2025 Second Half Crypto Market Outlook Report

I. Summary

In the first half of 2025, the global macro environment continues to be highly uncertain. The Federal Reserve has repeatedly paused interest rate cuts, reflecting that monetary policy has entered a "wait-and-see tug-of-war" phase, while increased tariffs and escalating geopolitical conflicts further tear apart the global risk appetite structure. From five macro dimensions, combined with on-chain data and financial models, we systematically assess the opportunities and risks in the crypto market for the second half of the year, and propose three core strategic recommendations covering Bitcoin, stablecoin ecosystems, and DeFi derivatives sectors.

II. Review of the Global Macroeconomic Environment (First Half of 2025)

In the first half of 2025, the global macroeconomic landscape continues to exhibit multiple characteristics of uncertainty. Under the interplay of multiple factors such as weak growth, sticky inflation, unclear monetary policy outlook, and escalating geopolitical tensions, there is a significant contraction in global risk appetite. The dominant logic of macroeconomics and monetary policy has gradually evolved from "inflation control" to "signal games" and "expectation management." The crypto market, as a frontline field of global liquidity changes, also demonstrates typical synchronous fluctuations in this complex environment.

At the beginning of 2025, the market had reached a consensus on the expectation of "three interest rate cuts within the year", but this optimistic expectation was soon hit by reality. In the March meeting, the central bank emphasized that "inflation is far from reaching the target" and warned that the labor market remains tight. Subsequently, the CPI in April and May rose more than expected year-on-year for two consecutive months, and the core PCE year-on-year growth rate has consistently remained above 3%, reflecting that "sticky inflation" has not faded as the market expected.

Faced with the pressure of rising inflation again, the central bank chose to "pause interest rate cuts" in the June meeting and lowered its expectation for the number of interest rate cuts in 2025 from three adjustments at the beginning of the year to two. This marks a shift in monetary policy from "directional" guidance to "timing" management, significantly increasing the uncertainty of the policy path.

In the first half of 2025, a phenomenon of "increasing split" between fiscal policy and monetary policy is also evident. The government accelerates the promotion of the strategy combination of "strong dollar + strong borders". In mid-May, the Ministry of Finance announced that it would optimize the debt structure through various financial means, including promoting the compliance legislative process for dollar stablecoins, attempting to leverage Web3 and fintech products to spill over dollar assets, and achieving liquidity injection without significantly expanding the balance sheet. This series of fiscal-led measures to stabilize growth is clearly decoupled from the central bank's monetary policy direction of "maintaining high interest rates to suppress inflation," making market expectation management increasingly complex.

The tariff policy has also become one of the dominant variables driving global market turmoil in the first half of the year. Starting from mid-April, a new round of tariffs ranging from 30% to 50% has been imposed on certain imported goods, with threats of further expansion. These measures are not merely trade retaliation; they are more aimed at creating inflation pressure through "imported inflation" to compel the central bank to lower interest rates. Against this backdrop, the contradiction between the stability of the US dollar's credit and the interest rate anchor has come to the forefront. Some market participants have begun to question whether the central bank still has independence, leading to a re-pricing of long-term yields. The 10-year yield once surged to 4.78%, and the yield spread between the 2-year and 10-year turned negative again in June, raising recession expectations once more.

At the same time, the ongoing escalation of geopolitical tensions has had a substantial impact on market sentiment. In early June, Ukraine successfully destroyed Russian strategic bombers, triggering a high-intensity verbal exchange between NATO and Russia; meanwhile, in the Middle East, key oil infrastructure in Saudi Arabia was reportedly attacked at the end of May, leading to concerns over crude oil supply and pushing Brent crude prices above $130, a new high since 2022. Unlike the market reaction in 2022, this round of geopolitical events did not drive a simultaneous rise in Bitcoin and Ethereum; instead, it led to a significant inflow of risk-averse funds into the gold and short-term bond markets, with gold spot prices temporarily surpassing $3450. This shift in market structure indicates that Bitcoin is still viewed more as a liquidity trading asset rather than a macro hedge asset at this stage.

From the perspective of global capital flows, there is a clear tendency of "de-emerging market" in the first half of 2025. Data shows that the net outflow of funds from emerging market bonds in Q2 reached the highest level since the pandemic began in March 2020, while the North American market experienced a relative net inflow of funds due to the stability brought by ETFs. The crypto market has not been completely isolated. Although Bitcoin ETFs have seen a cumulative net inflow of over $6 billion this year, showing strong performance, small and mid-cap tokens and DeFi derivatives have faced 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: severe tug-of-war over monetary policy expectations, fiscal policy intentions spilling over into USD credit, frequent geopolitical events creating new macro variables, capital flowing back to developed markets, and a reconfiguration of safe-haven funding structures, all of which lay a complex foundation for the operation of the crypto market in the second half of the year. It is not just a simple question of "whether to cut interest rates," but rather a multi-faceted battlefield surrounding the reconstruction of credit anchored by the USD, the struggle for global liquidity dominance, and the integration of the legitimacy of digital assets. In this battle, crypto assets will seek structural opportunities in institutional gaps and liquidity redistribution. The next stage of the market will no longer belong to all coins, but to investors who understand the macro landscape.

