Outlook for the Crypto Market in the Second Half of 2025: Opportunities Amid Range-Bound Monetary Policy and Global Turmoil

I. Summary

In the first half of 2025, the global macro environment continues to be highly uncertain. The Federal Reserve has paused interest rate cuts multiple times, reflecting that monetary policy has entered a "range-bound" stage. Meanwhile, the Trump administration's tariff increases and escalating geopolitical conflicts, such as the Israel-Palestine conflict, the Middle Eastern energy crisis, and the destruction of Russian warplanes, further tear apart the global risk appetite structure. From five macro dimensions—interest rate policy, dollar credit, geopolitical issues, regulatory trends, and global liquidity—combined with on-chain data and financial models, this report systematically assesses the opportunities and risks in the crypto market for the second half of the year and proposes three core strategic recommendations covering Bitcoin, stablecoin ecosystems, and DeFi derivatives.

2. Review of the Global Macroeconomic Environment ( In the first half of 2025 )

In the first half of 2025, the global macroeconomic landscape continues to exhibit multiple uncertainties since the end of 2024. With a lack of growth, sticky inflation, unclear prospects for the Federal Reserve's monetary policy, and escalating geopolitical tensions intertwining, global risk appetite has shown a significant contraction. The dominant logic of macroeconomics and monetary policy has gradually evolved from "inflation control" to "signal game" and "expectation management". The crypto market, as a frontier for changes in global liquidity, also shows typical synchronous fluctuations in this complex environment.

First of all, looking back at the Federal Reserve's policy path, the market reached a consensus in early 2025 on the expectation of "three rate cuts within the year", especially against the backdrop of a significant decline in the PCE month-on-month growth rate in the fourth quarter of 2024. The market generally anticipated that 2025 would enter the beginning of a loose cycle under "steady growth + moderate inflation". However, this optimistic expectation was soon hit by reality during the FOMC meeting in March 2025. At that time, although the Federal Reserve held steady, the post-meeting statement emphasized that "inflation is far from reaching the target" and warned that the labor market remains tight. Subsequently, the CPI year-on-year exceeded expectations in April and May, recovering to 3.6% and 3.5% respectively, while the core PCE year-on-year growth rate remained above 3%, reflecting that "sticky inflation" had not faded as the market expected. The structural causes of inflation—such as the rigid increase in housing rents, sticky wages in the service industry, and the temporary shocks to energy prices—had not undergone fundamental changes.

Faced with the pressure of rising inflation again, the Federal Reserve chose to "pause interest rate cuts" in the June meeting and lowered the expectation of the total number of interest rate cuts for 2025 through the dot plot, from three adjustments at the beginning of the year to two. The year-end expectation for the federal funds rate remains above 4.9%. More critically, Powell hinted at the press conference that the Federal Reserve has entered a "data-dependent + wait-and-see" phase, rather than the "easy monetary policy confirmation period" previously interpreted by the market. This marks a shift in monetary policy from "directional" guidance to "timing" management, significantly increasing the uncertainty of the policy path.

On the other hand, the first half of 2025 also shows a phenomenon of "increasing split" between fiscal policy and monetary policy. As the Trump administration accelerates the implementation of the "strong dollar + strong border" strategic combination, the U.S. Treasury announced in mid-May that it would "optimize the debt structure" through various financial means, including promoting the compliance legislation process for dollar stablecoins, attempting to leverage Web3 and fintech products to spill over dollar assets, achieving liquidity injection without significant balance sheet expansion. This series of fiscal-led measures to stabilize growth is clearly decoupled from the Federal Reserve's monetary policy direction of "maintaining high interest rates to suppress inflation," making market expectation management increasingly complex.

The tariff policy of the Trump administration has also become one of the dominant variables in the turmoil of the global market in the first half of the year. Since mid-April, the United States has gradually imposed a new round of tariffs ranging from 30% to 50% on China's high-tech products, electric vehicles, and clean energy equipment, and threatened to further expand the scope. These measures are not merely trade retaliation, but more a strategy by the government to create inflationary pressure through "imported inflation," thereby forcing the Federal Reserve to cut interest rates. Against this backdrop, the contradiction between the dollar's credit stability and the interest rate anchor has been pushed to the forefront. Some market participants have begun to question whether the Federal Reserve still has independence, which has led to a repricing of long-term yields on U.S. Treasuries. The yield on the 10-year U.S. Treasury briefly surged to 4.78%, while the yield spread between the 2-year and 10-year notes turned negative again in June, raising expectations of an economic recession.

At the same time, the ongoing escalation of geopolitical tensions is having a substantial impact on market sentiment. In early June, Ukraine successfully destroyed the Russian strategic bomber TU-160, triggering a high-intensity verbal clash between NATO and Russia; meanwhile, in the Middle East, key Saudi oil infrastructure was reportedly attacked by Houthi forces at the end of May, leading to a deterioration in crude oil supply expectations and causing Brent crude prices to exceed $130, reaching a new high since 2022. Unlike the market response in 2022, this round of geopolitical events did not drive a synchronous rise in Bitcoin and Ethereum; instead, it prompted a significant influx of risk-averse funds into gold and short-term U.S. Treasury markets, with spot gold prices briefly breaking through $3450. This shift in market structure indicates that Bitcoin is still viewed more as a liquidity trading instrument rather than a macro hedging asset at this stage.

From the perspective of global capital flows, there is a clear trend of "de-emerging market" in the first half of 2025. IMF data and JP Morgan's cross-border capital tracking show that net outflows from emerging market bonds in Q2 reached the highest level since the pandemic started in March 2020, while the North American market gained relative net inflows due to the stability brought by ETFization. The crypto market has not been completely isolated. Although Bitcoin ETFs have seen net inflows exceeding $6 billion this year and performed strongly, small and mid-cap tokens and DeFi derivatives have experienced large-scale capital outflows, indicating significant signs of "asset stratification" and "structural rotation."

