Review of the First Half of 2025: The crypto market shows resilience, with new engines poised for the second half.

In the first half of 2025, the global economy faces the dual pressures of delayed interest rate cuts and geopolitical turmoil, leading to turbulence across most asset classes. However, Bitcoin has led the encryption market in demonstrating strong rebound capabilities, completing a remarkable turnaround. As the major events of the second half are about to unfold, what key drivers are brewing in the market?

At the beginning of the year, there were widespread expectations that the U.S. economy would experience significant fluctuations, but the actual situation has shown a "soft landing" with a steady decline. The job market has remained relatively stable, with 139,000 new jobs added in May and an unemployment rate of 4.2%, with wages increasing by 3.9% year-on-year. This indicates that while there are signs of a slowdown in the labor market, it remains healthy. Meanwhile, inflation data has come in lower than expected, with the core CPI rising 2.7% year-on-year in June, showing a slight decline compared to the previous period. The market generally expects that the Federal Reserve will start cutting interest rates in September rather than July.

However, the risk of stagflation is intensifying. A well-known financial institution has warned that the expected GDP growth rate in the United States for 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 differences within the Federal Reserve regarding the path of interest rate cuts; the chairman emphasizes 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 is underpinned by the contradiction between inflation and growth: premature rate cuts may exacerbate inflation, while delayed action may accelerate economic recession.

The key variable lies in the lagged effects of tariffs. The Federal Reserve Chair pointed out that the transmission of tariffs to prices may become evident in the coming months, with inflation data for June to August possibly showing a "significant increase." One possible explanation is that companies previously alleviated short-term shocks by stocking up 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 become key decision-making references. If the data confirms that inflationary pressures are controllable, the Federal Reserve may reduce interest rates as planned in September; if inflation exceeds expectations, the market may face the impact of "hawkish delay," potentially even recreating the stagflation dilemma of the 1970s. In this game of interest rate cuts and stagflation, every decision made by the Federal Reserve will profoundly influence the direction of the global market.

Despite the weak economic data in the United States, the market still focuses on expectations of policy easing. The Fed's interest rate cut expectations for June 2025, breakthroughs in stablecoin regulation, and the rebound of tech stocks have driven the overall US stock market to show a fluctuating upward trend: the S&P 500 rose 4.96% for the month, and the Nasdaq rose 5.93%, with multiple new historical highs set during this period.

It is worth mentioning that the performance of crypto stocks, represented by a certain stablecoin giant, has been exceptional: after the company went public on the NYSE on June 5, its stock price soared over 600%, making it one of the most eye-catching fintech IPOs of 2025; the stock price of a well-known digital currency exchange 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 for the first time, requiring issuing entities to maintain reserves of 1:1 dollars or short-term U.S. Treasury bonds, and prohibits algorithmic stablecoins and interest-bearing stablecoins. The compliance advantage of a globally second-largest stablecoin (with a market cap of $61 billion) has become the preferred choice for institutions, and the explosive growth of its parent company's stock after going public reflects the strong market expectations for "regulatory dividends."

The trend of "stock issuance for cryptocurrency purchase" on the enterprise side further strengthens the logic of the linkage between stocks and cryptocurrencies. According to a certain report, as of April 2025, a total of 228 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 and an unrealized profit exceeding 200%.

Some tech giants are increasing their Bitcoin holdings through convertible bond financing, incorporating digital assets into the structural allocation of their balance sheets, thus forming a new capital operation model of "issuing shares to purchase coins." This shift in corporate entry from "strategic deployment" to "institutional acceptance" not only supports Bitcoin prices (up 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 credit card companies, validating the business potential of relevant 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 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 institutional capital inflows, and the boundaries between the traditional stock market and the crypto market will further merge, strengthening the "coin-stock linkage." Crypto stocks may continue to be strong and become the core driver of structural trends in the U.S. stock market.

In June, Bitcoin prices demonstrated resilience amid a complex situation: when the Middle East conflict suddenly escalated in mid-June, Bitcoin briefly fell below the $100,000 mark but quickly recovered and returned above $100,000, moving independently and gradually decoupling from traditional risk assets. A recent study by a certain exchange and an on-chain analysis firm shows that institutional investors continue to increase 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 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 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.

In June, the wave of institutionalization reached new heights, as the global crypto ETF scale surpassed the milestone of $1.1 trillion, with a single asset management company's Bitcoin ETF attracting a net inflow of $4.9 billion in just one month. Even more noteworthy is the qualitative change in the participation of traditional financial institutions; for example, a certain investment bank has started to provide Bitcoin collateralized loan services in collaboration with a certain exchange, a level of participation that far exceeds Wall Street's tentative layout 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 indicates that periods of interest rate cuts by the Federal Reserve are typically accompanied by significant increases in Bitcoin.

On the regulatory front, the passage of the stablecoin bill in the United States and the establishment of the stablecoin licensing system in Hong Kong 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 at the White House revealed 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 mandate the Treasury to disclose the government's holdings of Bitcoin, and we can expect it to actively publish related 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 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 stage driven purely by speculation.

The head of digital assets research at a certain bank once predicted that Bitcoin's target price by the end of 2025 would be $200,000. The dominant narrative behind this round of market activity has shifted from being linked with 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 about price fluctuations, 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 where the traditional financial system and the digital currency ecosystem achieve deep coupling.

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 favorable factors such as a possible interest rate cut by the Federal Reserve, continued growth in corporate encryption adoption, and clarification of regulatory policies, a new period of steady development is expected.