TL,DR
In May 2025, the U.S. macro-economy will enter a critical turning point: inflation will continue to decline, employment will remain resilient, and the Federal Reserve's policy will shift to wait-and-see. The "QE-like" operations on the fiscal side will lower interest rates, and the trade policy disturbances and the restoration of Sino-US relations will jointly drive the market risk appetite to rebound, which may be the beginning of a new round of structural capital repricing cycle.
In May, the capital activity in the crypto market rebounded significantly, with the average daily trading volume increasing by nearly 16%. The total market value rose to 3.56 trillion US dollars and showed a trend of structural repair. BTC and ETH led the rise, and USD1 ecological narrative projects continued to attract attention.
The easing of macroeconomic policies in May boosted market sentiment. BTC and ETH spot ETFs recorded net inflows of US$5.77 billion and US$317 million, respectively. The total circulation of stablecoins increased by approximately US$7.28 billion. The continuous influx of funds supported the rise of crypto assets.
In late May, Bitcoin remained above the key resistance level, rising for seven consecutive weeks and attracting a large amount of institutional capital inflows. If it breaks through $111,980, it is expected to hit $130,000. Ethereum and Solana also showed strong buying. If they successfully break through the current resistance, the short-term targets are $3,000 and $220 respectively. The overall market continues the structural bullish trend.
In May, USD1 became popular due to multiple narratives such as "presidential endorsement + RWA + stablecoin bill expectations", and the market value of stablecoins exceeded 2.1 billion US dollars. Ecosystem project tokens such as Lista and StakeStone also rose strongly, and the market paid close attention to its potential policy dividends. At the same time, the Believe platform quickly became popular in the MEME market with its social currency issuance mechanism and the surge in Launchcoin, but the ecosystem is highly dependent on the performance of the platform currency. The community is skeptical about its long-term sustainability, and whether the popularity can continue remains to be seen.
The rapid progress of the GENIUS Act marks a consensus reached by the two parties in the United States on the regulation of stablecoins. The bill sets strict issuance qualifications, reserves and compliance requirements, aiming to strengthen the global dominance of dollar-pegged stablecoins and restrict the participation of overseas issuers and large technology companies. At the same time, the approval of Ethereum ETF pledge is still delayed in the United States due to disputes over the regulatory mechanism, but Hong Kong has taken the lead in releasing pledge services. The market generally expects that the United States will follow up, which is good for ETH and pledge-related assets.
1. Macro perspective
In May 2025, the U.S. macro-economy is at a critical turning point. Inflation continues to fall, the labor market shows resilience, monetary policy enters a wait-and-see period, trade policy brings new uncertainties, and the fiscal side affects market expectations through QE-like operations and debt rating adjustments. Against this background, the crypto market has shown strong resistance to pressure, and the global risk asset structure may usher in a new round of revaluation.
1. Inflation trend
The unadjusted CPI annual rate in April fell to 2.3%, lower than the market expectation of 2.4%, the lowest since February 2021, indicating that price pressure continued to ease. The seasonally adjusted CPI monthly rate was 0.2%, also slightly lower than expected, and the momentum of inflation recovery in the short term was insufficient. At the same time, the U.S. Treasury launched a $40 billion Treasury bond repurchase operation, which was generally regarded by the market as a "quasi-QE" measure aimed at releasing liquidity by repurchasing issued Treasury bonds and conducting a new round of refinancing at low interest rates. This operation has become an important force supporting the prices of risky assets.
2. Labor Market
In April 2025, non-farm payrolls 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 Fed to maintain a wait-and-see policy. The Fed closely monitors employment data as a basis for policy adjustments. The continued strong employment has eased market concerns about recession on the one hand, and on the other hand, it has weakened the possibility of multiple unexpected interest rate cuts this year.
