Author: Jeffrey Ding, Chief Analyst at HashKey Group
On May 21, 2025, Bitcoin's price broke through $109,565, setting a new historical record once again. Under the triple resonance of trade easing, institutional involvement, and supply tightening, Bitcoin once again proved its unique value as digital gold, with its scarcity and consensus being amplified at this moment.
Notably, just a day before Bitcoin broke through this threshold, the U.S. Senate advanced the procedural motion for the 'GENIUS Stablecoin Act' with a vote of 66:32. The 'GENIUS Stablecoin Act' will provide a federal regulatory framework for U.S. dollar stablecoins, enabling traditional banks to use existing lending channels to provide collateral and clearing services for stablecoin issuance. Combined with the on-chain interoperability of DeFi protocols, this "on-chain to off-chain" liquidity bridge will unleash massive capital momentum. From the perspective of liquidity spillover effects, the scaled expansion of stablecoin supply will directly boost available funds on exchanges and DeFi platforms, significantly reducing trading slippage while enhancing the feasibility of leverage strategies. Market volatility and price upward momentum will also be further stimulated in this process.
Similar to the United States, Hong Kong passed the 'Stablecoin Ordinance Bill' in its third reading yesterday, with the ordinance expected to take effect this year, giving the industry ample time to understand the licensing requirements. This also means Hong Kong is among the first regions globally to complete stablecoin legislation. Hong Kong's stablecoin draft aims to provide a clear regulatory framework for the local market, promoting compliant stablecoin development.
We anticipate that in the coming years, the global stablecoin market value is expected to expand from the current $250 billion to $1 trillion. More importantly, the compliance of stablecoins will attract more "quasi-dollar" funds, endowing core assets like Bitcoin and Ethereum with stronger hedging and value storage attributes. As these funds gradually flow in, Bitcoin and Ethereum are expected to see a 20%-50% valuation increase in the next 6-12 months. Simultaneously, the maturation of compliant channels will provide a bridge for long-term capital such as pension funds and mutual funds to enter the crypto market, significantly enhancing market demand stability and effectively reducing structural risks. The interaction of policy dividends and market consensus is opening up a new growth space for Bitcoin and crypto assets.
Beyond macro-level policy promotion, the market itself is reinforcing Bitcoin's scarcity logic. According to glassnode data, the holdings of long-term Bitcoin holders have increased to 13.76 million coins, accounting for 65.6% of the total circulation, reaching a new high. Meanwhile, the number of Bitcoins in exchange reserves continues to decline, reaching only 2.437 million coins as of May 20, the lowest level since 2018. This means the tradable Bitcoin in the market is rapidly decreasing, and the supply-demand mismatch further consolidates the basis for price increases.
Simultaneously, the strong influx of institutional funds has become a powerful catalyst for the market. MicroStrategy has added 7,390 more Bitcoins in the past week, with total holdings reaching 576,230 coins, valued at approximately $6.1 billion at current prices. Grayscale Bitcoin Trust (GBTC) and multiple Bitcoin ETFs have attracted over $633 million in net capital inflows in recent weeks. The continuous layout of institutional investors through compliant channels not only strengthens the market's consensus on Bitcoin's scarcity and digital gold attributes but also establishes a solid demand-side support for long-term price appreciation. This is a victory of "long-term thinking" - when institutions view Bitcoin as part of core asset allocation, its value ceiling is fundamentally reshaped.
The macroeconomic situation also provides excellent soil for Bitcoin's rise. Trump's statement in early May about "reaching a historic cooperation with major powers" ignited market optimism about U.S.-China trade easing. On May 12, China and the U.S. signed a tariff agreement, reducing mutual tariffs from a maximum of 84% to 10%. This unexpectedly policy breakthrough not only alleviates global economic uncertainty but also injects new upward momentum for risk assets like Bitcoin.
From policy relaxation to supply tightening, from institutional involvement to liquidity channel construction, this Bitcoin rally is the result of multiple logical resonances. Behind the historical high, it is not just a capital market carnival but also signifies that global capital is ushering in a new round of value consensus reconstruction for decentralized assets.
