Q2 2025 Crypto Market Analysis: New Opportunities and Challenges in Macroeconomic Restructuring

1. Introduction

In the second quarter of 2025, the crypto market shifted from a high sentiment to a short-term adjustment. Although sectors like Meme, AI, and RWA took turns leading market sentiment, the impact of macroeconomic pressures became increasingly prominent. The global trade situation is turbulent, U.S. economic data is inconsistent, and the ongoing game of expectations around interest rate cuts by the Federal Reserve has led the market into a significant turning point. At the same time, new changes have emerged in policy: certain political figures have shown a more positive attitude towards cryptocurrencies, raising investors' expectations that Bitcoin could become a strategic reserve asset for the nation. We believe that the current market is still in the "mid-term bull market correction phase," but structural opportunities are gradually emerging, and the market pricing benchmark is undergoing a macro-level transformation.

2. Macroeconomic Variables: The old model is collapsing, and the new benchmark has not yet been established.

In May 2025, the crypto market is at a critical juncture of macro-logical reconstruction. The traditional pricing framework is rapidly collapsing, while new valuation benchmarks have yet to form, leading the market to exist in a "vague and anxious" macro environment. From macroeconomic data and central bank policy orientations to marginal changes in global geopolitical and trade relations, all are influencing the behavioral patterns of the entire crypto market in a manner characterized by a "new order in instability."

First, the Federal Reserve's monetary policy is shifting from "data dependency" to a new stage of "political and stagflation pressure games." Recent inflation data shows that although inflationary pressures in the U.S. have eased, overall rigidity remains, especially with the high rigidity of service prices. This, coupled with the structural labor market shortages, makes it difficult for inflation to quickly decline. Although the unemployment rate has shown a marginal increase, it has not yet triggered the threshold for a shift in Federal Reserve policy, leading the market to push back expectations for interest rate cuts from the originally likely June to the fourth quarter or even later. While the Federal Reserve Chair does not rule out the possibility of rate cuts within the year, his remarks emphasize "cautious observation" and "commitment to long-term inflation targets," which makes the expectation of liquidity easing feel even more distant in the face of reality.

This uncertain macro environment directly affects the pricing foundation of crypto assets. In the previous three years, crypto assets enjoyed a valuation premium under the backdrop of "zero interest rates + widespread liquidity easing," but now, after a sustained period of high interest rates in the latter half of the cycle, traditional valuation models face systemic failure. Although Bitcoin has maintained a fluctuating upward trend driven by structural funds, it has never managed to generate the momentum to break through the next important threshold, reflecting that its "alignment path" with traditional macro assets is disintegrating. The market is beginning to move away from applying simple correlation logic and is gradually realizing that crypto assets require independent policy anchors and role anchors.

At the same time, significant changes are occurring in the geopolitical variables affecting the market since the beginning of the year. The previously heated trade disputes have cooled significantly. Recent shifts in focus by certain political teams regarding the "manufacturing return" topic indicate that conflicts are unlikely to escalate further in the short term. This has led to a temporary retreat of the logic of "geopolitical risk aversion + Bitcoin as a risk-hedging asset," and the market is no longer granting a premium to the "safe haven" status of crypto assets, instead seeking new policy support and narrative momentum. This is also an important backdrop for the shift in the crypto market from a structural rebound to high-level fluctuations, and even the continued outflow of funds from certain on-chain assets since mid-May.

At a deeper level, the entire global financial system is facing a systemic process of "anchor point reconstruction." The U.S. dollar index is consolidating at a high level, the interrelationship among gold, government bonds, and U.S. stocks has been disrupted, and crypto assets are caught in between, lacking the endorsement of central banks like traditional safe-haven assets, while not being fully incorporated into the risk control frameworks of mainstream financial institutions. This "neither risk nor safe haven" intermediate state puts the market pricing of major crypto assets in a "relatively ambiguous zone." This ambiguous macro anchor further transmits to downstream ecosystems, leading to bursts in narratives like Meme, RWA, and AI, but they are difficult to sustain. Without the support of macro incremental funds, local prosperity on the chain can easily fall into the "rapid ignition --- quick extinguishment" rotation trap.

