdown could mark the end of the latest downturn, with improved fundamentals and regulatory momentum.
•Recent catalysts include Trump's intervention on the CLARITY Act, Kraken's Federal Reserve master account, and increased institutional participation like Morgan Stanley's ETF updates.
•Some analysts caution that the rally might be a bull trap, pointing to heavy overhead supply and derivatives market positioning as risks to a sustained recovery.

What to know:

Crypto markets may be emerging from a months-long downturn, with analyst Owen Lau suggesting the recent 44% drawdown could mark the end of this latest crypto winter.
Recent gains in bitcoin and progress on U.S. policy are bolstering sentiment and integration with the traditional financial system.
Some analysts warn that the current rally could mimic a bull trap, pointing to heavy overhead supply and positioning in derivatives markets.

Crypto markets may be emerging from a months-long downturn, with analyst Owen Lau suggesting the recent 44% drawdown could mark the end of this latest crypto winter.
Recent gains in bitcoin and progress on U.S. policy are bolstering sentiment and integration with the traditional financial system.
Some analysts warn that the current rally could mimic a bull trap, pointing to heavy overhead supply and positioning in derivatives markets.

Crypto prices may be approaching a turning point after months of losses as several recent developments could mark the start of a new bull phase.

In a note on Wednesday, Clear Street analyst Owen Lau said the roughly 44% drawdown in crypto markets between Oct. 10 and Feb. 28 may now represent the end of the latest downturn. If that stretch represented a crypto winter, he wrote, “so be it.”

Lau didn't provide a price target for bitcoin but argued that sentiment and fundamentals have both improved in recent weeks, pointing to regulatory momentum in Washington, deeper integration between crypto firms and the traditional financial system and continued institutional adoption.

“The industry may just hit an inflection point, and we believe this run has legs,” he wrote.

The comments come as the market has started to rebound. Bitcoin BTC$72,446.02 has risen about 11% over the past week and 8% in the past 24 hours as tensions in the Middle East intensify. The rally has pushed the largest cryptocurrency closer to what many traders view as a key resistance level around $75,000.

Lau also said that U.S. President Donald Trump’s Tuesday intervention on the hard-fought, but currently stalled, CLARITY Act raises the odds that the law wins Congressional passage by the end of the summer. A catalyst, which JPMorgan had said could be the spark that the digital assets market needs for a rally.

Additionally, infrastructure integration is also advancing after Kraken’s banking subsidiary received a Federal Reserve master account, allowing it direct access to the central bank’s payment system. Lau said the move represents a structural step toward integrating crypto-native institutions into the U.S. financial system.

If that's not enough, Lau also pointed out rising institutional participation as another potential catalyst for the rally. Morgan Stanley recently amended a filing for a proposed spot bitcoin ETF to name Coinbase Custody as a co-custodian alongside Bank of New York Mellon, reinforcing Coinbase’s (COIN) role in the institutional crypto ecosystem.

Lau, who covers several major crypto firms, including Coinbase (COIN), Circle (CRCL) and Bullish (BLSH), currently has a Buy rating on Coinbase and Bullish, and a Hold rating on Circle.

'Bull trap'

However, not everyone is convinced that the rally marks the start of a sustained recovery.

Some traders warn the latest move could turn into a classic bull trap — a brief breakout that attracts buyers before reversing lower.

Analysts have pointed to heavy overhead supply and positioning in derivatives markets as potential risks, with some suggesting a rally into the $72,000 to $76,000 range could draw sellers rather than confirm a durable uptrend.

Lau, on the other hand, believes the recent developments could signal a broader shift for the industry.

“The industry may just hit an inflection point, and we believe this run has legs,” he wrote.

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Ray Dalio, founder of Bridgewater Associates, said in a recent podcast that bitcoin lacks gold’s qualities, citing transparency, lack of central bank backing and quantum computing risks.
Bitwise CIO Matt Hougan said those risks are exactly why bitcoin is only 4% the size of gold’s market, and long-term investors are betting that those will be solved in time.
Galaxy’s Alex Thorn and VanEck’s Matthew Sigel countered Dalio's critique, saying that bitcoin’s adoption and utility continue to grow while quantum risks are being addressed.

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