Review of the First Half of 2025 and Outlook for the Second Half: New Momentum in the Crypto Market

In the first half of 2025, amidst global economic uncertainty and turbulent geopolitical situations, most asset classes performed moderately. However, the crypto market, led by Bitcoin, has shown remarkable resilience and growth potential, successfully achieving an upward trend against the odds. As the second half of the year is about to begin, some key development trends are brewing in the market.

The U.S. economy was generally expected to experience a significant decline at the beginning of the year, but in reality, it has shown a steady cooling "soft landing" trend. The job market remains relatively stable, with 139,000 new jobs added in May, an unemployment rate of 4.2%, and a year-on-year wage growth of 3.9%. These data indicate that although there is a slight slowdown in the labor market, it remains healthy overall. Inflation data is also below expectations, with the core CPI rising 2.7% year-on-year in June, a slight decline from previous periods. The market generally anticipates that the Federal Reserve will start cutting interest rates in September rather than July.

However, the risk of stagflation facing the economy is intensifying. Financial institutions warn that the expected GDP growth rate for the U.S. in 2025 has been revised down from 2% to 1.3%. Tariff policies may drive up inflation and suppress growth, trapping the economy in a "stagflation" dilemma. There are differing views within the Federal Reserve regarding the interest rate cut path; some officials advocate for an early rate cut to guard against economic downturn risks, while the Chair emphasizes a "lack of urgency to ease policies." This policy game reflects the contradiction between inflation and growth: cutting rates too early may exacerbate inflation, while acting too late may accelerate economic recession.

The lagging impact of tariffs has become a key variable. There is a view that the transmission of tariffs to prices may become evident in the coming months, with inflation data for June to August potentially showing a "significant increase." This may be because 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, there remains a high degree of uncertainty regarding policy direction. The non-farm employment and CPI data for July will become key decision-making criteria. If the data shows that inflationary pressure is controllable, the Federal Reserve may lower interest rates as planned in September; if inflation rises above expectations, the market may face the impact of policy tightening, even reproducing the stagflation dilemma of the 1970s. In this game of interest rate cuts and stagflation, every decision made by the Federal Reserve will profoundly impact the direction of the global market.

Despite weak economic data, the market remains focused on expectations of policy easing. In June 2025, driven by expectations of interest rate cuts from the Federal Reserve, breakthroughs in stablecoin regulation, and a rebound in tech stocks, the U.S. stock market showed an overall upward trend with fluctuations: the S&P 500 rose 4.96% for the month, and the Nasdaq increased by 5.93%, with multiple new historical highs being set during this period.

The most striking is the crypto-related stocks represented by a certain stablecoin giant, which have outperformed others by a wide margin: the company’s stock price surged over 600% after its listing on the NYSE on June 5, becoming one of the most outstanding fintech IPOs of 2025; another well-known crypto market trading platform's stock also saw a monthly increase of 43%.

The surge behind this increase is the first federal regulation bill for stablecoins passed by the U.S. Senate, which establishes a federal regulatory framework for stablecoins for the first time, clarifying that issuing institutions must hold reserves of 1:1 with U.S. dollars or short-term U.S. Treasury bonds, and prohibits algorithmic stablecoins and interest-bearing stablecoins. The stablecoin issued by a certain company is the second largest stablecoin globally, with a market value of $61 billion, and its compliance advantages make it the preferred choice for institutions. The explosive growth after its listing reflects the market's strong expectations for "regulatory dividends."

The trend of "stock issuance to purchase cryptocurrencies" on the enterprise side has further strengthened the logic of the linkage between stocks and cryptocurrencies. According to the report, as of April 2025, a total of 228 publicly listed companies worldwide hold 820,000 bitcoins, with one company holding nearly 600,000 bitcoins, accounting for 2.5% of the total bitcoin supply, with an average cost of about $68,000, resulting in an unrealized profit of over 200%.

Some tech giants have increased their Bitcoin holdings through convertible bonds, incorporating digital assets into the structural allocation of their balance sheets, forming a new capital operation model of "issuing stocks to purchase coins." This trend of corporate entry shifting from "strategic deployment" to "institutional acceptance" not only supported the price of Bitcoin (which rose 10.6% in the first half of 2025) but also enhanced the legitimacy and market recognition of crypto assets. An executive from a company stated: "Bitcoin has become the core asset for companies to combat inflation, and we are pushing for it to become the global reserve standard." Data from a certain bank shows that the settlement volume of stablecoins reached $28 trillion in 2024, surpassing the combined total of the two major credit card companies, validating the business potential of stablecoin issuing institutions and revealing the ability of blockchain payments to reshape the global clearing system.

Looking ahead to the second half of the year, if the aforementioned bill is passed in the House and signed by the President, it will officially usher in a new era of stablecoin regulation. Compliance will accelerate the inflow 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 their strong performance, becoming a core driver of the structural market in the US stock market.

In June, Bitcoin prices 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 recovered and returned above $100,000, moving in an independent trend and gradually decoupling from traditional risk assets. Research shows that institutional investors are continuously increasing their holdings through channels like ETFs, and the structural changes in the market are reshaping its volatility characteristics.

Looking back at the first half of 2025, although short-term prices are still mainly influenced by capital supply and geopolitical conflicts, fundamentally, 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 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 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 one month. More notably, the level of participation by traditional financial institutions is undergoing a qualitative change; for example, a certain investment bank has started to offer Bitcoin collateralized loan services in partnership with a cryptocurrency trading platform, which represents a much deeper level of participation than Wall Street's tentative layouts during the 2021 bull market. Meanwhile, the Federal Reserve's shift in monetary policy is expected to inject new variables into the market, with historical data indicating that a Fed rate cut cycle is usually accompanied by significant increases in Bitcoin.

In terms of regulation, the passage of relevant legislation in the United States and the establishment of a stablecoin licensing system in Hong Kong mark the initial compliance framework for digital assets set up by major financial centers. This policy certainty is attracting more traditional capital to enter the market.

In addition, there are reports that the United States is working to build a strategic Bitcoin reserve infrastructure. The executive order issued by the president in March this year did not require the Treasury to disclose the government's Bitcoin holdings, and we can expect it to proactively release relevant information in the second half of the year. It is reported 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 cost savings without increasing the fiscal deficit or taxpayer burden.

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.

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 trend has shifted from being linked to risk assets to being driven by capital flows, with funds pouring in through various forms. Bitcoin is becoming a tool for reallocating funds away from U.S. assets, indicating that this rise 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 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 interest rate cut by the Federal Reserve, continued growth in corporate encryption adoption, and clearer regulatory policies, a new round of steady development is expected.