We are entering a "de-financialization" turning window dominated by macro variables. At this stage, market liquidity and trends are no longer driven by simple correlations between assets, but rather depend on the redistribution of policy pricing power and institutional roles. If the crypto market wants to welcome the next round of systemic re-evaluation, it must wait for a new macro anchor------it could be the official establishment of Bitcoin as a national strategic reserve asset, or the clear initiation of a rate-cutting cycle, or the acceptance of on-chain financial infrastructure by multiple governments worldwide. Only when these macro-level anchors are truly established will there be a comprehensive return of risk appetite and a resonant upward movement of asset prices.

Currently, what the crypto market needs to do is not to cling to the continuation of old logic, but to calmly recognize the subtle signs of new anchor points emerging. Those funds and projects that can first understand the changes in the macro structure and prepare for the new anchor points in advance will hold the initiative in the next real bull market.

3. Policy Variables: The stablecoin bill has been approved, and the state-level Bitcoin strategic reserve has been implemented, leading to structural expectations.

In May 2025, the U.S. Senate officially passed a legislative proposal regarding stablecoins, becoming one of the most institutionally influential stablecoin legislative proposals globally since the EU's MiCA. The passage of this bill not only marks the establishment of a regulatory framework for USD stablecoins but also sends a clear signal: stablecoins are no longer a technical experiment or a gray financial tool, but rather a core part of the sovereign financial system, becoming an organic extension of the influence of the digital dollar.

The core content of the bill mainly focuses on three aspects: first, establishing the licensing authority of the Federal Reserve and financial regulatory agencies over stablecoin issuers, and setting capital, reserve, and transparency requirements equivalent to those of banks; second, providing a legal basis and standard interface for the interoperability of stablecoins with commercial banks and payment institutions, promoting their widespread application in retail payments, cross-border settlements, and financial interoperability; third, establishing a "regulatory sandbox" exemption mechanism for decentralized stablecoins (such as DAI, crvUSD, etc.), retaining innovation space for open finance within a compliant and controllable framework.

From a macro perspective, the passage of this bill has triggered a triple structural shift in expectations for the cryptocurrency market. Firstly, a new paradigm of "on-chain anchoring" has emerged in the international extension path of the dollar system. Stablecoins, as the "federal check" of the digital age, not only serve the payment needs within Web3 but may also function as part of the dollar policy transmission mechanism, enhancing its competitive advantage in emerging markets. This also means that the U.S. is no longer simply suppressing crypto assets; instead, it is choosing to incorporate some "channel rights" into the national financial system, legitimizing stablecoins while positioning the dollar ahead in the future digital financial war.

Secondly, it is the on-chain financial structure reassessment driven by the legalization of stablecoins. The ecosystem of compliant stablecoins will usher in a liquidity explosion period, and the logic of on-chain payments, on-chain lending, and on-chain ledger reconstruction will further activate the demand for bridging DeFi and RWAs assets. Especially in the context of high interest rates, high inflation, and regional currency fluctuations in the traditional financial environment, the attribute of stablecoins as "cross-system arbitrage tools" will further attract emerging market users and on-chain asset management institutions. Less than two weeks after the passage of this bill, the daily trading volume of certain platform stablecoins hit a new high since 2023, and the circulating market value of on-chain USDC increased by nearly 12% month-on-month, with the liquidity focus beginning to shift from Tether to compliant assets.

