Authors: White55 & Luke, Marsbit
As global central banks are mired in stagflation, Wall Street's capital whales have pushed Bitcoin to its historical throne of $120,000 and Ethereum to $3,800 through an epic short squeeze - this is not just a numerical breakthrough, but a silent declaration of the collapse of the old financial order.
Institutions have etched new rules with real money: BlackRock's single ETF holdings surpass Swiss gold reserves, 125 listed companies have written 847,000 Bitcoins into their balance sheets, permanently freezing 4.3% of circulating chips; with a $250 billion stablecoin market creating a new cross-border payment artery, and 24.4 billion in real-world assets anchored on-chain, a trillion-dollar territory of traditional finance is being devoured by Washington legislation (the GENIUS Act) and Wall Street manipulation (ETF daily absorption of $300 million) - and this is merely the prelude to crypto capital's reconstruction of the global asset landscape in the first half of 2025 - this report will dissect the ice and fire battlefield of this capital reconstruction and review the life-and-death game of the crypto market in the first half of 2025.
Washington's Thaw: How Regulatory Clarity Became the Core Engine of the Bull Market
In the second quarter of 2025, the cryptocurrency market carved out a remarkable independent trend amidst macroeconomic fog. While global investors were still anxious about tariff disputes, Federal Reserve policies, and slowing economic growth, a regulatory warm current from Washington was quietly reshaping the industry's foundations. This was not just a quarterly rebound, but a structural inflection point. Regulatory dawn paved the way for institutional scale entry, which in turn launched an unprecedented "Bitcoinization of companies" wave.
The Damoclean sword hanging over the crypto industry - regulatory uncertainty - began to dissolve in the second quarter of 2025. The core driving force behind this market sentiment and trend was not improvements in the macroeconomic environment, but the fundamental "thawing" and "de-risking" of the US regulatory environment. These series of changes created crucial preconditions for the subsequent large-scale adoption by institutions and enterprises.
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This phenomenon reveals a deeper trend: the second quarter of 2025 may mark the beginning of a "great divergence". In this divergence, the internal structural catalysts driving Bitcoin (such as the aforementioned regulatory clarity and institutional adoption) begin to overwhelm external macroeconomic headwinds for the first time. The market's pricing of crypto-native driving factors has already surpassed its reaction to short-term macroeconomic noise. This itself is an important sign of market maturation. The weakness in the macroeconomic environment provides a realistic problem background for the "Bitcoin as a solution" narrative, greatly accelerating its acceptance as a legitimate macro hedging asset. Leaders like Larry Fink have begun to frequently define Bitcoin as an "international asset" that can hedge geopolitical risks and sovereign currency depreciation in mainstream financial media, and this endorsement from the head of the world's largest asset management company carries far more weight than that of crypto evangelists.
Institutional Floodgates Open: From ETF Highways to Corporate Treasuries
If regulatory thawing is the "heavenly timing" and macroeconomic turbulence is the "geographical advantage", then institutional and corporate entry is the decisive "human harmony". In the second quarter, we clearly saw institutional capital flowing into Bitcoin through two main channels: the already established ETF pathway and the explosively growing new wave of corporate treasuries.
The U.S. spot Bitcoin ETF continued its historic success in the second quarter. Data shows that in just one week in April, these ETFs attracted over $3 billion in net inflows. By early July, the total AUM of all Bitcoin ETFs had reached $137.46 billion. Among them, BlackRock's IBIT was called by CEO Larry Fink the "fastest-growing product in ETF history", once attracting nearly $1 billion in inflows in a single day. Fink candidly admitted that he was "surprised" by the scale of demand, which far exceeded expectations. The success of ETFs lies not only in their ability to attract funds but also in completely transforming Bitcoin's investor structure. A market previously dominated by retail investors and crypto funds now welcomes indirect participation from sovereign wealth funds, pension funds, and large corporate consortiums.
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Overall TVL: Affected by Trump's tariff policy at the beginning of the year, DeFi TVL dropped from $129 billion at the start of the year to $83.6 billion in April, but rebounded from April with market recovery.
AAVE Lending Reaches New High, Driven by Scale and Synergy Effects
AAVE has built a strong network effect barrier in the DeFi field. Leveraging five years of market cultivation, massive users, and top-tier industry liquidity, projects developed on AAVE naturally enjoy an hard-to-replicate scale advantage.
Partners can quickly access ready-made ecosystem resources - powerful infrastructure, active user groups, and deep liquidity pools, skipping the lengthy infrastructure construction period, which is the embodiment of the "AAVE effect".
