### 2025 Crypto Market Observations: The Interweaving of Policies, Technologies, Liquidity, and Risks
#### I. Policy and Regulatory Dynamics: From Suppression to Guidance
1. **Shift of U.S. Policy Towards Crypto-Friendly**
Policy adjustments by the Trump administration have become one of the core driving forces for the crypto market in 2025. The SEC has repealed SAB 121, allowing banks to participate in crypto asset custody, facilitating institutional entry. Furthermore, Trump plans to establish a national Bitcoin reserve and appoint regulatory officials who support the crypto industry, in stark contrast to the Biden administration's hostile stance. Currently, the proportion of pro-crypto legislators in the U.S. Congress has significantly increased, and the advancement of the FIT21 bill may further clarify the regulatory boundaries between the SEC and CFTC.
2. **Global Regulatory Convergence and Competition**
The implementation of the EU's MiCA framework provides a compliance pathway for the crypto industry, while places like the UK, Singapore, and Hong Kong are also accelerating the formulation of rules adapted to digital assets. Some U.S. states (such as Pennsylvania) have attempted to include Bitcoin in their strategic reserves, but federal legal restrictions remain a challenge.
#### II. The Profound Impact of Institutional Funds Entering and ETFs
1. **The Institutional Wave of Bitcoin ETFs**
Since the launch of the Bitcoin spot ETF in 2024, net inflows have exceeded $300 billion, with assets under management (AUM) nearing that of gold ETFs. Holdings by institutions such as BlackRock and Fidelity have significantly increased, pushing the Bitcoin price above the $100,000 mark and reducing market volatility (30-day volatility decreased from 65% to 50%). If the staking function of the Ethereum ETF is approved, it could further attract capital inflows.
2. **ETFs Restructuring Market Dynamics**
The standardization of ETFs has lowered the entry barriers for institutions, improved market liquidity, and narrowed price spreads between exchanges. In addition, the maturation of derivatives markets (such as options) has formed a linkage with ETFs, enhancing price stability.
#### III. Macroeconomics and Liquidity: Risks and Opportunities Coexist
1. **Federal Reserve Policy and Interest Rate Cut Expectations**
Although the core CPI remains above the target (2.5%), the market generally expects the Federal Reserve to cut interest rates 1-2 times in 2025, and a low interest rate environment may boost demand for risk assets, reinforcing Bitcoin's 'digital gold' attribute. However, Trump's tariff policies may push inflation higher, increasing the complexity of monetary policy.
2. **Short-Term Liquidity Release and Debt Risks**
The U.S. Treasury is injecting short-term liquidity through TGA accounts (estimated at $150 billion to $600 billion), providing a temporary boost to risk assets, but the debt ceiling issue and the pressure of $36 trillion in national debt may trigger long-term liquidity tightening. The correlation of the crypto market with U.S. stocks has risen to 0.5, showing that it is increasingly influenced by the macro environment.
#### IV. Technological Innovation and Track Development
1. **Ethereum Pectra Upgrade**
The Pectra upgrade expected to be completed in Q2 2025 will optimize the staking mechanism, reduce gas fees, and enhance the security of smart contracts, solidifying Ethereum's leading position in the smart contract platform.
2. **Tokenization of RWA and Revival of DeFi**
The scale of tokenized real-world assets (RWA) increased from $8.4 billion in 2023 to $13.5 billion, with institutions like BlackRock already investing in on-chain national bonds. DeFi protocols are regaining attention through transparent governance and compliance pathways, with DEX trading volume share rising from 8% to 14%.
3. **The Fusion of AI and Crypto**
DeepSeek and other AI technologies drive improvements in computing efficiency, potentially giving rise to new use cases that combine AI agents with cryptocurrency wallets, becoming a potential narrative point in the market.
#### V. Market Risks and Challenges
1. **Meme Coin Bubble and Speculative Risks**
The market capitalization of the TRUMP coin launched by Trump once exceeded $15 billion before plummeting 60%. Trading of meme coins on the Solana chain accounted for 11%, with high leverage leading to liquidation of $346 million within 24 hours, exacerbating market volatility.
2. **Geopolitical and Regulatory Uncertainty**
The controversy surrounding Trump's 'America Bay' and the digital dollar resistance policies may lead to a fragmentation of the international payment system, while crypto projects (such as WLFI) are accused of using political influence to manipulate liquidity, exposing regulatory arbitrage risks.
#### VI. Future Outlook: From Frenzy to Value Reconstruction
The crypto market in 2025 is at a turning point from 'policy arbitrage' to 'technology-driven'. If the narrative of AI and crypto collaboration takes shape, it could catalyze a new round of breakthroughs. However, the market must be wary of overly relying on policy dividends; solidifying underlying technologies (such as Layer 2 scaling and privacy computing) and practical applications (such as cross-border payments and asset tokenization) is the true long-term value support.
