Against the backdrop of delayed interest rate cuts and geopolitical turmoil, almost all assets trembled in the first half of 2025. However, Bitcoin led the entire crypto world in a stunning comeback, demonstrating strong resilience and growth potential. What key forces are brewing in the market as the second half unfolds?
At the beginning of this year, there were widespread expectations that the U.S. economy would take a sharp dive, but so far, it has shown a stable downward trend akin to a 'soft landing'. The job market remains somewhat resilient, with non-farm employment adding 139,000 jobs in May, an unemployment rate of 4.2%, and wage growth year-on-year at 3.9%, indicating that while the labor market has slightly slowed, it remains robust. Meanwhile, inflation data came in below expectations, with the core CPI rising 2.7% year-on-year in June, slightly down from the previous value, and has not yet significantly reflected the impact of tariffs imposed by the Trump administration. The market generally expects the Federal Reserve to initiate interest rate cuts in September rather than July.
However, the risk of stagflation is intensifying. JPMorgan warned that the U.S. GDP growth forecast for 2025 has been downgraded from 2% to 1.3%. Tariff policies may raise inflation and suppress growth, trapping the economy in a 'stagflation' dilemma. There are clear divisions within the Federal Reserve regarding the path of interest rate cuts—Chair Powell emphasized that there is 'no rush to ease policy', while some officials, like Waller and Bowman, advocate for early rate cuts (as soon as July) to guard against economic downturn risks. Behind this policy game is the contradiction between inflation and growth: if the Fed cuts rates too early, inflation may worsen; if actions are delayed, it may accelerate economic recession.
The key variable is the lagging impact of tariffs. Powell pointed out that the transmission of tariffs to prices may manifest in the coming months, with inflation data from June to August potentially showing a 'significant increase'. One possible explanation is that businesses previously mitigated short-term shocks by stocking up, but as inventory depletes, 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, the policy path remains highly uncertain. July's non-farm employment and CPI data will be key decision-making references. If data confirms that inflation pressures are manageable, the Federal Reserve may cut rates as planned in September; if inflation rises beyond expectations, the market may face a 'hawkish delay' shock, even resembling the stagflation dilemma of the 1970s. In this game of interest rate cuts versus stagflation, every choice made by the Federal Reserve will profoundly impact global market trends.
Despite weak U.S. economic data, the market remains focused on expectations for policy easing. However, expectations for an interest rate cut by the Federal Reserve in June 2025, breakthroughs in stablecoin regulation, and rebounds in tech stocks have driven the overall U.S. stock market to show a fluctuating upward trend: the S&P 500 rose 4.96% for the month, and the Nasdaq gained 5.93%, repeatedly hitting historical highs during this period.
Notably, the performance of crypto stocks represented by stablecoin giant Circle (CRCL) has been outstanding: Circle went public on the NYSE on June 5, and its stock price soared over 600%. This first stablecoin IPO is undoubtedly one of the most remarkable fintech IPOs of 2025; Coinbase (COIN) also saw a monthly increase of 43%.
Behind this surge is the first federal regulatory framework for stablecoins established by the U.S. Senate on June 17 through the GENIUS Act (Guiding and Establishing a National Innovation Law for the Dollar Stablecoin), which specifies that issuing institutions must maintain reserves of $1:1 or short-term U.S. Treasuries and prohibits algorithmic stablecoins and interest-bearing stablecoins. Circle's USDC is the second-largest stablecoin globally (market cap of $61 billion), and its significant compliance advantages have made it the institution's top choice. The post-listing surge reflects the market's strong expectations for 'regulatory dividends'.
The table above is the 'stress test chart' for different assets during a downturn. In each downturn cycle, cryptocurrencies fell more than U.S. stocks, which fell more than bonds (the higher the risk, the sharper the decline), but in 2025, Bitcoin's decline narrowed and volatility was minimal, indicating that institutional involvement has increased the maturity of the crypto market.
