Review of the crypto market in the first half of 2025 and outlook for the second half

In the first half of 2025, the global economy faces numerous challenges. Against the backdrop of the Federal Reserve delaying interest rate cuts and geopolitical turmoil, most asset classes have performed poorly. However, Bitcoin and the entire crypto market have demonstrated strong resilience, achieving a beautiful rebound. As the second half of the year is about to unfold, what key variables are brewing in the market?

At the beginning of the year, there were widespread expectations that the U.S. economy would fall into recession. However, the actual situation is that the economy is exhibiting a steady decline with a "soft landing" trend. The job market remains relatively stable, with 139,000 new jobs added in May and an unemployment rate of 4.2%, while wages grew by 3.9% year-on-year. This indicates that although the labor market is slowing down, it remains robust. Meanwhile, inflation data came in lower than expected, with June's core CPI rising 2.7% year-on-year, slightly down from the previous value. The market generally expects the Federal Reserve to initiate interest rate cuts in September rather than July.

However, the risk of stagflation is intensifying. A large financial institution warned that the forecast for U.S. GDP growth in 2025 has been downgraded from 2% to 1.3%, and tariff policies may drive up inflation and suppress growth, trapping the economy in a "stagflation" dilemma. There are divisions within the Federal Reserve regarding the path of interest rate cuts, with the Chair emphasizing that there is "no rush to ease policy," while some officials advocate for early rate cuts to guard against economic downturn risks. This policy game reflects the contradiction between inflation and growth: premature rate cuts may exacerbate inflation, while delayed action may accelerate economic recession.

The lagging effects of tariffs are a key variable. The Federal Reserve Chairman pointed out that the transmission of tariffs to prices may become apparent in the coming months, with inflation data in June to August possibly showing "significant increases." This may be due to businesses previously mitigating short-term shocks by stockpiling in advance, but as inventory is depleted, rising import costs will gradually push up end prices. If inflation rebounds, the Federal Reserve may be compelled to delay interest rate cuts or even pause the easing cycle, further reinforcing stagflation expectations.

Looking ahead to the second half of the year, the policy path remains highly uncertain. The non-farm payroll and CPI data in July will serve as key decision-making references. If the data confirms that inflationary pressures are manageable, the Federal Reserve may lower interest rates in September as planned; if inflation rises beyond expectations, the market may face the impact of a "hawkish delay," potentially even revisiting the stagflation predicament of the 1970s. Every decision made by the Federal Reserve will profoundly affect the direction of global markets.

Despite weak economic data, the market remains focused on expectations for policy easing. In June 2025, expectations for an interest rate cut by the Federal Reserve, breakthroughs in stablecoin regulation, and a rebound in tech stocks drove the overall US stock market to show a fluctuating upward trend: the S&P 500 rose 4.96% for the month, and the Nasdaq increased by 5.93%, repeatedly setting new historical highs during this period.

It is worth noting that a stablecoin giant company went public on the New York Stock Exchange on June 5, and its stock price soared over 600%, becoming one of the most outstanding fintech IPOs of 2025. The stock of another crypto market trading platform also saw a monthly increase of 43%.

Behind this surge is the first federal regulatory bill for stablecoins passed by the U.S. Senate on June 17, which establishes a federal regulatory framework for stablecoins, requiring issuing institutions to hold reserves of 1:1 dollar or short-term U.S. Treasury bonds, and prohibiting algorithmic stablecoins and interest-bearing stablecoins. The stablecoin USDC is the second largest stablecoin in the world (with a market value of $61 billion), and its compliance advantages have made it the preferred choice for institutions, with the post-listing surge reflecting the market's strong expectations for "regulatory dividends."

The trend of "stock issuance and cryptocurrency purchase" on the enterprise side further strengthens the logic of the linkage between stocks and cryptocurrencies. As of April 2025, a total of 228 listed companies worldwide hold 820,000 Bitcoins, of which a certain company holds nearly 600,000 (accounting for 2.5% of the total Bitcoin supply), with an average cost of approximately $68,000, resulting in a floating profit of over 200%.

