May 2025 Crypto Market Analysis

1. Macroeconomic Situation

In May 2025, the U.S. macroeconomy is at a critical turning point. Inflation continues to decline, the labor market remains resilient, monetary policy enters a wait-and-see period, trade policies bring new uncertainties, and fiscal measures affect market expectations through special operations. Against this backdrop, the crypto market shows strong resilience, and the structure of global risk assets may迎来新一轮重估.

inflation trend

In April, the seasonally adjusted year-on-year CPI fell to 2.3%, the lowest since February 2021, indicating that price pressures continue to ease. The seasonally adjusted month-on-month CPI recorded 0.2%, showing insufficient momentum for short-term inflation rebound. At the same time, the U.S. Treasury Department initiated a $40 billion Treasury bond repurchase operation, aiming to release liquidity through the repurchase of issued Treasury bonds and to refinance at low interest rates in a new round. This operation has become an important force supporting the prices of risk assets.

labor market

In April 2025, non-farm payrolls added 177,000 jobs, far exceeding the market expectation of 138,000, reflecting the resilience of the labor market. This data provides a basis for maintaining a wait-and-see approach in policy. The sustained strength in employment has, on one hand, alleviated market concerns about a recession, while on the other hand, it has diminished the likelihood of multiple unexpected rate cuts within the year.

monetary policy dynamics

The Federal Reserve Chairman stated that he will reassess the current monetary policy framework and may abandon the "average inflation targeting" mechanism. He pointed out that frequent supply-side shocks are changing the traditional policy environment, prompting a greater focus on structural inflation risks. In the future, the period of maintaining high interest rates may be extended, and even through balance sheet expansion to increase holdings of medium- and long-term government bonds to control the rise in long-term interest rates. The policy tone will be more flexible, and there is no urgency for preventive interest rate cuts in the short term.

Trade Policy and Global Economic Outlook

In early May, it was reported that a 50% tariff would be imposed on EU goods starting from June 1, which was later postponed to July 9, but the threat of high tariffs has already impacted market sentiment. Given the frequent changes in trade policy previously, the uncertainty regarding future policy directions has significantly increased in the market. In China, the central bank implemented a "reserve requirement ratio cut + interest rate cut" policy in May, 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, with market expectations for improved Sino-US relations heating up and risk appetite rising correspondingly.

2. Crypto Market Overview

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 rebound in capital activity and a high volatility characteristic in the overall market. During the two periods from May 6 to May 12 and from May 21 to 22, trading volume surged significantly, with daily trading volume once exceeding $180 billion. During this period, BTC prices broke through $100,000 and $110,000 respectively, and market bullish sentiment significantly intensified.

total market capitalization and daily growth

As of May 27, the total market capitalization of cryptocurrencies has rebounded to $3.56 trillion, an increase of 17.0% compared to last month. Among them, BTC's market share is 62.6%, and ETH's market share is 9.6%, with the latter increasing by 29.7% compared to the previous period, indicating a continued preference for allocating funds to ETH in this round. Since May 8, the total market capitalization has risen above $3.3 trillion and has been steadily increasing since then, showing a clear trend of structural market repair.

May new popular tokens

Among the popular tokens launched in May, VC-backed projects still dominate, including Layer 2 projects SOPH and B2. In addition, USD1, as one of the popular narratives in May, has also attracted widespread market attention for related projects such as B, Lista, and Staketone.

3. On-Chain Data Analysis

BTC, ETH ETF inflow and outflow situation

In May, as multiple countries reached a phased suspension agreement on tariff policies, market sentiment significantly improved, driving Bitcoin prices to rebound strongly and set a new historical high of $111,959. As of May 28, Bitcoin's price increased from $94,212 to $108,969 within the month, representing a rise of approximately 13.5%. The overall trend of net inflow of funds for Bitcoin spot ETFs showed a net inflow, with a total of about $5.77 billion accumulated in May.

On the Ethereum front, the price increase has been more significant due to expectations of the Pectra upgrade and a relaxation of macro policies. As of May 28, ETH rose from $1,794 at the beginning of the month to $2,635, an increase of 31.9%. The Ethereum spot ETF has also attracted capital inflows, with a net inflow of approximately $317 million in May.

Stablecoin inflow and outflow situation

In May, with the easing of macro policies, the crypto market experienced a significant correction. The stablecoin market continued to show strong growth momentum. Among them, USDT, USDE, and DAI became the main drivers of growth this month, with the total circulation of stablecoins increasing by approximately $7.28 billion.

