After a substantial 96.2% growth in 2024, the crypto markets saw a modest increase during the first half of 2025, with total market capitalization up 1.99% year-to-date (YTD). The market experienced a decline of 18.61% in the first quarter, followed by a recovery of 25.32% in the second quarter, leading to a slight overall gain for the first six months of 2025. In the first half of 2025, the markets faced significant volatility driven by tariff announcements and escalating geopolitical tensions.
Major economies and their central banks took markedly different paths in H1 2025, creating a volatile yet opportunity-rich environment for crypto assets. The global landscape was characterized by a gradual slowdown in the U.S. economy and an unexpected easing of inflation, while China defied expectations with a strong 5.4% year-on-year (YoY) GDP growth in the first quarter, reflecting the positive impact of its stimulus measures. This economic divergence was further amplified by a massive liquidity surge, as the combined money supply of the U.S., China, Europe, and Japan increased by US$5.5T— the largest 6-month rise in four years — primarily driven by monetary easing outside of the hawkishly paused U.S. Federal Reserve. Adding to the complexity were dramatic geopolitical situations, highlighted by a brief but intense U.S.-China trade war that pushed tariff rates to an astonishing 145% before eventually easing. Amid this turbulent environment, Bitcoin revealed its evolving nature: it behaved less like a “safe haven” and more like a high-beta asset, yet still delivered an impressive +13% YTD return, outperforming most traditional equity indices. We view Bitcoin’s price cycle as a leading indicator for the global manufacturing cycle by 8 to 12 months, suggesting that H2 2025 could present further opportunities.
Bitcoin's performance in H1 2025 reflects its ongoing maturation as a key macro asset and institutional favorite. With a market cap holding above US$2T and peak crypto market dominance at 65.1% (its highest level in over four years), BTC remains among the top-performing global assets, delivering strong double digit YTD returns even amid macro volatility. Spot BTC ETFs have become a critical structural driver, drawing sustained institutional inflows and significantly reshaping market dynamics. Corporate adoption also saw substantial growth, with total holdings reaching 848.1K BTC across over 140 firms, as regulatory clarity and favorable accounting rules boosted confidence. Meanwhile, Bitcoin’s economic model is evolving: native scaling solutions made notable progress, Bitcoin DeFi (BTCFi) remains a strong on-chain use case — with total value locked (TVL) still up over 550% YoY — though on-chain token standards experienced a decline in speculative activity. Despite reduced base-chain activity and transaction fees, network security and hash rates remain robust, highlighting Bitcoin’s network resilience.
Major Layer 1 (L1) protocols saw distinct growth paths: Ethereum retained its dominance despite pricing pressures, driven by strong institutional inflows, successful upgrades like Pectra, and leading developer activity. Solana maintained high transaction throughput, grew institutional interest, and improved network reliability ahead of Firedancer's launch. BNB Chain saw record Decentralized Exchange (DEX) activity, expanded into memecoins, real-world assets (RWAs), AI applications, and performance upgrades like Pascal and Maxwell. Meanwhile, Avalanche accelerated enterprise subnet adoption, Sui more than doubled its Decentralized Finance (DeFi) TVL and stablecoin flows, Tron reinforced its role as a key stablecoin settlement layer, and TON deepened its strategic integration with Telegram.
For Ethereum Layer 2s (L2s), H1 2025 marked a more nuanced cycle. Signs of market saturation, diverging growth paths, rising modular competition, and a ‘blob fee arms race’ all tested liquidity durability, especially as the debate over Ethereum’s base layer value capture grew. Optimistic rollups maintained liquidity leadership and user share, with Base and Arbitrum standing out for sustainable fee generation, while ZK rollups made real technical strides on prover costs but still trailed in TVL and stickiness. However, persistent fragmentation and mixed progress on sequencer decentralization and Stage 2 readiness keep long-term maturity in flux. L2s now must prove they can deliver sustainable economics — without over-relying on incentives — and credible decentralization, even as Ethereum upgrades like Fusaka and PeerDAS drive scalability forward.