Several technology giants are financing through convertible bonds to increase their Bitcoin holdings, incorporating digital assets into the structural allocation of their balance sheets, forming a new capital operation model of "issuing shares to purchase coins." This trend of corporate entry shifting from "strategic deployment" to "institutional acceptance" not only supports the price of Bitcoin (which rose 10.6% in the first half of 2025) but also enhances the legitimacy and market recognition of crypto assets. Data from a certain bank shows that the settlement volume of stablecoins reached $28 trillion in 2024, surpassing the total of the two major mainstream payment networks, revealing the ability of blockchain payments to reshape the global clearing system.

Looking ahead to the second half of the year, if the stablecoin bill passes the House of Representatives and is signed by the President, it will officially usher in a new era of stablecoin regulation. Compliance will accelerate the inflow of institutional funds, the boundaries between the traditional stock market and the crypto market will further merge, reinforcing the "coin-stock linkage," and encryption stocks may continue to perform strongly, becoming a core driver of the structural trend in the U.S. stock market.

In June, Bitcoin showed resilience amidst a complex situation. When conflicts in the Middle East suddenly escalated in mid-June, Bitcoin briefly fell below the $100,000 mark but quickly rebounded above $100,000, moving into an independent trend and gradually decoupling from traditional risk assets. Research by a certain exchange and an on-chain analysis firm shows that institutional investors are continuously increasing their holdings through channels such as ETFs, and the structural changes in the market are reshaping its volatility characteristics.

Looking back at the first half of 2025, although short-term price influencing factors are still dominated by capital supply and geopolitical conflicts, on a more fundamental level, the crypto market may be undergoing the most profound paradigm shift since its inception. Its development trajectory can no longer be simply defined by market sentiment or technical indicators, but is instead showing new vitality under the combined forces of technology, capital, regulation, and ecology. The market performance in June clearly reveals that this industry is gradually transforming into a mature digital asset infrastructure.

The wave of institutionalization reached new heights in June, with the global crypto market ETF size surpassing the milestone of $1.1 trillion, and a certain asset management company's Bitcoin ETF alone attracted a net inflow of $4.9 billion in a single month. More notably, the level of participation by traditional financial institutions is undergoing a qualitative change; for example, a certain investment bank has begun to offer Bitcoin collateral loan services in collaboration with cryptocurrency trading platforms, a level of involvement that far exceeds Wall Street's tentative arrangements during the bull market of 2021.

On the regulatory front, the passage of the U.S. stablecoin bill and the establishment of Hong Kong's stablecoin licensing system signify that major financial centers have begun to build a preliminary compliance framework for digital assets. This policy certainty is attracting more traditional capital into the market.

In addition, a digital asset policy advisor from the White House revealed that the U.S. is working on building a strategic Bitcoin reserve infrastructure. The government is "highly inclined" to increase its Bitcoin holdings in a budget-neutral manner, which means that funding support for Bitcoin purchases will come through internal fund restructuring or savings without increasing the fiscal deficit or the burden on taxpayers.

In short, looking back from the midpoint of 2025, the development trajectory of the crypto market has fundamentally differed from the early purely speculative-driven stage. The head of digital asset research at a certain bank once predicted that the target price for Bitcoin by the end of 2025 would be $200,000. The dominant narrative behind this market cycle has shifted from being linked to risk assets to being driven by capital flows, and funds are pouring in through various forms. Bitcoin is becoming a tool for reallocating funds away from U.S. assets, indicating that this rise is not only a price fluctuation, but also a reflection of global capital allocation and macroeconomic trends.

The current Bitcoin price remains in the high range of $100,000 to $120,000. Looking ahead to the second half of the year, with multiple favorable factors such as a possible Federal Reserve interest rate cut, continued growth in corporate encryption adoption, and clearer regulatory policies, a new round of stable development is expected. The second half of 2025 is likely to be a historical turning point for the deep coupling of the traditional financial system and the digital currency ecosystem.