Against the backdrop of delayed rate cuts and geopolitical turmoil, almost all assets trembled in the first half of 2025. However, Bitcoin led the entire crypto world in a remarkable comeback, showcasing strong resilience and growth potential. The grand performance of the second half of the year is about to begin. What key forces are brewing in the market?
At the beginning of this year, external expectations were that the U.S. economy would take a sharp dive, but so far, it has shown a smooth downward trend, akin to a "soft landing." The job market has maintained a degree of resilience, with 139,000 new non-farm jobs added in May, an unemployment rate of 4.2%, and a wage growth rate of 3.9% year-on-year, indicating that while the labor market has slowed slightly, it remains robust. At the same time, inflation data has come in below expectations, with June's core CPI rising 2.7% year-on-year, slightly down from the previous value, and has not yet clearly reflected the impact of the tariffs imposed by the Trump administration. The market generally expects the Fed to start cutting rates in September rather than July.
However, the risk of stagflation is intensifying. JPMorgan warns that the expected GDP growth rate in the U.S. for 2025 has been revised down from 2% to 1.3%, and tariff policies may drive up inflation while suppressing growth, trapping the economy in a "stagflation" dilemma. There are significant internal divisions within the Fed regarding the path of rate cuts—Chairman Powell emphasizes "not rushing to ease policy," while some officials, like Waller and Bowman, advocate for early rate cuts (as early 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, it may exacerbate inflation; if it acts too late, 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 for June-August possibly showing "significant increases." One possible explanation is that businesses previously alleviated short-term shocks by stockpiling, but as inventory is exhausted, rising import costs will gradually push up end prices. If inflation rebounds, the Fed may be forced to delay rate cuts or even pause its easing cycle, further reinforcing stagflation expectations.
Looking ahead to the second half of the year, the policy path remains highly uncertain. July's non-farm payroll and CPI data will be crucial decision-making benchmarks. If the data confirms that inflation pressures are manageable, the Fed may cut rates as planned in September; if inflation rises above expectations, the market may face the shock of "hawkish delays," potentially recreating the stagflation dilemma of the 1970s. In this game between rate cuts and stagflation, every decision made by the Fed will profoundly impact the global market direction.
Despite weak U.S. economic data, the market remains focused on expectations of policy easing. However, the Fed's expected rate cuts in June 2025, breakthroughs in stablecoin regulation, and rebounds in tech stocks are still driving the overall U.S. stock market to show a trend of oscillating upward: the S&P 500 rose 4.96% for the month, while the Nasdaq rose 5.93%, with multiple new historical highs reached 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 stock 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 stablecoin federal regulatory bill (GENIUS Act) passed by the U.S. Senate on June 17, which establishes a federal regulatory framework for stablecoins for the first time. It clearly states that issuing institutions must hold reserves of 1:1 dollars or short-term U.S. Treasury bonds, prohibiting algorithmic stablecoins and interest-bearing stablecoins. Circle's USDC is the second-largest stablecoin globally (market cap of $61 billion), and its substantial compliance advantages have made it the top choice for institutions. The post-listing surge reflects the market's strong expectations for "regulatory dividends."
The table above shows the "stress test table" of different assets during downturn cycles. In each downturn cycle, cryptocurrencies fall more than U.S. stocks and bonds (the higher the risk, the sharper the decline). However, in 2025, Bitcoin's decline narrowed, and volatility was minimal, indicating that after institutional entry, the maturity of the crypto market has improved.
The trend of "issuing stocks to buy coins" on the corporate side further reinforces this coin-stock linkage logic. According to (Monthly Outlook: Three Themes for 2H25), as of April 2025, a total of 228 listed companies globally held 820,000 Bitcoins, with Strategy (MSTR) holding nearly 600,000 Bitcoins (accounting for 2.5% of the total Bitcoin supply) at an average cost of about $68,000, yielding over 200% in unrealized gains.
Tech giants like Tesla 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 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 the core asset for companies to combat inflation, and we are pushing for it to become the global reserve standard." Data from Deutsche Bank shows that the settlement volume of stablecoins reached $28 trillion in 2024, surpassing the sum of Visa and MasterCard, validating the business potential of institutions like Circle and revealing the capability of blockchain payments to reshape the global clearing system.
Looking ahead to the second half of the year, if the (GENIUS Act) passes in the House and is signed by Trump, it will officially usher in a new era of stablecoin regulation. Compliance will accelerate institutional capital inflow, and the boundary between traditional stock markets and the world of cryptocurrencies will further accelerate its integration, strengthening the "coin-stock linkage." Crypto stocks may continue to remain strong, becoming the core driver of structural trends in the U.S. stock market.
In June, Bitcoin prices demonstrated resilience despite complex circumstances: when the Israel-Palestine conflict suddenly escalated in mid-June, Bitcoin briefly fell below the $100,000 mark but quickly recovered and returned above $100,000, showing an independent performance that gradually decoupled from traditional risk assets. Recent research by the Gemini exchange and on-chain analysis firm Glassnode shows that institutional investors are continuously increasing their holdings through ETFs and other channels, and the structural changes in the market are reshaping its volatility characteristics.
Reflecting on the first half of 2025, although factors affecting short-term prices are still primarily driven 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 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.
In June, the wave of institutionalization reached new heights, with the global crypto ETF scale surpassing the milestone of $1.1 trillion. BlackRock's Bitcoin ETF alone attracted a net inflow of $4.9 billion in just one month. Notably, the level of participation from traditional financial institutions is undergoing a qualitative change. For instance, Goldman Sachs has begun offering Bitcoin collateralized loan services in collaboration with CoinBase, a level of engagement that far exceeds 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. Historical data shows that periods of Fed rate cuts are typically accompanied by significant increases in Bitcoin prices.
In terms of regulation, the passage of the (GENIUS Act) in the U.S. and the establishment of Hong Kong's stablecoin licensing system mark the beginning of a preliminary compliance framework for digital assets in major financial centers. This policy certainty is attracting more traditional capital to enter the market.
In addition, White House digital asset policy advisors have revealed that the U.S. is working to build a 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, so we can expect it to actively release 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 for Bitcoin purchases through internal fund restructuring or expenditure savings, without increasing fiscal deficits or taxpayer burdens.
In short, looking back from the midpoint of 2025, the trajectory of the crypto market's development has fundamentally differed from the earlier phase driven purely by speculation.
Geoffrey Kendrick, head of digital asset research at Standard Chartered Bank, once predicted that Bitcoin's target price by the end of 2025 would be $200,000. The dominant narrative behind this market cycle 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 capital away from U.S. assets, indicating that this surge is not merely price fluctuation but also a reflection of global capital allocation and macroeconomic trends. In this sense, the second half of 2025 is likely to mark a historical turning point for the deep coupling of the traditional financial system and the digital currency ecosystem.
Currently, BTC prices remain in the high range of $100,000 to $120,000. Looking ahead to the second half of the year, with the possibility of a Fed rate cut, continued growth in corporate crypto adoption, and clearer regulatory policies, a new phase of steady development is anticipated.