3. Monetary policy dynamics
Fed Chairman Powell said he would reassess the current monetary policy framework and may abandon the "average inflation target" mechanism. He pointed out that frequent supply-side shocks (such as tariffs, geopolitics, and energy transition) are changing the traditional policy environment, prompting the Fed to pay more attention to structural inflation risks. In the future, the Fed may extend the high interest rate maintenance period, and even increase its holdings of medium- and long-term government bonds by expanding its balance sheet to control the upward trend of long-term interest rates. The policy tone will be more flexible, and there will be no rush to preventively cut interest rates in the short term. It also emphasized that the policy direction in June will be determined based on data such as PCE, CPI, and tariff impacts.
4. Trade policy and global economic outlook
In early May, Trump announced that he would impose a 50% tariff on EU goods from June 1. Although the tariff was later postponed to July 9, the threat of high tariffs has already impacted market sentiment. Given the frequent changes in the Trump administration's trade policies, the market's uncertainty about the future policy path has increased significantly. In China and the United States, the People's Bank of China implemented a combination of "lowering the reserve requirement ratio and lowering interest rates" in May, releasing 1 trillion yuan of 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 the market's expectations for the improvement of Sino-US relations have increased, and risk appetite has also increased.
Summarize
In May 2025, the U.S. economy entered a critical turning point:
Inflation continues to decline , and expectations of easing are rising;
Strong employment supports a wait-and-see monetary policy;
The “quasi-QE” operation of fiscal policy , in conjunction with the Fed’s softer tone, jointly pushed down market interest rates;
Global trade frictions have re-emerged , but the restoration of Sino-US relations has boosted market risk appetite;
In the crypto market, with the marginal improvement of macro funding and the continuous inflow of ETFs, the price of Bitcoin has broken through the historical high to $111,959. The resonance of current macro policies and global financial trends may be helping the crypto market to start a new cycle based on structural fund repricing.
2. Crypto Market Overview
Currency data analysis
Trading volume & daily growth rate
According to CoinFGecko data, as of May 27, the average daily trading volume of the market was US$117.4 billion, up 15.8% from the previous cycle, indicating that the activity of funds continued to pick up, and the overall market showed high volatility, with single-day trading volume increasing by more than 50% on multiple occasions. From May 6 to May 12 and from May 21 to 22, trading volume increased significantly, with daily trading volume exceeding US$180 billion at one point. During this period, BTC prices exceeded US$100,000 and US$110,000 respectively, and market bullish sentiment significantly increased, forming a concentrated release of trading momentum in the short term.
Total market value & daily growth
According to CoinGecko data, as of May 27, the total market value of cryptocurrencies rebounded to $3.56 trillion, up 17.0% from the previous month, and the total market value increased significantly. Among them, BTC accounts for 62.6% of the market, and ETH accounts for 9.6%. The latter increased by 29.7% from the previous cycle. The allocation preference of ETH in this round of funds continues to increase. Since May 8, the total market value has risen above $3.3 trillion, and has been steadily rising since then, with a clear trend of structural repair in the market.
New popular tokens in May
Among the popular tokens newly launched in May, VC-backed projects still dominate, including Layer2 projects - SOPH and B2. In addition, USD1 is one of the hot narratives in May. Stablecoin USD1 and its related projects such as B, Lista, Staketone, etc. have also received widespread attention from the market.
3. On-chain data analysis
3.1 Analysis of BTC and ETH ETF inflows and outflows
BTC ETFs saw $5.77 billion inflows in May
In May, as the United States reached a phased suspension agreement with many countries on tariff policies, market sentiment rebounded significantly, driving the price of Bitcoin to rebound strongly and hit a record high of $111,959. As of May 28, the price of Bitcoin rose from $94,212 to $108,969, an increase of about 13.5%. At the same time, Bitcoin spot ETF funds generally showed a net inflow trend, with a cumulative inflow of about US$5.77 billion in May.
ETH ETFs saw $317 million inflows in May
Ethereum, benefiting from the expectation of Pectra upgrade and the easing of macroeconomic policies, saw a more significant price increase. 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 ETF also attracted capital inflows, with a net inflow of approximately $317 million in May.
3.2 Analysis of Stablecoin Inflow and Outflow
Stablecoin inflows in May were about US$1 billion, mainly from USDT and USDC
In May, as the United States suspended its tariff policy, the easing of macroeconomic policies caused a significant correction in the crypto market. The stablecoin market continued its strong growth momentum. Among them, USDT, USDE, and DAI became the main drivers of growth this month, and the total circulation of stablecoins increased by about US$7.28 billion.