In summary, the first half of 2025 presents a highly structured uncertain environment: sharp fluctuations in monetary policy expectations, fiscal policy intentions spilling over into dollar credit, frequent geopolitical events constituting new macro variables, capital flowing back to developed markets, and the restructuring of risk-averse funds, all of which lay a complex foundation for the operating environment of the crypto market in the second half of the year. It is not merely a question of "whether to cut interest rates," but rather a multifaceted battleground surrounding the reconstruction of dollar-pegged credit, the contest for global liquidity dominance, and the integration of digital asset legitimacy. In this battle, crypto assets will seek structural opportunities within institutional gaps and liquidity redistribution. The next phase of the market will no longer belong to all coins, but to investors who understand the macro landscape.

III. The Reconstruction of the Dollar System and the Systematic Evolution of the Role of Cryptocurrencies

Since 2020, the dollar system has been undergoing the deepest structural reconstruction since the collapse of the Bretton Woods system. This reconstruction is not driven by the evolution of payment tools at the technical level, but rather by the instability of the global monetary order itself and a crisis of institutional trust. Against the backdrop of severe fluctuations in the macro environment in the first half of 2025, dollar hegemony faces both internal policy inconsistency and external challenges to its authority through multilateral currency experiments, which profoundly affects the market position, regulatory logic, and asset roles of encryption currencies.

From an internal structural perspective, the biggest problem facing the US dollar credit system is the "erosion of the monetary policy anchoring logic." Over the past decade, the Federal Reserve, as an independent inflation target manager, has had a clear and predictable policy logic: tightening during an overheating economy, easing during downturns, with price stability as the primary goal. However, by 2025, this logic is being gradually eroded by the "strong fiscal-weak central bank" combination represented by the Trump administration. The Biden administration's insistence on fiscal easing and monetary independence has gradually been reshaped by Trump into a "fiscal priority" strategy, the core of which is to use the global dominance of the dollar to export domestic inflation in reverse, indirectly prompting the Federal Reserve to adjust its policy path in line with the fiscal cycle.

The most intuitive manifestation of this policy disconnection is the Ministry of Finance's continuous reinforcement of the shaping of the internationalization path of the US dollar, while bypassing traditional monetary policy tools. For example, the "Compliance Stablecoin Strategic Framework" proposed by the Ministry of Finance in May 2025 clearly supports the realization of global spillover of US dollar assets through on-chain issuance in the Web3 network. Behind this framework lies the intention of the US dollar's "financial state machine" to evolve into a "technology platform state". Its essence is to shape the "distributed currency expansion capability" of the digital dollar through new financial infrastructure, enabling the dollar to continue providing liquidity to emerging markets while circumventing the central bank's balance sheet expansion. This path integrates US dollar stablecoins, on-chain treasury bonds, and the US commodity settlement network into a "digital dollar export system", aiming to strengthen the network effect of US dollar credit in the digital world.

However, this strategy has also raised market concerns about the "disappearance of the boundary between fiat currency and crypto assets." As the dominance of USD stablecoins in crypto trading continues to rise, their essence has gradually evolved into "a digital representation of the dollar" rather than "crypto native assets." Correspondingly, the relative weight of purely decentralized crypto assets such as Bitcoin and Ethereum in the trading system continues to decline. From the end of 2024 to Q2 2025, data shows that in the total trading volume on major global trading platforms, the trading pairs of USDT against other assets increased from 61% to 72%, while the spot trading shares of BTC and ETH both declined. This change in liquidity structure signifies that the dollar credit system has partially "devoured" the crypto market, making USD stablecoins a new source of systemic risk in the crypto world.

Meanwhile, from the perspective of external challenges, the dollar system is facing continuous tests from multilateral currency mechanisms. Countries such as China, Russia, Iran, and Brazil are accelerating the promotion of local currency settlements, bilateral clearing agreements, and commodity-linked digital asset network construction, aiming to weaken the monopoly position of the dollar in global settlements and promote the steady implementation of a "de-dollarization" system. Although no effective network has yet been formed to counter the SWIFT system, its "infrastructure replacement" strategy has already created marginal pressure on the dollar settlement network. For example, the China-led e-CNY is accelerating cross-border payment interface connections with several countries in Central Asia, the Middle East, and Africa, and exploring the use cases of central bank digital currencies in oil, gas, and bulk commodity transactions. In this process, crypto assets are caught between two systems, and their "institutional affiliation" issue is becoming increasingly blurred.

Bitcoin, as a special variable in this landscape, is shifting its role from "decentralized payment tool" to "sovereignty-agnostic anti-inflation asset" and "liquidity channel under institutional gaps." In the first half of 2025, Bitcoin was widely used in several countries and regions to hedge against local currency depreciation and capital controls, especially in currency-volatile countries like Argentina, Turkey, and Nigeria, where the "grassroots dollarization network" composed of BTC and USDT became an important tool for residents to hedge risks and store value. On-chain data shows that in the first quarter of 2025, the total amount of BTC flowing into Latin America and Africa through peer-to-peer trading platforms increased by over 40% year-on-year, and these transactions significantly avoided domestic central bank regulation, reinforcing Bitcoin's function as a "grey hedge asset."

However, it is important to be vigilant, as Bitcoin and Ethereum have not yet been integrated into the national credit logic system, their risk resistance capabilities remain insufficient when facing "policy stress tests." In the first half of 2025, U.S. regulators continued to strengthen their oversight of DeFi projects and anonymous trading protocols, particularly launching a new round of investigations targeting cross-chain bridges and MEV relay nodes within the Layer 2 ecosystem, prompting some funds to choose to exit high-risk.