There are indeed many dynamics worth looking forward to in the current cryptocurrency space: regulation and legislation are continuously improving, stablecoins are gaining momentum, corporate purchases of coins are surging, institutions are steadily incorporating cryptocurrencies into their portfolios through ETFs, and Ethereum is regaining vitality, injecting much-needed momentum into the entire cryptocurrency market.
However, these situations have long been an open secret. I always feel that the market underestimates the scale of each piece of progress, but that does not mean they are happening without anyone paying attention. Media coverage of the cryptocurrency bull market has been overwhelming.
Nevertheless, I believe that by the end of this year, the market will still welcome a series of significant upside surprises, with enough strength to drive prices up significantly. The following four important dynamics, in my view, have yet to be reflected in the current market pricing.
More governments will buy Bitcoin this year
By early 2025, the market generally believes that the three main sources of demand for Bitcoin this year are ETFs, corporations, and governments, which we refer to as the 'three horses of Bitcoin demand'.
So far, two horses have already exerted force: ETFs have purchased 183,126 Bitcoins, while public companies have bought 354,744 Bitcoins. Given that the Bitcoin network only produces 100,697 Bitcoins, this has driven its price up by 27.1%.
However, the third horse has not yet truly exerted force. Indeed, the United States has established a 'strategic Bitcoin reserve', but it only contains Bitcoins obtained through criminal forfeiture; Pakistan has announced the establishment of its own Bitcoin reserve, and Abu Dhabi has invested in Bitcoin ETFs, but compared to the large-scale purchases of ETFs and corporations, these are merely sporadic actions.
The market generally believes that the process of various countries using Bitcoin as a reserve asset has been shelved, but I have my doubts. Although the actions of various governments and central banks are slow, based on our discussions at Bitwise, they are indeed making progress.
It should be clear that I do not believe there will be a concentrated announcement from various countries before the end of the year, but it is certain that more countries will join, and the number will be enough to make this trend a significant potential driver in 2026. Just this alone could significantly push up prices.
Dollar depreciation + interest rate decline = Bitcoin rise
A unique aspect of the current situation is that the price of Bitcoin is approaching historical highs, while interest rates are hovering near their peak since Bitcoin's inception in 2009. This should not be happening. For non-yielding assets like Bitcoin (and gold), high interest rates are undoubtedly a significant challenge, as they greatly raise the opportunity cost threshold for holding such assets.
The market has been digesting expectations of multiple rate cuts before the end of the year, which should provide support for Bitcoin. However, I believe the market is overlooking a key trend with far-reaching implications.
The Trump administration strongly hopes for dollar depreciation while also wishing for the Federal Reserve to adopt more accommodative policies. From directly criticizing Federal Reserve Chairman Jerome Powell to appointing Stephen Milan, who advocates for dollar depreciation, to the Federal Reserve Board, this series of actions strongly signals that the government wants significant rate cuts and substantial dollar depreciation.
It may not be three rate cuts, but six or even eight.
Particularly noteworthy is the appointment of Milan. Milan's research papers have gained wide attention, proposing that the dollar's status as a global reserve currency places a heavy burden on the United States. He calls for a new 'Mar-a-Lago Agreement' to lower the dollar's exchange rate against other major international currencies and suggests that the Federal Reserve could achieve this goal through massive money printing.
If massive money printing leads to a significant decrease in interest rates and a substantial depreciation of the dollar, the price of Bitcoin could rise significantly.
Lower volatility means increased allocation
One of the most underestimated trends in the cryptocurrency space is the significant decline in Bitcoin's volatility. Since the launch of the spot Bitcoin ETF in January 2024, not only has Bitcoin's volatility significantly decreased, but the rate of change in its volatility has also greatly slowed down.
Bitcoin 30-Day Rolling Volatility
Note: The green shaded area represents the period after the launch of the spot Bitcoin ETF.
The reasons for the decline in volatility are not hard to understand: the development of ETFs and corporate purchasing behaviors have introduced new buyers to the cryptocurrency market, while progress in regulation and legislation has significantly reduced market risk. I believe this is already Bitcoin's 'new normal', with its volatility currently roughly equivalent to that of high-volatility tech stocks like Nvidia.