4. Price analysis of mainstream currencies
4.1 Analysis of BTC price changes
Bitcoin is struggling to stay above $109,588, showing that buying has stepped in on every minor pullback. Bitcoin has risen for seven consecutive weeks, and if buyers can extend this trend into the eighth week, it will pave the way for further gains. Institutional investors continue to pour money into Bitcoin exchange-traded products as they see long-term opportunities. CoinShares reported on May 26 that Bitcoin ETPs recorded $2.9 billion in inflows last week, accounting for a quarter of the total inflows in 2024.
Bitcoin bulls are struggling to push and sustain the price above $109,588, suggesting that every pullback is bought. The rising moving averages and the RSI close to the overbought zone indicate that the easiest resistance is to the upside. If the buyers can push the price above $111,980, the BTC/USDT trading pair could surge to $130,000.
On the downside, the 20-day EMA ($104,886) is the key support to watch. If the price breaks and closes below the 20-day EMA, it may tempt short-term investors to book profits, leading to a drop to the psychological level of $100,000, where buying is expected to form a strong support.
4.2 Analysis of ETH price changes
Ethereum rebounded from the 20-day EMA ($2,425) on May 25, showing strong demand at lower levels. The bulls will once again attempt to break out of the $2,738 resistance. If successful, the ETH/USDT pair could surge to $3,000, although the bears may try to stall the gains near $2,850.
If the price corrects back from the current levels or meets resistance and breaks below the 20-day EMA, it will suggest that the control of the bulls is weakening. In such a case, the price could drop to $2,323 and then to $2,111.
4.3 Analysis of SOL price changes
Solana found support at the 20-day EMA ($169) on May 25, which shows that the sentiment remains positive and traders are buying on minor pullbacks. The bulls will once again attempt to break out of the $188 resistance. If successful, the SOL/USDT trading pair could surge to $210 and possibly $220.
However, the sellers need to sink the price below the 20-day EMA to prevent further gains. Below this support, the price could drop to the 50-day SMA ($151), which could act as a strong support. A rebound from the 50-day SMA could result in a range-bound consolidation between $153 and $188 for a while.
5. Hot events of this month
USD1 Ecosystem
In mid-May, as the price of BTC broke through the historical high and the popularity of USD1 soared after Binance launched it, the USD1 ecological cooperation project also attracted market attention. As of May 28, 2025, the market value of USD1 stablecoin has exceeded 2.1 billion US dollars, becoming the seventh largest stablecoin. Although USD1 has no significant difference in mechanism design from other mainstream stablecoins such as USDT and USDC, its core advantage lies in the issuance of WLFI led by the Trump family, which is the first stablecoin project endorsed by the president.
The main narrative of USD1 currently revolves around "presidential endorsement + RWA track + stablecoin bill expectations". WLFI's official positioning of USD1 is mainly for institutional users. For retail investors, participating in USD1 ecological projects is a better opportunity to benefit. Recently, the prices of related tokens of Buildon, Lista DAO, StakeStone, Haedal, Cookie and other USD1 partners have risen sharply, which has promoted the market's high enthusiasm for the concept of "WLFI+USD1". If the subsequent US stablecoin bill is successfully passed, USD1, as a stablecoin project endorsed by the president himself and a project with in-depth cooperation with him, is expected to occupy a more important position in the future crypto ecology.
Believe has become a new MEME platform
As of May 28, the core token of the Believe platform, Launchcoin, rose from $0.014 at the beginning of the month to a high of $0.36, with a market value of nearly $310 million, becoming one of the MEME coins with the largest increase in recent times. The platform was created by Ben Pasternak and focuses on the concept of "social assetization". Users only need to post a tweet with $TICKER and @launchcoin on the X platform to automatically trigger the token issuance.