3. The Reconstruction of the Dollar System and the Systematic Evolution of the Role of Cryptocurrency

Since 2020, the dollar system has been undergoing the most profound structural reconstruction since the collapse of the Bretton Woods system. This reconstruction is not driven by the evolution of payment tools at a technical level, but rather by the instability of the global monetary order 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 not only internal policy inconsistency but also external challenges to its authority in the form of multilateral currency experiments, which profoundly affect the market position, regulatory logic, and asset roles of cryptocurrencies.

From an internal structural perspective, the biggest problem facing the US dollar credit system is the "erosion of the logic of monetary policy anchoring." Over the past decade or so, central banks, as independent managers of inflation targets, have had a clear and predictable policy logic: tightening during economic overheating and loosening 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. The previous insistence on the independence of monetary policy from fiscal policy has gradually been reshaped into a "fiscal priority" strategy, the core of which is to leverage the global dominance of the US dollar to export domestic inflation in reverse, indirectly prompting central banks to adjust their policy paths in line with fiscal cycles.

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 explicitly supports the global spillover of US dollar assets through on-chain issuance in the Web3 network. The intention reflected behind this framework is the evolution of the US dollar from a "financial national machine" to a "tech platform state". Its essence is to shape the "distributed currency expansion capability" of the digital dollar through new financial infrastructure, allowing the US dollar to continue providing liquidity to emerging markets while bypassing central bank balance sheet expansion. This path integrates US dollar stablecoins, on-chain national 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 concerns in the market about the "disappearance of the boundary between fiat currency and encryption assets." As the dominance of the US dollar stablecoin in crypto trading continues to rise, its essence has gradually evolved into a "digital representation of the US dollar" rather than "crypto native assets." Accordingly, purely decentralized encryption assets like Bitcoin and Ethereum have seen a continuous decline in their relative weight within the trading system. 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 rose from 61% to 72%, while the spot trading proportions of BTC and ETH both declined. This change in liquidity structure marks that the US dollar credit system has partially "swallowed" the crypto market, with US dollar stablecoins becoming a new source of systemic risk in the crypto world.

At the same time, from the perspective of external challenges, the dollar system is facing ongoing 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 the construction of commodity-linked digital asset networks, with the aim of weakening the dollar's monopoly position in global settlements and promoting the steady implementation of a "de-dollarization" system. Although an effective network to counter the SWIFT system has not yet formed, its "infrastructure replacement" strategy has already exerted marginal pressure on the dollar settlement network. For example, the e-CNY, led by China, is accelerating the cross-border payment interface connectivity with multiple countries in Central Asia, the Middle East, and Africa, and exploring the use scenarios of central bank digital currencies (CBDC) 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.

As a special variable in this pattern, Bitcoin's role is shifting from "decentralized payment tool" to "sovereignty-free anti-inflation asset" and "liquidity channel under institutional gaps". In the first half of 2025, Bitcoin is being widely used in some countries and regions to hedge against local currency depreciation and capital controls, especially in unstable currency countries such as Argentina, Turkey, and Nigeria, where the "grassroots dollarization network" formed by BTC and USDT has become an important tool for residents to hedge risks and achieve value storage. 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, significantly bypassing local regulations and strengthening Bitcoin's function as a "gray hedge asset."

However, it is important to be vigilant that, because Bitcoin and Ethereum have not yet been incorporated into the national credit logic system, their risk resistance capabilities are still insufficient when facing "policy stress tests." In the first half of 2025, regulatory agencies will continue to strengthen their oversight of DeFi projects and anonymous trading protocols, especially 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 DeFi protocols. This reflects that during the process of the dollar system re-dominating the market narrative, crypto assets must reposition their roles, no longer symbolizing "financial independence," but more likely becoming tools for "financial integration" or "institutional hedging."

The role of Ethereum is also undergoing a transformation. Alongside its dual evolution into a data-verifiable layer and a financial execution layer, its underlying functions are gradually evolving from a "smart contract platform" to an "institutional access platform." Whether it's the on-chain issuance of RWA assets or the deployment of government/corporate stablecoins, an increasing number of activities will integrate Ethereum into their compliance framework. Several traditional financial institutions have deployed infrastructure on Ethereum-compatible chains, forming an "institutional layer" with the DeFi native ecosystem. This means that Ethereum's institutional position as a "financial middleware" has been restructured, and its future direction is not determined by the "degree of decentralization," but rather by the "degree of institutional compatibility."

The dollar system is regaining dominance in the digital asset market through three paths: technological spillover, institutional integration, and regulatory penetration. Its goal is not to eliminate encryption assets, but to make them an embedded component of the "digital dollar world." Bitcoin, Ethereum, stablecoins, and RWA assets will be reclassified, revalued, and re-regulated, ultimately forming a "Pan-Dollar System 2.0" anchored by the dollar and represented by on-chain settlement. In this system, true encryption assets are no longer "rebels," but have become "arbitrageurs in the institutional gray area." The future investment logic will no longer be just about "decentralization.