The trend of 'issuing stocks to buy coins' on the corporate side further reinforces this currency-stock linkage logic. According to the Monthly Outlook: Three Themes for 2H25, as of April 2025, 228 publicly listed companies globally held a total of 820,000 Bitcoins, with Strategy (MSTR) holding nearly 600,000 Bitcoins (2.5% of total Bitcoin supply) at an average cost of about $68,000, resulting in a floating profit of over 200%.
Tech giants like Tesla are financing Bitcoin purchases through convertible bonds, integrating digital assets into the structural allocation of their balance sheets, forming a new capital operation model of 'issuing stocks to buy coins'. This trend of corporate entry shifting 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. Strategy CEO Michael Saylor stated: 'Bitcoin has become a core asset for companies to combat inflation; we are driving it to become the global reserve standard.' Data from Deutsche Bank shows that stablecoin settlement volume reached $28 trillion in 2024, surpassing the combined total of Visa and Mastercard, validating the business potential of institutions like Circle and revealing the blockchain payment system's ability to reshape the global clearing system.
Looking ahead to the second half, if the GENIUS Act passes in the House and is signed by Trump, it will officially open a new era of stablecoin regulation. Compliance will accelerate institutional capital inflow, and the boundaries between traditional stock markets and the crypto world will further merge, reinforcing the 'currency-stock linkage'. Crypto stocks may continue their strong performance, becoming a core driver of structural trends in the U.S. stock market.
In June, Bitcoin prices still showed resilience amidst a complex situation: when the Israel-Palestine conflict suddenly escalated in mid-June, Bitcoin briefly fell below the $100,000 mark but quickly rebounded above it, exhibiting an independent trend and gradually decoupling from traditional risk assets. Recent research from Gemini and on-chain analysis firm Glassnode shows that institutional investors are continuously increasing their holdings through channels like ETFs, and structural changes in the market are reshaping its volatility characteristics.
Reflecting on the first half of 2025, although short-term price influences still mainly stem from 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 trajectory can no longer be simply defined by market sentiment or technical indicators, but is exhibiting 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 scale surpassing the $1.1 trillion milestone. In just one month, BlackRock's Bitcoin ETF attracted a net inflow of $4.9 billion. More notably, the level of participation from traditional financial institutions is undergoing a qualitative change. For example, Goldman Sachs has begun offering Bitcoin collateralized loan services with Coinbase, a level of engagement far beyond Wall Street's tentative layouts during the 2021 bull market. Meanwhile, the Federal Reserve's shift in monetary policy expectations has injected new variables into the market. Historical data indicates that the Federal Reserve's rate-cutting cycles are typically accompanied by significant increases in Bitcoin.
In terms of regulation, the earlier mentioned passing of the GENIUS Act in the U.S. 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.
Additionally, the White House digital asset policy advisor revealed that the U.S. is working to build strategic Bitcoin reserve infrastructure. The executive order issued by Trump in March of this year did not mandate the Treasury to disclose the government's Bitcoin holdings, and we can expect the government to actively publish relevant information in the second half of the year. The advisor also added that the U.S. government is 'highly inclined' to increase Bitcoin holdings in a budget-neutral manner. This means that the U.S. government will provide funding for Bitcoin purchases through internal fund restructuring or expenditure cuts without increasing the fiscal deficit or taxpayer burden.
In short, reflecting on the midpoint of 2025, the trajectory of the crypto market has fundamentally diverged from the early phase driven purely by speculation.
Standard Chartered's head of digital assets research, Geoffrey Kendrick, has predicted a target price of $200,000 for Bitcoin by the end of 2025. The narrative driving this market round has shifted from being linked to risk assets to being driven by capital flows, with funds entering in various forms. Bitcoin is becoming a tool for reallocating funds away from U.S. assets, indicating that this price increase is not just a fluctuation but 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.
Currently, the BTC price remains in the high range of $100,000 to $120,000. Looking ahead to the second half, amidst a potential Federal Reserve rate cut, continued growth in corporate crypto adoption, and the clarification of regulatory policies, a new phase of steady development is expected.