Analysis of the crypto market in May 2025

1. Overview of the Macroeconomic Environment

In May 2025, the U.S. economy is at a critical turning point. Inflation continues to decline, the labor market remains resilient, monetary policy enters a wait-and-see phase, trade policies bring new uncertainties, and fiscal measures impact market expectations through operations similar to quantitative easing and adjustments in debt ratings. Against this backdrop, the crypto market demonstrates strong resilience, and the structure of global risk assets may undergo a new round of reassessment.

inflation trend

In April, the unadjusted year-on-year CPI fell to 2.3%, the lowest since February 2021, indicating that price pressures continue to ease. The seasonally adjusted month-on-month CPI rate was 0.2%, also below expectations, suggesting insufficient momentum for a short-term inflation rebound. Meanwhile, the U.S. Treasury initiated a $40 billion Treasury bond buyback operation, which the market viewed as a "similar to quantitative easing" move, aimed at releasing liquidity through the repurchase of issued Treasury bonds and refinancing at low interest rates. This operation has become an important force supporting the prices of risk assets.

Employment Market Conditions

In April 2025, non-farm employment increased by 177,000, far exceeding the market expectation of 138,000, reflecting the resilience of the job market. This data provides a basis for the central bank to maintain a wait-and-see policy. The continuous strength in employment mitigates market concerns about a recession on one hand, while also weakening the possibility of multiple unexpected interest rate cuts within the year on the other.

monetary policy trends

The central bank governor stated that the current monetary policy framework will be reassessed and may abandon the "average inflation targeting" mechanism. He pointed out that frequent supply-side shocks are changing the traditional policy environment, prompting the central bank to pay more attention to structural inflation risks. In the future, the central bank may extend the period of high interest rates, and even increase the holding of medium to long-term government bonds through balance sheet expansion to control the rise in long-term rates. The policy tone will be more flexible, with no urgent need for preemptive rate cuts in the short term, and it is emphasized that the policy direction in June will be determined based on multiple economic data.

Trade Policies and Global Economic Outlook

In early May, Trump announced a 50% tariff increase on EU goods starting from June 1. Although it was postponed to July 9, the threat of high tariffs has already impacted market sentiment. Given the frequent changes in trade policy by the Trump administration, the uncertainty regarding future policy directions has significantly increased. In China, the central bank implemented a "reserve requirement ratio cut + interest rate cut" policy in May, releasing 1 trillion yuan in liquidity and lowering the policy interest rate to 1.4%. This move is seen as the start of a new round of easing cycle, with market expectations for improved Sino-U.S. relations heating up and risk appetite rising accordingly.

2. Crypto Market Overview

trading volume analysis

As of May 27, the market's average daily trading volume was $117.4 billion, an increase of 15.8% compared to the previous period, indicating a continued rebound in capital activity and a high volatility characteristic in the overall market. During the two phases from May 6 to 12 and from May 21 to 22, trading volume surged significantly, with single-day trading volume once exceeding $180 billion. During this period, the price of BTC broke through $100,000 and $110,000 respectively, and market bullish sentiment significantly heated up.

market capitalization change

As of May 27, the total market capitalization of cryptocurrencies has rebounded to $3.56 trillion, an increase of 17.0% compared to last month. Among them, BTC's market share is 62.6%, and ETH's market share is 9.6%, with the latter growing by 29.7% compared to the previous period, indicating a continued preference for capital allocation to ETH. Since May 8, the total market capitalization has been steadily rising, and the structural repair trend in the market is明显.

emerging popular tokens

Among the popular tokens launched in May, venture capital-backed projects dominate, including Layer 2 projects like SOPH and B2. In addition, USD1-related projects such as B, Lista, and Staketone have also gained widespread attention in the market.

3. On-chain Data Analysis

BTC, ETH ETF capital flow

In May, BTC ETF net inflows amounted to $5.77 billion, while ETH ETF net inflows reached $317 million. The price of Bitcoin rose from $94,212 at the beginning of the month to $108,969, an increase of approximately 13.5%. The price of Ethereum increased from $1,794 to $2,635, a growth of 31.9%.

stablecoin market changes

In May, the total circulation of stablecoins increased by approximately $7.28 billion, mainly driven by the growth of USDT, USDE, and DAI. The easing of macro policies has led to a significant correction in the crypto market, while the stablecoin market continues to show strong growth momentum.

4. Mainstream Cryptocurrency Price Analysis

BTC price trend

The price of Bitcoin remains above $109,588, indicating that there is buying interest during each slight pullback. If buyers can extend the upward trend into the eighth week, it will pave the way for further increases. Institutional investors continue to inject funds into Bitcoin ETF products, with $2.9 billion recorded in inflows last week.

ETH price trend

Ethereum rebounded from the 20-day EMA ($2,425) on May 25, indicating strong demand at lower price levels. Bulls will attempt to break through the resistance at $2,738 once again. If successful, the ETH/USDT trading pair may rise to $3,000, but could face resistance near $2,850.

SOL price trend

Solana found support at the 20-day EMA ($169) on May 25, indicating positive market sentiment. Bulls will attempt to break through the resistance level of $188 again. If successful, the SOL/USDT trading pair could rise to $210, or even $220.

5. Hot Event Analysis

USD1 ecological development

As of May 28, the market capitalization of the USD1 stablecoin has surpassed $2.1 billion, making it the seventh largest stablecoin. Its core advantage lies in being issued by WLFI, led by the Trump family, making it the first stablecoin project to receive a "presidential endorsement." Recently, the prices of several tokens related to USD1's partners have surged significantly, driving the market's enthusiasm for the "WLFI+USD1" concept.

The rise of the Believe platform

The core token of the Believe platform, Launchcoin, rose from $0.014 at the beginning of the month to a peak of $0.36, with a market cap approaching $310 million at one point. The platform focuses on the concept of "social assetization," allowing users to automatically trigger token issuance by posting on the X platform. However, the $YAPPER token supported by the platform plummeted after its launch, raising concerns within the community. As of May 28, Believe has issued over 27,000 tokens, with a total market cap of approximately $290 million.

6. Future Outlook

stablecoin bill progress

The "GENIUS Act" was passed with 69 votes in favor and 31 votes against to enter the amendment process. The legislation may be completed in the fourth quarter of 2024. The act involves issuance qualification restrictions, reserve requirements, compliance obligations, user protection, and international applicability, aiming to strengthen the international dominance of dollar-pegged stablecoins.

Ethereum ETF pledge approval

The SEC has delayed its decision on Grayscale's Ethereum Trust ETF until June 1, with a final deadline at the end of October. Hong Kong has approved the Ethereum ETF staking services of Bosera Funds and Huaxia Funds. The market expects that U.S. regulators will soon reach a regulatory framework regarding the relevant mechanisms, promoting the final approval of the Ethereum spot ETF. This could drive a new wave of market enthusiasm for Ethereum and related assets such as Lido and Eigen.