Comparison of Bitcoin's volatility with Tesla, Nvidia, and Meta
(One-year rolling annualized volatility; time range: December 31, 2019, to June 30, 2025)
In discussions with institutional investors, this decrease in volatility is prompting them to consider increasing their allocation to cryptocurrencies in their portfolios, significantly more than before. Before the launch of the spot Bitcoin ETF, the initial allocation for such discussions was basically set at 1%, but now, I frequently hear discussions starting at 5% or even higher.
This is also one of the important reasons for the accelerated inflow of funds into Bitcoin ETFs. Since July 1, the net inflow of funds has reached $5.6 billion, and if this trend continues, the annual inflow could approach $50 billion. Notably, summer is typically a slow season for ETF fund inflows, which makes me believe that this trend may further accelerate in the fall.
ICO 2.0: The Rebirth of Cryptocurrency Financing
Initial Coin Offerings (ICOs) have gained infamy. In 2018, fraudulent ICOs flooded the market, raising billions from investors only to run off with the money, with promised products never delivered; this was also a key reason for the abrupt end of the 2017 cryptocurrency bull market. The SEC swiftly cracked down, and investors became thoroughly weary of such fraudulent activities.
I believe that most investors and observers have regarded ICOs as 'second-rate products', but SEC Chairman Paul Atkins recently outlined a blueprint for the rebirth of ICOs in his 'Cryptocurrency Plan' speech:
"I have asked my team to formulate disclosure rules, exemptions, and safe harbor provisions that fit the characteristics of so-called 'Initial Coin Offerings', 'airdrops', and 'network rewards'... In my view, if we can stick to this path, the innovation sector may welcome a 'Cambrian explosion'."
If this idea is realized, it could become an important catalyst for driving the market upwards. Looking back at history, whether during the ICO boom or after the downturn, cryptocurrency investors' enthusiasm for investing in crypto projects has never waned. The newly launched ICO Market 2.0 is expected to attract a large influx of new capital into the cryptocurrency market.
Conclusion
The market will not rise due to known positive news, but will rise only due to positive news that has not yet been reflected in the price.
Overall, I believe the market is underestimating the scale of the current bull market in the cryptocurrency space and is ignoring some specific driving factors, which will gradually show their influence over the next few months and even years.
Beware of a subsequent sharp price surge. There are indeed many dynamics worth looking forward to in the current cryptocurrency space: regulation and legislation are continuously improving, stablecoins are gaining momentum, corporate purchases of coins are surging, institutions are steadily incorporating cryptocurrencies into their portfolios through ETFs, and Ethereum is regaining vitality, injecting much-needed momentum into the entire cryptocurrency market.
However, these situations have long been an open secret. I always feel that the market underestimates the scale of each piece of progress, but that does not mean they are happening without anyone paying attention. Media coverage of the cryptocurrency bull market has been overwhelming.
Nevertheless, I believe that by the end of this year, the market will still welcome a series of significant upside surprises, with enough strength to drive prices up significantly. The following four important dynamics, in my view, have yet to be reflected in the current market pricing.
More governments will buy Bitcoin this year
By early 2025, the market generally believes that the three main sources of demand for Bitcoin this year are ETFs, corporations, and governments, which we refer to as the 'three horses of Bitcoin demand'.
So far, two horses have already exerted force: ETFs have purchased 183,126 Bitcoins, while public companies have bought 354,744 Bitcoins. Given that the Bitcoin network only produces 100,697 Bitcoins, this has driven its price up by 27.1%.
However, the third horse has not yet truly exerted force. Indeed, the United States has established a 'strategic Bitcoin reserve', but it only contains Bitcoins obtained through criminal forfeiture; Pakistan has announced the establishment of its own Bitcoin reserve, and Abu Dhabi has invested in Bitcoin ETFs, but compared to the large-scale purchases of ETFs and corporations, these are merely sporadic actions.
The market generally believes that the process of various countries using Bitcoin as a reserve asset has been shelved, but I have my doubts. Although the actions of various governments and central banks are slow, based on our discussions at Bitwise, they are indeed making progress.
It should be clear that I do not believe there will be a concentrated announcement from various countries before the end of the year, but it is certain that more countries will join, and the number will be enough to make this trend a significant potential driver in 2026. Just this alone could significantly push up prices.
Dollar depreciation + interest rate decline = Bitcoin rise
A unique aspect of the current situation is that the price of Bitcoin is approaching historical highs, while interest rates are hovering near their peak since Bitcoin's inception in 2009. This should not be happening. For non-yielding assets like Bitcoin (and gold), high interest rates are undoubtedly a significant challenge, as they greatly raise the opportunity cost threshold for holding such assets.
