2025 Mid-term Outlook for the Crypto Market: Regulation, Institutional Get on Board and Emerging Trends

In the first half of 2025, the global financial market is facing numerous challenges. The delay in the Federal Reserve's interest rate cut expectations and the turmoil in geopolitical situations have led to a lackluster performance of most assets. However, the crypto market has shown remarkable resilience, with digital assets led by Bitcoin not only rising against the trend but also presenting a brand new development pattern.

The U.S. economy is showing signs of a "soft landing", with the job market remaining relatively stable. Non-farm employment increased by 139,000 in May, with an unemployment rate of 4.2% and a year-on-year wage growth of 3.9%. Inflationary pressures have eased somewhat, with June's core CPI rising by 2.7% year-on-year, slightly down from the previous value. The market generally expects the Federal Reserve to start cutting interest rates in September rather than July.

However, the risk of simultaneous economic growth slowdown and inflationary pressure is intensifying. A large investment bank has lowered its forecast for U.S. GDP growth in 2025 from 2% to 1.3%, warning that tariff policies could raise inflation and suppress growth, leading the economy into a "stagflation" dilemma. There are differences within the Federal Reserve regarding the path of interest rate cuts, reflecting the conflict between inflation and growth.

The lagging impact of tariffs is a key variable. The Federal Reserve Chair pointed out that the transmission of tariffs to prices may become evident in the coming months, with inflation data for June to August potentially showing a "significant increase." 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 of the year, the policy path remains highly uncertain. July's employment and inflation data will become key decision-making criteria. If the data confirms that inflationary pressures are manageable, the Federal Reserve may proceed with its plan to cut interest rates in September; if inflation exceeds expectations, the market may face the impact of a policy shift. Every decision made by the Federal Reserve will profoundly influence the direction of the global market.

Despite weak economic data, the market remains focused on expectations for policy easing. In June 2025, the U.S. stock market showed an overall trend of fluctuating upward: the S&P 500 rose 4.96% for the month, and the Nasdaq increased by 5.93%, repeatedly hitting historical highs.

Stocks related to encryption have performed particularly well. A stablecoin company saw its stock price soar over 600% after listing on the NYSE on June 5, becoming one of the most eye-catching fintech IPOs of 2025. Another cryptocurrency trading platform's stock also achieved a monthly increase of 43%.

Behind this surge is the first federal regulatory bill for stablecoins passed by the U.S. Senate. The bill establishes a regulatory framework for stablecoins, clarifies reserve requirements for issuing institutions, and prohibits algorithmic stablecoins and interest-bearing stablecoins. The market's strong expectations for "regulatory dividends" have driven related stocks to rise sharply.

It is worth noting that Bitcoin demonstrated strong resilience against downturns in the market turmoil of 2025, with volatility significantly narrowing, reflecting the increased maturity of the crypto market following institutional participation. The trend of companies "getting on board" with stock purchases further reinforced the logic of coin-stock linkage. As of April 2025, a total of 228 listed companies worldwide held 820,000 Bitcoins, with some tech giants increasing their Bitcoin holdings through convertible bond financing, incorporating digital assets into the structural allocation of their balance sheets.

Looking ahead to the second half of the year, if the stablecoin regulation bill is passed in the House of Representatives and signed into law, it will officially usher in a new era of stablecoin regulation. Compliance is expected to accelerate the inflow of institutional funds, further blurring the lines between traditional stock markets and the crypto market, and crypto-related stocks may continue to perform strongly.

In June, Bitcoin prices showed resilience in a complex situation, gradually decoupling from traditional risk assets. Research shows that institutional investors are continuously increasing their holdings through channels like ETFs, and structural changes in the market are reshaping Bitcoin's volatility characteristics. In the first half of 2025, the crypto market experienced a profound paradigm shift, with its development trajectory no longer dominated by simple market sentiment or technical indicators, but rather presenting new vitality under the joint forces of technology, capital, regulation, and ecology.

The wave of institutionalization has reached new heights, with the global crypto ETF scale breaking 1.1 trillion USD. The participation level of traditional financial institutions has significantly increased, and some large investment banks have begun offering Bitcoin collateral loan services. The expectation of a shift in the Federal Reserve's monetary policy injects new variables into the market, and historical data shows that the Federal Reserve's rate-cutting cycles are usually accompanied by significant increases in Bitcoin.

On the regulatory front, the passage of the stablecoin bill in the United States and the establishment of Hong Kong's stablecoin licensing system have laid a preliminary compliance framework for digital assets. In addition, there are reports that the U.S. government is working on building strategic Bitcoin reserve infrastructure and is inclined to increase its Bitcoin holdings in a budget-neutral manner.

The head of digital asset research at a certain bank predicts that Bitcoin's target price by the end of 2025 will be $200,000. The dominant logic behind this round of market activity has shifted from being linked to risk assets to being driven by diversified capital flows. Bitcoin is becoming a tool for reallocating funds away from U.S. assets, reflecting changes in global capital allocation and macroeconomic trends.

The current Bitcoin price remains in the high range of $100,000 to $120,000. Looking ahead to the second half of the year, with multiple positive factors such as the potential interest rate cuts by the Federal Reserve, the continuous growth of corporate encryption adoption, and the clarification of regulatory policies, the crypto market is expected to usher in a new period of steady development. The second half of 2025 is likely to become a historic turning point for the deep integration of the traditional financial system and the digital currency ecosystem.