Analysis of the crypto market in May 2025

1. Macroscopic Perspective

In May 2025, the US economy is at a critical turning point. Inflation continues to decline, the labor market shows resilience, monetary policy enters a wait-and-see period, trade policies bring uncertainty, and fiscal measures such as quantitative easing and debt rating adjustments affect market expectations. Against this backdrop, the crypto market demonstrates strong resilience, and the global risk asset structure may face a new round of revaluation.

inflation trend

The seasonally adjusted CPI annual rate in April fell to 2.3%, the lowest level since February 2021, indicating a continued easing of price pressures. The seasonally adjusted monthly CPI recorded 0.2%, showing insufficient momentum for short-term inflation rebound. Meanwhile, the U.S. Treasury Department initiated a $40 billion Treasury bond buyback operation, which is widely viewed as a measure to release liquidity, becoming an important force supporting the prices of risk assets.

labor market

In April 2025, the non-farm payrolls added 177,000 jobs, far exceeding the expected 138,000, reflecting the resilience of the job market. This provides a basis for the Federal Reserve to maintain a wait-and-see approach to policy. Continuous strength in employment has alleviated market concerns about a recession, but it has also weakened the possibility of multiple unexpected interest rate cuts within the year.

monetary policy dynamics

The Federal Reserve Chairman stated that they will reassess the current monetary policy framework and may abandon the "average inflation targeting" mechanism. In the future, the Federal Reserve may extend the period of high interest rates and even increase the holding of medium- and long-term government bonds through balance sheet expansion to control the rise in long-term interest rates. The policy tone will be more flexible, and there is no urgency for preemptive rate cuts in the short term.

Trade Policy and Global Economic Outlook

At the beginning of May, relevant parties announced an increase of 50% tariffs on EU goods starting from June 1, which was later postponed to July 9; however, the threat of high tariffs has already impacted market sentiment. In China, the central bank implemented a "reserve requirement ratio cut + interest rate cut" policy combination, 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, and market expectations for improvement in China-US relations have risen.

Summary

In May 2025, the U.S. economy enters a critical turning point:

• Inflation continues to decline, easing expectations are rising
• Strong employment supports a cautious view on monetary policy
• Fiscal policy "quantitative easing" operations, in conjunction with the Federal Reserve's softer tone, collectively suppress market interest rates.
• Global trade frictions have resurfaced, but the restoration of China-US relations has heightened market risk appetite.

In terms of the crypto market, with the marginal improvement of the macro funding environment and continuous inflows into ETFs, the price of Bitcoin has broken its historical high to $111,959. The resonance of current macro policies and global financial trends may help the crypto market enter a new cycle based on structural capital repricing.

2. Crypto Market Overview

cryptocurrency data analysis

Trading Volume and Daily Growth Rate

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 recovery in capital activity. There were multiple instances of daily trading volume increasing by over 50%. During two periods from May 6 to 12 and from May 21 to 22, trading volume surged significantly, with daily trading volume briefly exceeding $180 billion, and BTC prices breaking through $100,000 and $110,000 respectively, showing a notable rise in market bullish sentiment.

Total market capitalization and daily growth

As of May 27, the total market capitalization of cryptocurrencies has rebounded to $3.56 trillion, up 17.0% from last month. BTC market share is 62.6%, and ETH market share is 9.6%, which has increased by 29.7% compared to the previous period. Since May 8, the total market capitalization has surpassed $3.3 trillion and has steadily risen since then, indicating a clear trend of structural recovery in the market.

May New Popular Tokens

Among the popular tokens launched in May, projects with VC backgrounds still dominate, including Layer 2 projects SOPH and B2. In addition, USD1, as a hot narrative in May, along with the stablecoin USD1 and its associated projects such as B, Lista, Staketone, etc., have also garnered wide market attention.

3. On-chain Data Analysis

Analysis of BTC and ETH ETF Inflows and Outflows

In May, BTC ETF inflows reached $5.77 billion. As of May 28, the price of Bitcoin increased from $94,212 to $108,969 during the month, an increase of approximately 13.5%. The overall trend of funds in Bitcoin spot ETFs shows a net inflow.

In May, ETH ETFs saw an inflow of $317 million. As of May 28, ETH rose from $1,794 at the beginning of the month to $2,635, an increase of 31.9%. Ethereum spot ETFs also attracted fund inflows.

Analysis of stablecoin inflow and outflow

In May, stablecoin inflows amounted to approximately $7.28 billion, primarily from USDT and USDC. USDT, USDE, and DAI were the main drivers of growth this month.

4. Price Analysis of Major Currencies

BTC price fluctuation analysis

Bitcoin is striving to maintain above $109,588, indicating that there is buying interest with every slight pullback. The rising moving averages and the RSI nearing the overbought zone suggest that the easiest resistance direction is upward. If buyers can push the price up to $111,980, the BTC/USDT trading pair could soar to $130,000.

On the downside, the 20-day EMA ($104,886) is a key support level. If the price falls below and closes under the 20-day EMA, it may entice short-term investors to take profits, leading to a decrease in price to $100,000.

