Outlook for the Crypto Market in the Second Half of 2025: Opportunities Amid Range-Bound Monetary Policy and Global Turmoil

I. Summary

In the first half of 2025, the global macro environment remains highly uncertain. The Federal Reserve has paused interest rate cuts multiple times, reflecting that monetary policy has entered a "wait-and-see range-bound" phase, while increased tariffs and escalating geopolitical conflicts further fracture the global risk appetite structure. From five major macro dimensions, combining on-chain data and financial models, a systematic assessment of the opportunities and risks in the crypto market for the second half of the year is conducted, and three core strategy recommendations are proposed, covering Bitcoin, stablecoin ecosystems, and DeFi derivatives.

II. Review of the Global Macroeconomic Environment (First Half of 2025)

In the first half of 2025, the global macroeconomic landscape continues to exhibit multiple characteristics of uncertainty. Under the intertwining of several factors such as weak growth, sticky inflation, ambiguous monetary policy prospects, and escalating geopolitical tensions, global risk appetite has shown significant contraction. The dominant logic of macroeconomics and monetary policy has gradually evolved from "inflation control" to "signal game" and "expectation management." The crypto market, as a front-line field of global liquidity changes, also demonstrates typical synchronous fluctuations in this complex environment.

First, looking back at the policy path, the market reached a consensus on the expectation of "three interest rate cuts within the year" at the beginning of 2025. However, this optimistic expectation was soon hit by reality. In April and May, the CPI rose unexpectedly for two consecutive months, and the core PCE growth rate has remained above 3%, reflecting that "sticky inflation" has not faded as the market expected. The structural causes of inflation have not fundamentally changed.

In the face of the renewed pressure of inflation, the June meeting once again chose to "pause interest rate cuts" and adjusted the expected number of interest rate cuts for the entire year of 2025 through the dot plot, from three adjustments at the beginning of the year to two. The year-end expectation for the federal funds rate remains at over 4.9%. This marks a shift in monetary policy from "directional" guidance to "timing" management, significantly increasing the uncertainty of the policy path.

In the first half of 2025, there is a phenomenon of "increasing division" between fiscal policy and monetary policy. As the strategic combination of "strong dollar + strong borders" accelerates, the Ministry of Finance announced in mid-May that it would "optimize debt structure" through various financial means, including promoting the compliance legislative process for dollar stablecoins, attempting to leverage Web3 and financial technology products to spill over dollar assets, injecting liquidity without significantly expanding the balance sheet. This series of fiscal-led measures to stabilize growth is clearly decoupled from the monetary policy direction of "maintaining high interest rates to suppress inflation", making market expectation management increasingly complex.

Tariff policy has also become one of the dominant variables in the global market turmoil in the first half of the year. Since mid-April, a new round of tariffs ranging from 30% to 50% has been imposed on Chinese high-tech products, electric vehicles, and clean energy equipment, with threats to further expand the scope. These measures are not merely trade retaliation; they are more intended to create inflationary pressure through "imported inflation," thereby forcing interest rate cuts. Against this backdrop, the contradiction between the stability of the dollar's credit and the interest rate anchor has been brought to the forefront. Some market participants have begun to question whether independence still exists, leading to a repricing of long-term yields on U.S. Treasuries. The yield on the 10-year U.S. Treasury rose to as high as 4.78%, while the yield spread between the 2-year and 10-year turned negative again in June, raising recession expectations once more.

At the same time, the continuous warming of geopolitical tensions has had a substantial impact on market sentiment. Ukraine successfully destroyed Russian strategic bombers in early June, triggering a high-intensity verbal confrontation between NATO and Russia; meanwhile, in the Middle East, key Saudi oil infrastructure was reportedly attacked at the end of May, leading to damaged expectations for crude oil supply, with Brent crude oil prices surpassing $130, setting a new high since 2022. Unlike the market reaction in 2022, this round of geopolitical events did not drive a simultaneous increase in Bitcoin and Ethereum, but instead prompted a significant inflow of safe-haven funds into gold and short-term U.S. Treasury markets, with gold spot prices briefly exceeding $3450. This change in market structure indicates that Bitcoin is still viewed more as a liquidity trading asset rather than a macro safe-haven asset at this stage.

From the perspective of global capital flows, a significant trend of "de-emerging marketization" emerged in the first half of 2025. IMF data and cross-border capital tracking show that net outflows from emerging market bonds in Q2 reached the highest single-quarter level since the pandemic began in March 2020, while the North American market experienced relative net inflows due to the stability brought by ETFs. The crypto market has not been completely insulated from this. Although Bitcoin ETFs saw a cumulative net inflow of over $6 billion this year, demonstrating strong performance, small and mid-cap tokens and DeFi derivatives faced massive capital outflows, indicating significant signs of "asset stratification" and "structural rotation."

In summary, the first half of 2025 presents a highly structured uncertain environment: monetary policy expectations are experiencing severe range-bound fluctuations, fiscal policy intentions are spilling over into US dollar credit, frequent geopolitical events are forming new macro variables, capital is flowing back to developed markets, and safe-haven fund structures are being restructured. All these factors lay a complex foundation for the operating environment of the crypto market in the second half of the year. It is not merely a question of "whether interest rates will be cut", but rather a multi-faceted battlefield surrounding the reconstruction of credit anchored to the US dollar, the struggle for global liquidity dominance, and the integration of digital asset legitimacy. In this battle, crypto assets will seek structural opportunities in the cracks of the system and the redistribution of liquidity. The next phase of the market will no longer belong to all coins, but to investors who understand the macro landscape.