More structurally significant is the fact that multiple state governments have quickly followed the passage of the bill by launching Bitcoin strategic reserve plans. As of late May, New Hampshire has already passed the Bitcoin Strategic Reserve Act, while Texas, Florida, Wyoming, and others have announced plans to allocate part of their fiscal surpluses as Bitcoin reserve assets, citing reasons such as inflation hedging, diversification of fiscal structure, and support for the local blockchain industry. In a sense, this behavior marks the transition of Bitcoin from being a "grassroots consensus asset" to being included in the "local fiscal balance sheet," representing a digital reconstruction of the logic of reserve assets seen in the golden age of states. Although the scale remains small and the mechanisms are still unstable, the political signals it releases are far more important than the asset volume: Bitcoin is beginning to become a "government-level choice."

These policy dynamics together contribute to a new structural landscape: stablecoins become the "on-chain dollar," Bitcoin becomes "local gold," with each playing a distinct role—one in payment and the other in reserve—coexisting and hedging against the traditional monetary system. This situation, in the context of geopolitical financial fragmentation and declining institutional trust in 2025, provides another anchor logic for safety. This also explains why the crypto market maintained high-level fluctuations in mid-May despite poor macro data (persistent high interest rates and a rebound in CPI)------because the structural shift at the policy level has established a long-term certainty support for the market.

After the passage of the bill, the market's reassessment of the "US Treasury yield - stablecoin yield" model will also accelerate the convergence of stablecoin products towards "on-chain T-Bills" and "on-chain money market funds." In a sense, the future digital debt structure of the US Treasury may be partially managed by stablecoins. The expectation of the on-chain transformation of US Treasuries is gradually becoming clearer through the institutionalization of stablecoins.

4. Market Structure: The track rotation is intense, and the main line is still to be confirmed.

The cryptocurrency market in the second quarter of 2025 presents a highly tense structural contradiction: at the macro level, policy expectations are warming, and stablecoins and Bitcoin are moving towards "institutional embedding"; however, at the micro structural level, there is still a lack of a truly market consensus-driven "main track". This results in the overall market exhibiting characteristics of obvious frequent rotations, weak sustainability, and transient "empty rotations" in liquidity. In other words, while the speed of capital circulation on the chain remains, the sense of direction and certainty has yet to be reconstructed, which stands in stark contrast to certain "single-track main upward wave" cycles in 2021 or 2023.

Firstly, from the perspective of sector performance, the crypto market in May 2025 showed an extremely fragmented structure. Solana Meme, AI+Crypto, RWA, DeFi, and others took turns to engage in a "hot potato" game of strength, with each sub-track experiencing explosive cycles lasting less than two weeks, followed by a rapid dispersion of subsequent follow-up funds. For example, Solana Meme once triggered a new wave of FOMO frenzy, but due to a weak community consensus base and overdrawn market sentiment, the market quickly corrected from its high. The AI sector, represented by certain leading projects, exhibited characteristics of "high beta and high volatility," heavily influenced by the sentiment of AI-weighted stocks in the US stock market, lacking the continuity of spontaneous narratives on-chain; while the RWA sector, represented by ONDO, has certainty, but has entered a "divergence between price and value" consolidation period as the expectations for airdrops have partially been fulfilled.

The data on capital flows shows that this rotation phenomenon essentially reflects a structural liquidity overflow rather than the initiation of a structural bull market. Since mid-May, the market capitalization of USDT has stagnated, while USDC and DAI have seen a slight rebound. The average daily trading volume on on-chain DEXs has remained in the range of $2.5 to $3 billion, shrinking nearly 40% compared to the peak in March. There has been no significant influx of new capital into the market; rather, existing capital is searching for short-term trading opportunities in "local high volatility + high sentiment." In this situation, even with frequent shifts in sectors, it is difficult to form a strong main trend, which further amplifies the speculative rhythm of "passing the parcel," leading to a decrease in retail participation willingness, and exacerbating the disconnect between trading heat and social heat.

On the other hand, the phenomenon of valuation stratification has intensified. First-tier blue-chip projects exhibit significant valuation premiums, with top assets like ETH, SOL, and TON continuing to attract large capital, while long-tail projects find themselves in an awkward situation where "fundamentals cannot be priced, and expectations cannot be fulfilled." The data shows...