With the innovative coin issuance mechanism and the surge in Launchcoin, the activity of the Believe platform has risen rapidly, and currencies such as Dupe and Goonc have followed suit. The number of new coins issued on the platform has jumped to the third place on the MEME platform. However, the official over-supported token $YAPPER of Believe plummeted by more than 66% after its launch, triggering community FUD, and the heat of the ecosystem has dropped sharply. As of May 28, Believe has issued more than 27,000 tokens with a total market value of approximately US$290 million, of which Launchcoin contributed nearly 63%, and its transaction volume accounted for nearly 72% of the total ecosystem. It can be seen that the popularity of platform coins is heavily dependent on the market performance of LAUNCHCOIN. However, the platform coin is accused of lacking empowerment such as dividends and actual application scenarios, and the community has great doubts about its long-term sustainability. Once the market heat is difficult to maintain, investor confidence may decline rapidly, and there is a risk of stampede.
Overall, the current MEME market platform is highly homogenized. Although Believe has simplified the process through X token issuance, it has not changed the MEME issuance logic. Whether it can maintain its popularity in the future will depend on whether it can continue to innovate or create projects with real wealth effects.
6. Outlook for next month
Stablecoin bill approval progress
This month, the stablecoin GENIUS Act passed the debate motion with 69 votes in favor and 31 votes against, and entered the revision process. With the rapid advancement of the stablecoin bills in the House of Representatives and the Senate, the two parties have reached a rare consensus on the regulation of crypto assets, and the bill may be expected to complete the legislative process in Q4 2024.
The core of the GENIUS Act includes key contents 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, all stablecoins must be 100% backed by highly liquid assets, and customer assets must be strictly isolated. Issuers must disclose their reserves monthly, be audited by certified public accountants, and senior management must bear legal responsibility for the authenticity of the information. At the same time, issuers must establish a complete anti-money laundering and sanctions compliance system and record and monitor trading activities. The Act also sets limits on overseas issuers and large technology companies, requiring them to follow the same regulatory standards as in the United States to prevent systemic risks and market monopoly. In terms of consumer protection, coin holders enjoy priority repayment rights when the issuing institution goes bankrupt, and officials are prohibited from participating in stablecoin business during their term of office. In addition, the Act clarifies that payment stablecoins are not securities or commodities, excluding the overlap of SEC and CFTC supervision.
The GENIUS Act is not only a regulatory framework for stablecoins, but also a strategic move by the United States to comprehensively strengthen the international dominance of the digital dollar by promoting the issuance of compliant stablecoins anchored by the US dollar, attracting global capital to flow to US bonds, and restricting overseas issuers. At present, Hong Kong has passed the Stablecoin Issuer Bill, which has set the first complete regulatory framework for Hong Kong's stablecoin market. Based on the previous experience of Bitcoin spot ETFs, the United States is likely to pass relevant bills soon. In this context, stablecoin projects with strong compliance are expected to gain greater market recognition in the future.
Ethereum ETF staking approval progress
On April 14, the SEC postponed the decision on Grayscale Ethereum Trust ETF and Grayscale Ethereum Mini Trust ETF to June 1, with the final decision deadline being the end of October. The reason for the postponement involved regulatory issues regarding pledge and physical subscription/redemption mechanisms . In contrast, the progress of Hong Kong Ethereum ETF pledge is relatively fast. On April 11, Bosera Fund issued an announcement that Bosera Hashkey Virtual Asset Ethereum ETF has obtained regulatory approval and can pledge up to 30% of Ethereum holdings starting from April 25, 2025. On April 18, China Asset Management will launch a pledge service for its Ethereum spot ETF, becoming the second fund in Hong Kong to provide such services.
Based on the previous experience of Bitcoin and Ethereum ETF approval, Hong Kong is usually ahead of the United States. Therefore, after Hong Kong took the lead in allowing pledge, the market generally expects that the US regulators will also reach a regulatory framework on the relevant mechanism in the near future to promote the final approval of the Ethereum spot ETF. Once this move is realized, it will not only promote the institutionalization of Ethereum as an asset class, but Ethereum and Ethereum pledge-related assets such as Lido and Eigen may usher in a new wave of market popularity.