The DeFi sector demonstrated significant maturity and resilience, with its growth driver shifting from internal speculation to institutional adoption and the integration of RWAs. While TVL stabilized at approximately US$151.5B, monthly active users soared 240% YoY, and the spot trading volume ratio of DEXes hit a record high of 29%, indicating strong user growth and a structural shift in market share. During this period, restaking, led by EigenLayer, became an important cornerstone of the ecosystem, while prediction markets achieved a breakthrough through a partnership between Polymarket and the social media giant X. Overall, DeFi is transitioning to a sustainable growth phase supported by real-world value, but still faces severe systemic risks and security challenges.
The stablecoin sector experienced significant growth in H1 2025, with total market cap surpassing US$250B, marking new all-time highs. Tether (USDT) maintained its dominant position with a market cap of US$153–156B, while Circle’s USDC emerged as the fastest-growing stablecoin, nearly doubling its supply to reach ~US$61.5B and increasing its market share from 20% to over 25%. On-chain activity also surged, with over US$7T in adjusted stablecoin transaction volume recorded across major blockchains, led by Tron, Ethereum, and Solana. Regulatory clarity played a key role in boosting institutional confidence — most notably through the U.S. Senate’s passage of the GENIUS Act and the enforcement of MiCA rules in the EU — positioning stablecoins as increasingly recognized tools for payments, remittances, and on-chain settlement. Overall, H1 2025 marked a turning point in stablecoins’ evolution from crypto-native primitives to mainstream financial infrastructure.
H1 2025 highlighted a growing bifurcation in crypto’s trajectory — while institutional adoption accelerated through regulatory clarity and stablecoin integration, the consumer layer remained a vital, if more chaotic, frontier of innovation. On-chain activity was increasingly shaped by products that prioritized usability, culture, and immediacy: wallets became ‘super apps’, DeFi merged with fiat neobanking, and casual gaming and memecoins captured mainstream attention. Though often overshadowed by institutional narratives, consumer crypto continues to serve as the space where new behaviors are tested, cultural moments are minted, and user pipelines are built. As the infrastructure matures, sustaining momentum on the consumer side — through intuitive products, low-friction onboarding, and emotionally resonant experiences — remains essential to ensuring that crypto’s long-term promise extends beyond financial rails into everyday life.
The convergence of decentralized technologies with artificial intelligence and real-world infrastructure is driving a new wave of innovation across the blockchain ecosystem. Decentralized Financial AI (DeFAI) is emerging as a critical advancement, embedding autonomous AI agents into DeFi protocols to optimize trading, lending, and governance in real time. Concurrently, Decentralized Physical Infrastructure Networks (DePIN) are expanding blockchain’s reach into RWAs and services by enabling decentralized ownership and management of physical infrastructure — in turn supporting advancements in Decentralized Physical AI (DePAI) and Decentralized Science (DeSci). Collectively, these interconnected domains represent a paradigm shift toward a decentralized, AI-powered, and community-governed digital economy that bridges virtual and physical worlds.
In 2025, the blockchain and crypto ecosystem reached a new level of maturity, characterized by adoption across enterprises of all sizes — from Fortune 500 companies to SMEs — and strong institutional investor confidence. This widespread adoption is driving innovation and expanding use cases well beyond retail trading, including supply chain transparency, cross-border payments, DeFi integrations, digital identity, and tokenization of RWAs.
The global crypto regulatory landscape experienced notable shifts marked by strategic crypto-friendly moves in the U.S. after Donald Trump’s inauguration as the president. At the same time, Europe is implementing stricter crypto enforcement measures while Asia presents a contrasting regulatory environment with Hong Kong fostering innovation through open licensing and tax incentives, and Singapore imposing stringent compliance measures, causing industry migration. Global efforts also progressed with respect to standardizing tax transparency and improving cross-border regulatory cooperation.
Moving into the second half of 2025, ten key themes are particularly exciting to us, and we anticipate significant progress in these areas throughout the year. These themes span various narratives and sectors, such as those related to the macro environment, policy and regulation, Bitcoin ecosystem, stablecoins, RWAs, and more.
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