As the protocol with the largest TVL in DeFi history, AAVE dominates with 21% of the industry's TVL and an overwhelming 51% market share in lending. Its $49 billion net deposit scale forms the cornerstone of system stability, with its core advantage being a unique capital hub role that can effectively catalyze ecosystem synergy and achieve geometric liquidity growth:
Examples of significant synergy:
- After Ethena's sUSDe integrated with AAVE, deposits surged 55 times in just two months, jumping from $2 million to $1.1 billion.
- After receiving AAVE support, Pendle assets saw users deposit PT tokens worth $1 billion within weeks, which has now doubled to $2 billion, making AAVE the primary supply market for Pendle tokens.
- After KelpDAO's rsETH was integrated with the AAVE protocol, TVL grew nearly 4 times in four months, skyrocketing from 65,000 ETH to 255,000 ETH.
Moreover, AAVE supports nearly half of the active stablecoin market and has become the primary hub for circulating Bitcoin in DeFi. Notably, it has achieved nearly $1 billion TVL on four independent blockchain networks, demonstrating rare depth and breadth of layout.
The first half of 2025 is a turning point for DeFi to move from regulatory winter to institutionalization. Aave has consolidated its "lending hegemony" through liquidity depth, demand creation capability, and multi-chain expansion, but its token has not yet fully reflected its value; the capital inflow and innovation unleashing triggered by SEC's new policies are driving DeFi towards the "ultimate battle" of integration with traditional finance.
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The HYPE token started a downward trend from $28 at the beginning of the year, falling below $10 in April due to the HLP fund attack during the "Jelly incident". Subsequently, through fee buyback mechanisms and trading volume explosion, it staged a comeback: the platform's daily trading volume exceeded $1.5 billion, with 50% of daily fee income used for token burning, pushing the token to a high of $49.8 on July 20, a staggering 398% increase from its low point.
On-chain data shows that whale addresses like James Foye continue to accumulate, with holdings exceeding 15%, forming a liquidity moat.
Ecosystem Evolution: From Derivatives Island to Cross-Chain Application Ecosystem
Hyperliquid, established as an institutional-level derivatives protocol, aims to achieve three major leaps by 2025:
- Product Matrix Expansion: Perpetual contract leverage increased to 50x, adding forex and commodity derivatives to attract hedge funds;
- Chain Abstraction Architecture: Enabling cross-chain asset trading compatible with Ethereum and Solana through account abstraction, reducing multi-chain operational friction;
- Ecosystem Incubation Plan: Hyperliquid Foundation investing $20 million to support Perp DEX, options protocols, and RWA projects,
- First lending protocol Lendify's TGE raising over $48 million.
- Daily unique trading addresses exceeding 120,000, proving its transformation from a "niche protocol" to a derivatives infrastructure core layer.
Epilogue: Public Chain Competition Enters the "Multidimensional War" Era
The public chain landscape of the first half of 2025 reveals a brutal truth: single-point advantages are insufficient. Ethereum maintains its foundation through ETF and L2 ecosystem, Solana breaks through with speed and payment scenarios, BNB Chain is reborn through traffic operations and compliance transformation, while Hyperliquid rises through a vertical domain deflationary model.
Core trends are emerging:
- RWA and stablecoins become new traffic entry points, with US Bank and Citibank announcing self-issued stablecoins;
- Regulatory arbitrage ends - US GENIUS Act and EU MiCA force public chains to build compliance frameworks;
- Token economic innovation: shifting from PoS staking yields to practical models like fee burning (e.g., HYPE), ecosystem incentive dividends.
As Altcoin market cap breaks through $1.5 trillion, competing coins outperform BTC recently, the ultimate goal of public chain wars is no longer a "killer app", but the ecosystem's anti-fragility and institutional design.
In the second half of 2025, Solana's Firedancer upgrade, Ethereum's Verkle tree integration, and Hyperliquid's cross-chain derivatives will push the battle to new dimensions.
Conclusion
As human civilization moves from steam's roar to bit flow, history repeats similar scripts: every technological frontier expansion is accompanied by old order's shock and new rules' coronation.
The first half of 2025's crypto market is the climax of this power transfer - Washington's regulatory iron curtain thaws in a lobbying flood, the Federal Reserve's interest rate scepter dims under stagflation clouds, while the blockchain's bitcoin miners' roar has built a new digital continent.
We stand at the crack between two eras: in old finance's fissures, corporate bitcoin reserves stack like Fort Knox, ETF capital floods demolish Wall Street's last arrogant walls; on the new world's map, stablecoin legislation becomes cross-border payment's constitution, DeFi smart contracts rewrite profit distribution rules, and public chain computing power ignites the on-chain industrial revolution of AI and RWA.
And this is merely the prologue.