The market has been digesting expectations of multiple rate cuts before the end of the year, which should provide support for Bitcoin. However, I believe the market is overlooking a key trend with far-reaching implications.
The Trump administration strongly hopes for dollar depreciation while also wishing for the Federal Reserve to adopt more accommodative policies. From directly criticizing Federal Reserve Chairman Jerome Powell to appointing Stephen Milan, who advocates for dollar depreciation, to the Federal Reserve Board, this series of actions strongly signals that the government wants significant rate cuts and substantial dollar depreciation.
It may not be three rate cuts, but six or even eight.
Particularly noteworthy is the appointment of Milan. Milan's research papers have gained wide attention, proposing that the dollar's status as a global reserve currency places a heavy burden on the United States. He calls for a new 'Mar-a-Lago Agreement' to lower the dollar's exchange rate against other major international currencies and suggests that the Federal Reserve could achieve this goal through massive money printing.
If massive money printing leads to a significant decrease in interest rates and a substantial depreciation of the dollar, the price of Bitcoin could rise significantly.
Lower volatility means increased allocation
One of the most underestimated trends in the cryptocurrency space is the significant decline in Bitcoin's volatility. Since the launch of the spot Bitcoin ETF in January 2024, not only has Bitcoin's volatility significantly decreased, but the rate of change in its volatility has also greatly slowed down.
Bitcoin 30-Day Rolling Volatility
(Based on Coin Metrics data; time range: December 31, 2012, to August 10, 2025)
Note: The green shaded area represents the period after the launch of the spot Bitcoin ETF.
The reasons for the decline in volatility are not hard to understand: the development of ETFs and corporate purchasing behaviors have introduced new buyers to the cryptocurrency market, while progress in regulation and legislation has significantly reduced market risk. I believe this is already Bitcoin's 'new normal', with its volatility currently roughly equivalent to that of high-volatility tech stocks like Nvidia.
Comparison of Bitcoin's volatility with Tesla, Nvidia, and Meta
(One-year rolling annualized volatility; time range: December 31, 2019, to June 30, 2025)
In discussions with institutional investors, this decrease in volatility is prompting them to consider increasing their allocation to cryptocurrencies in their portfolios, significantly more than before. Before the launch of the spot Bitcoin ETF, the initial allocation for such discussions was basically set at 1%, but now, I frequently hear discussions starting at 5% or even higher.
This is also one of the important reasons for the accelerated inflow of funds into Bitcoin ETFs. Since July 1, the net inflow of funds has reached $5.6 billion, and if this trend continues, the annual inflow could approach $50 billion. Notably, summer is typically a slow season for ETF fund inflows, which makes me believe that this trend may further accelerate in the fall.
ICO 2.0: The Rebirth of Cryptocurrency Financing
Initial Coin Offerings (ICOs) have gained infamy. In 2018, fraudulent ICOs flooded the market, raising billions from investors only to run off with the money, with promised products never delivered; this was also a key reason for the abrupt end of the 2017 cryptocurrency bull market. The SEC swiftly cracked down, and investors became thoroughly weary of such fraudulent activities.
I believe that most investors and observers have regarded ICOs as 'second-rate products', but SEC Chairman Paul Atkins recently outlined a blueprint for the rebirth of ICOs in his 'Cryptocurrency Plan' speech:
"I have asked my team to formulate disclosure rules, exemptions, and safe harbor provisions that fit the characteristics of so-called 'Initial Coin Offerings', 'airdrops', and 'network rewards'... In my view, if we can stick to this path, the innovation sector may welcome a 'Cambrian explosion'."
If this idea is realized, it could become an important catalyst for driving the market upwards. Looking back at history, whether during the ICO boom or after the downturn, cryptocurrency investors' enthusiasm for investing in crypto projects has never waned. The newly launched ICO Market 2.0 is expected to attract a large influx of new capital into the cryptocurrency market.
Conclusion
The market will not rise due to known positive news, but will rise only due to positive news that has not yet been reflected in the price.
Overall, I believe the market is underestimating the scale of the current bull market in the cryptocurrency space and is ignoring some specific driving factors, which will gradually show their influence over the next few months and even years.
Beware of a subsequent sharp price surge.