III. The Reconstruction of the Dollar System and the Systematic Evolution of the Role of Cryptocurrency

Since 2020, the dollar system has been undergoing the most profound structural reconstruction since the collapse of the Bretton Woods system. This reconstruction is not driven by the evolution of payment tools at the technical level but stems from the instability of the global monetary order itself and a crisis of institutional trust. Against the backdrop of dramatic fluctuations in the macro environment in the first half of 2025, dollar hegemony faces both an imbalance in internal policy consistency and external challenges to its authority through multilateral currency experiments, which profoundly affects the market position, regulatory logic, and asset role of cryptocurrencies.

From an internal structural perspective, the biggest problem facing the US credit system is the "erosion of the monetary policy anchoring logic." Over the past decade, as an independent inflation target manager, its policy logic has been clear and predictable: tightening during economic overheating and relaxing during downturns, with price stability as the primary goal. However, by 2025, this logic is being gradually eroded by the "strong fiscal - weak central bank" combination. The persistence of fiscal easing and monetary independence during the Biden administration has gradually been reshaped into a "fiscal priority" strategy, which centers on leveraging the global dominance of the dollar to export domestic inflation in reverse, indirectly prompting adjustments in its policy path in conjunction with fiscal cycles.

The most intuitive manifestation of this policy fragmentation is the Ministry of Finance's continuous strengthening of the shaping of the internationalization path of the US dollar, while bypassing traditional monetary policy tools. For example, the "Compliance Stablecoin Strategic Framework" proposed by the Ministry of Finance in May 2025 clearly supports the global spillover of US dollar assets through on-chain issuance in the Web3 network. Behind this framework lies the intention of the US dollar's "financial national machine" evolving into a "technology platform nation". The essence is to shape the "distributed currency expansion capability" of the digital dollar through new financial infrastructure, allowing the US dollar to continue providing liquidity to emerging markets while bypassing central bank balance sheet expansion. This path integrates US dollar stablecoins, on-chain government bonds, and the US commodity settlement network into a "digital dollar export system", aimed at strengthening the network effect of US dollar credit in the digital world.

However, this strategy has also raised concerns in the market about the "disappearance of the boundary between fiat currency and crypto assets." As the dominance of USD stablecoins in crypto trading continues to rise, its essence has gradually evolved into a "digital representation of the US dollar" rather than "crypto native assets." Correspondingly, purely decentralized crypto assets like Bitcoin and Ethereum have seen a continuous decline in their relative weight within the trading system. From the end of 2024 to Q2 2025, data shows that the trading pairs of USDT against other assets account for an increase from 61% to 72% of the total trading volume on major global trading platforms, while the spot trading shares of BTC and ETH have both declined. This change in liquidity structure signifies that the US dollar credit system has partially "devoured" the crypto market, with USD stablecoins becoming a new systemic risk source in the crypto world.

At the same time, from the perspective of external challenges, the dollar system is facing continuous probing from multilateral currency mechanisms. Countries such as China, Russia, Iran, and Brazil are accelerating the construction of domestic currency settlement, bilateral clearing agreements, and commodity-linked digital asset networks, aiming to weaken the dollar's monopoly position in global settlements and promote the steady implementation of a "de-dollarization" system. Although an effective network to counter the SWIFT system has not yet formed, its "infrastructure substitution" strategy has already created marginal pressure on the dollar settlement network. For example, e-CNY is accelerating cross-border payment interface connectivity with several countries in Central Asia, the Middle East, and Africa and exploring the use scenarios of central bank digital currencies in oil, gas, and bulk commodity transactions. In this process, crypto assets are caught between two systems, and their "institutional affiliation" issue is becoming increasingly blurred.

Bitcoin, as a special variable in this pattern, is transitioning from "decentralized payment tool" to "sovereignty-resistant inflation asset" and "liquidity channel under institutional gaps." In the first half of 2025, Bitcoin is being extensively used in some countries and regions to hedge against local currency depreciation and capital controls, especially in currency-unstable countries like Argentina, Turkey, and Nigeria, where the "grassroots dollarization network" formed by BTC and USDT becomes an important tool for residents to hedge risks and achieve value storage. On-chain data shows that in the first quarter of 2025, the total amount of BTC flowing into Latin America and Africa through peer-to-peer trading platforms increased by over 40% year-on-year. Such transactions significantly evade domestic central bank regulation and strengthen Bitcoin's role as a "gray hedging asset."

However, it is necessary to be vigilant, as Bitcoin and Ethereum have not yet been incorporated into the national credit logic system, their risk resistance capability remains insufficient when facing "policy stress tests." In the first half of 2025, the regulatory intensity on DeFi projects and anonymous trading protocols will continue to increase, especially with a new round of investigations targeting cross-chain bridges and MEV relay nodes in the Layer 2 ecosystem, prompting some funds to choose to exit high-risk DeFi protocols. This reflects that in the process of the dollar system re-dominating the market narrative, crypto assets must reposition their roles, no longer symbolizing "financial independence," but more likely becoming tools for "financial integration" or "institutional hedging."

The role of Ethereum is also undergoing a transformation. Along with its dual evolution into a data verifiable layer and a financial execution layer, its underlying function is gradually evolving from "smart contract platform" to "institutional access platform." Whether it is the on-chain issuance of RWA assets or the deployment of government/corporate stablecoins, more and more activities will incorporate Ethereum into their compliance frameworks. Traditional financial institutions such as Visa, JP Morgan, and Paypal have deployed infrastructure on Ethereum-compatible chains like Base and Polygon, forming an "institutional layer" with the DeFi native ecosystem. This means that Ethereum's institutional position as a "financial middleware" has been restructured, and its future direction does not depend on the "degree of decentralization," but rather on the "degree of institutional compatibility."

The dollar system is re-dominating the digital asset market through three paths: technological spillover, institutional integration, and regulatory penetration. Its goal is not to eliminate crypto assets, but to make them part of the "digital dollar world."