4. Mainstream Currency Price Analysis

BTC price change

Bitcoin is struggling to maintain above $109,588, indicating that every minor pullback attracts buying interest. It 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 see long-term opportunities and continue to inject funds into Bitcoin exchange-traded products. Rising moving averages and an RSI close to the overbought zone suggest that the path of least resistance 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 to watch. If the price breaks below and closes under the 20-day EMA, it may entice short-term investors to take profits, leading to a price drop to the psychological barrier of $100,000.

ETH price changes

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

If the price pulls back from the current level or faces resistance and breaks 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 down to $2,111.

SOL price change

On May 25, Solana found support at the 20-day EMA ($169), indicating that market sentiment remains positive, with traders buying on slight pullbacks. Bulls will again attempt to break through the resistance at $188. If successful, the SOL/USDT trading pair could surge to $210 and possibly reach $220.

However, sellers need to push the price below the 20-day EMA to prevent further rises. Once the price breaks below this support level, it may drop to the 50-day SMA ($151), which could act as strong support. A rebound from the 50-day SMA may lead to the price consolidating in the range of $153 to $188 for some time.

5. Hot Events of the Month

USD1 ecosystem

In mid-May, as the price of BTC broke its historical high and the launch of USD1 on a trading platform caused its popularity to soar, the USD1 ecological cooperation projects also gained market attention. As of May 28, 2025, the market capitalization of the USD1 stablecoin has surpassed 2.1 billion USD, making it the seventh largest stablecoin. Although there are no significant differences in the mechanism design of USD1 compared to other mainstream stablecoins, its core advantage lies in being issued by WLFI, led by the Trump family, making it the first stablecoin project endorsed by a president.

The current narrative around USD1 mainly revolves around "presidential endorsement + RWA track + expectations for stablecoin legislation". WLFI officially positions USD1 primarily for institutional users, while for retail investors, participating in USD1 ecological projects represents a better opportunity for benefits. Recently, the prices of several tokens related to USD1's partners have surged significantly, driving the market's high enthusiasm for the "WLFI+USD1" concept. If the U.S. stablecoin legislation 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 ecology.

Believe has risen to become a new force in the MEME platform.

As of May 28, the core token Launchcoin of the Believe platform has risen from $0.014 at the beginning of the month to a high of $0.36, with a market capitalization nearing $310 million at one point, making it one of the MEME coins with the largest increase recently. The platform was created by Ben Pasternak and focuses on the concept of "social assetization," where users can automatically trigger the token issuance by tweeting with $TICKER and @launchcoin on the X platform.

With the innovative token issuance mechanism and the surge of Launchcoin, the activity level of the Believe platform has rapidly increased, with tokens such as Dupe and Goonc following the upward trend, and the number of new tokens issued by the platform has jumped to third in the MEME platform. However, after the overly supported token $YAPPER launched by Believe officially plummeted over 66%, it triggered FUD in the community, and the ecological enthusiasm subsequently dropped sharply. As of May 28, Believe has issued over 27,000 tokens, with a total market value of approximately $290 million, of which Launchcoin contributes nearly 63%, and its trading volume accounts for nearly 72% of the total ecological volume. It can be seen that the popularity of the platform token heavily relies on the market performance of LAUNCHCOIN. However, this platform token has been criticized for lacking dividends and actual application scenarios, leading to significant doubts in the community regarding its long-term sustainability. Once market enthusiasm is difficult to maintain, investor confidence may quickly decline, posing a risk of a stampede.

Overall, the current MEME market platforms are highly homogeneous. Although Believe has simplified the process through issuing tokens via X, 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 wealth effects.

6. Outlook for Next Month

Stablecoin Bill Approval Progress

This month, the stablecoin "GENIUS Act" was passed with 69 votes in favor and 31 votes against, entering the amendment process following the debate motion. With the rapid progress of stablecoin legislation in both the House of Representatives and the Senate, a rare bipartisan consensus has been reached 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 content such as issuance eligibility 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, undergo audits by certified public accountants, and senior management is legally responsible 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 transaction activities. The Act also imposes restrictions on overseas issuers and large technology companies, requiring them to adhere to the same regulatory standards as those in the United States to prevent systemic risks and market monopolies. In terms of consumer protection, holders have priority repayment rights in the event of the issuer's bankruptcy, and officials are prohibited from participating in stablecoin business during their tenure. In addition, the Act clarifies that payment stablecoins do not fall under the category of securities or commodities, thereby eliminating regulatory overlap.

The "GENIUS Act" is not only a regulatory framework for stablecoins but also a strategic initiative by 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. Treasuries, and restricting offshore issuers. Currently, Hong Kong has already passed the "Stablecoin Issuers Ordinance Bill."