Review of the First Half of 2025: A New Engine in the Crypto Market is Brewing

In the first half of 2025, the global asset market is generally under pressure from the dual pressures of delayed interest rate cuts and geopolitical turmoil. However, Bitcoin has led the entire crypto market in achieving a remarkable rebound, demonstrating strong resilience and growth potential. As the second half of the year is about to unfold, what key drivers are brewing in the market?

At the beginning of this year, the market widely expected a severe downturn in the U.S. economy, but the actual situation has shown a steady "soft landing" trend. The job market remains resilient, with 139,000 non-farm jobs added in May, an unemployment rate of 4.2%, and a year-on-year wage growth of 3.9%. These figures indicate that although the labor market is slowing down, it remains relatively robust. At the same time, inflation data came in below expectations, with the core CPI rising 2.7% year-on-year in June, slightly down from the previous value. The market generally anticipates that the Federal Reserve will begin cutting interest rates in September rather than July.

However, the risk of stagflation is intensifying. A major investment bank warned that the expected GDP growth rate in the U.S. for 2025 has been revised down from 2% to 1.3%. The tariff policy may push up inflation and suppress growth, trapping the economy in a "stagflation" dilemma. There are differences within the Federal Reserve regarding the path to interest rate cuts; Chairman Powell emphasized that there is "no rush to ease policy," while some officials advocate for early rate cuts to guard against economic downturn risks. Behind this policy game is the contradiction between inflation and growth: cutting rates too early may exacerbate inflation, while acting too late may accelerate economic recession.

The lagging effect of tariffs is a key variable. Powell pointed out that the transmission of tariffs to prices may become apparent in the coming months, with inflation data in June to August potentially showing a "significant increase." One possible explanation is that companies previously alleviated 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 forced 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 employment and CPI data for July will be key decision-making references. If the data confirms that inflationary pressures are manageable, the Federal Reserve may lower interest rates as planned in September; if inflation rises beyond expectations, the market may face the impact of a "hawkish delay," potentially even replicating the stagflation dilemma of the 1970s. In this game between interest rate cuts and stagflation, every decision made by the Federal Reserve will profoundly affect the direction of the global market.

Despite the weak economic data in the United States, the market is still focused on expectations of policy easing. The expected interest rate cuts by the Federal Reserve in June 2025, breakthroughs in stablecoin regulation, and the rebound of tech stocks have driven the overall U.S. stock market to show a volatile 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.

The most noteworthy is the performance of crypto stocks represented by stablecoin-related companies. A stablecoin company saw its stock price soar over 600% after listing on the New York Stock Exchange on June 5, making it one of the most impressive fintech IPOs of 2025; another major cryptocurrency exchange also experienced a monthly stock price increase of 43%.

Behind this surge is the first federal regulatory bill for stablecoins, the "GENIUS Act" ("Guiding and Establishing the National Innovation of Dollar Stablecoins Act"), passed by the U.S. Senate on June 17. This bill establishes a federal regulatory framework for stablecoins for the first time, requiring issuing institutions to hold reserves of 1:1 dollars or short-term U.S. Treasury bonds, and prohibiting algorithmic stablecoins and interest-bearing stablecoins. The establishment of this regulatory framework provides a huge development opportunity for compliant stablecoins.

It is noteworthy that Bitcoin demonstrated strong resistance during the market downturn in 2025, with its decline significantly narrowing and volatility decreasing. This reflects that as institutional investors enter the market, the crypto market is gradually maturing.

The trend of "issuing shares to purchase coins" on the corporate side has further strengthened the logic of the linkage between stocks and cryptocurrencies. According to statistics, as of April 2025, a total of 228 listed companies worldwide held 820,000 bitcoins. Some technology giants have increased their holdings of bitcoins through convertible bond financing, 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 participation shifting from "strategic deployment" to "institutional acceptance" not only supports the price of bitcoin (which rose by 10.6% in the first half of 2025) but also enhances the legitimacy and market recognition of crypto assets.

Looking ahead to the second half of the year, if the "GENIUS Act" is passed in the House of Representatives and signed by the President, it will officially usher in a new era of stablecoin regulation. Compliance is expected to accelerate the influx of institutional funds, further blurring the boundaries between the traditional stock market and the crypto market, strengthening the "coin-stock linkage," and crypto-related stocks may continue to perform strongly, becoming an important driving force behind the structural trend in US stocks.

In June, the price of Bitcoin demonstrated resilience amid a complex situation. Despite the sudden escalation of conflicts in the Middle East in mid-June, Bitcoin briefly fell below the $100,000 mark, but quickly recovered and returned above $100,000, performing independently and gradually decoupling from traditional risk assets. Recent research 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.

Reflecting on the first half of 2025, the crypto market may be experiencing the most profound paradigm shift since its inception. Its development trajectory can no longer be simply defined by market sentiment or technical indicators, but rather presents 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 ETF scale surpassing the milestone of $1.1 trillion. More notably, the level of participation from traditional financial institutions is undergoing a qualitative change. For example, a major investment bank has started offering Bitcoin collateralized loan services, which goes far beyond the tentative layouts of Wall Street during the bull market of 2021. Meanwhile, the Federal Reserve's shift in monetary policy is expected to inject new variables into the market. Historical data shows that the Fed's interest rate cut cycles are usually accompanied by significant increases in Bitcoin.

In terms of regulation, the passage of the U.S. "GENIUS Act" and the establishment of Hong Kong's stablecoin licensing system mark the initial compliance framework that major financial centers have built for digital assets. This policy certainty is attracting more traditional capital to enter 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 executive order from March this year did not require the Treasury to disclose the government's Bitcoin holdings, and we can expect them to actively publish relevant information in the second half of the year. The advisor also added that the U.S. government "is highly inclined" to increase its Bitcoin holdings in a budget-neutral manner. This means that the U.S. government will provide funding support for Bitcoin purchases through internal fund restructuring or spending cuts without increasing the fiscal deficit or the tax 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 phase driven purely by speculation.

A research director of a bank's digital assets once predicted that Bitcoin's target price 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, with funds pouring in in various forms. Bitcoin is becoming a tool for reallocating capital away from U.S. assets, indicating that this surge is not just a price fluctuation but also a reflection of global capital allocation and macroeconomic trends. In this sense, 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.

The current BTC price remains in the high range of $100,000 to $120,000. Looking ahead to the second half of the year, with multiple positive factors such as a possible Federal Reserve interest rate cut, continued growth in corporate encryption adoption, and clarification of regulatory policies, a new period of steady development is expected.