ETH price change analysis

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

If the price pulls back from the current level or encounters resistance and falls below the 20-day EMA, it indicates that the bulls' control is weakening. In this case, the price may drop to $2,323 and then further to $2,111.

SOL price change analysis

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

The seller needs to break the price below the 20-day EMA to prevent further upward movement. Once the price breaks below this support level, it may drop to the 50-day SMA ($151). If it rebounds from the 50-day SMA, it may lead to the price oscillating and consolidating between $153 and $188 for a period of time.

5. Hot Events of This Month

USD1 ecosystem

In mid-May, as the BTC price broke through historical highs and a trading platform launched USD1, its popularity surged, leading to increased market attention on the USD1 ecosystem collaboration projects. As of May 28, 2025, the market capitalization of the USD1 stablecoin has surpassed $2.1 billion, making it the seventh largest stablecoin. The core advantage of USD1 lies in its issuance by WLFI, led by the Trump family, making it the first stablecoin project endorsed by a president.

The current narrative surrounding USD1 revolves around "presidential endorsement + RWA track + expectations for the stablecoin bill". Recently, the prices of several tokens related to USD1 partners such as Buildon, Lista DAO, StakeStone, Haedal, and Cookie have surged significantly, driving the market's strong enthusiasm for the "WLFI+USD1" concept. If the U.S. stablecoin bill is successfully passed in the future, USD1, as a stablecoin project personally endorsed by the president, along with its deeply cooperative projects, is expected to occupy a more important position in the future crypto ecosystem.

Believe has ascended to become a new star in the MEME platform.

As of May 28, the core token of the Believe platform, Launchcoin, has risen 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," where users can automatically trigger token issuance by tweeting with $TICKER and @launchcoin on a certain social platform.

With the innovative token issuance mechanism and the surge of Launchcoin, the activity level of the Believe platform has rapidly increased. However, the excessive support from the Believe team for the token $YAPPER resulted in a drop of over 66% after its launch, triggering community FUD and a subsequent sharp decline in ecosystem enthusiasm. As of May 28, Believe has issued more than 27,000 tokens, with a total market value of approximately $290 million, of which Launchcoin contributes nearly 63%, and the trading volume accounts for nearly 72% of the ecosystem's total.

Overall, the current MEME market platforms are highly homogeneous. Although Believe has simplified the process of issuing tokens through social platforms, it has not changed the logic of MEME issuance. Whether it can maintain its popularity in the future will depend on whether it can continue to innovate or create projects that truly have a wealth effect.

6. Outlook for Next Month

Stablecoin bill approval progress

This month, the stablecoin "GENIUS Act" passed the motion for debate with 69 votes in favor and 31 votes against, entering the revision process. As the stablecoin bills in the House and Senate progress rapidly, both parties have reached a rare consensus on the regulation of crypto assets, and the bill is expected to complete the legislative process by Q4 2024.

The core of the "GENIUS Act" includes key elements such as issuance qualification restrictions, reserve requirements, compliance obligations, user protection, and international applicability. The act stipulates that only specific financial institutions can issue payment stablecoins, and all stablecoins must be 100% backed by highly liquid assets, with strict segregation of customer assets. Issuers are required to disclose reserve status monthly, accept audits by certified public accountants, and senior management bears legal responsibility for the authenticity of the information.

The "GENIUS Act" is not only a regulatory framework for stablecoins, but also a strategic measure for the United States to enhance the international dominance of the digital dollar by promoting the issuance of compliant stablecoins anchored to the dollar, attracting global capital to U.S. Treasury bonds, and restricting offshore issuers. Currently, Hong Kong has passed the "Stablecoin Issuers Ordinance Bill," establishing the first complete regulatory framework for the stablecoin market in Hong Kong. Against this backdrop, stablecoin projects with strong compliance are expected to gain greater market recognition in the future.

Ethereum ETF pledge approval progress

On April 14, regulators postponed their decisions on the Grayscale Ethereum Trust ETF and the Grayscale Ethereum Mini Trust ETF until June 1, with a final decision deadline set for the end of October. The delay was due to regulatory issues concerning staking and the physical subscription/redemption mechanism. In contrast, the progress of the Hong Kong Ethereum ETF staking has been relatively swift. On April 11, Bosera Funds announced that its virtual asset Ethereum ETF received regulatory approval, allowing for up to 30% of Ethereum holdings to be staked starting from April 25, 2025. On April 18, China Asset Management is about to launch staking services for its Ethereum spot ETF, becoming the second fund in Hong Kong to offer such services.

Based on previous experiences with the approval of Bitcoin and Ethereum ETFs, Hong Kong typically leads the United States. Therefore, following Hong Kong's initiative to allow staking, the market generally expects that U.S. regulators will soon reach a regulatory framework regarding the relevant mechanisms, facilitating the final approval of the Ethereum spot ETF. Once this move is realized, it will not only promote the institutionalization process of Ethereum as an asset class, but also potentially usher in a new wave of market enthusiasm for Ethereum and staking-related assets such as Lido and Eigen.