Crypto Market Analysis for May 2025

1. Macroeconomic Overview

In May 2025, the US economy is at a critical turning point. Inflation continues to decline, the labor market shows resilience, monetary policy enters a wait-and-see period, trade policies bring new uncertainties, and fiscal measures affect market expectations through special operations and debt rating adjustments. Against this backdrop, the crypto market demonstrates strong resilience, and the global risk asset structure may face a new round of reassessment.

inflation trend

In April, the seasonally adjusted CPI year-on-year decreased to 2.3%, the lowest since February 2021, indicating that price pressures continue to ease. The seasonally adjusted CPI month-on-month recorded 0.2%, which is also slightly lower than expected, showing insufficient momentum for inflation to rise in the short term. Meanwhile, the U.S. Treasury has initiated a $40 billion government bond repurchase operation, which the market generally views as a measure to release liquidity, and is refinancing at low interest rates. 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 market expectations of 138,000, reflecting the resilience of the job market. This data provides a basis for the Federal Reserve to maintain a wait-and-see approach to policy. The continued strength of employment has, on one hand, alleviated market concerns about a recession, and on the other hand, weakened the possibility of multiple unexpected rate cuts within the year.

monetary policy dynamics

Federal Reserve Chairman Powell stated that he will reassess the current monetary policy framework and may adjust the "average inflation targeting" mechanism. He pointed out that frequent supply-side shocks 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 period of high interest rates and even increase its holdings of medium- and long-term government bonds through balance sheet expansion 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, emphasizing that the direction of June's policy will be determined based on economic data.

Trade Policies and Global Economic Outlook

In early May, Trump announced tariffs on EU goods, which were later postponed, but the threat of high tariffs has already impacted market sentiment. Given the frequent changes in trade policy beforehand, uncertainty regarding future policy directions has significantly increased. On the China-US front, the People's Bank of China implemented a "reserve requirement cut + interest rate cut" combination policy, releasing a large amount of liquidity and lowering the policy interest rate. This move is seen as the start of a new round of easing cycle, and market expectations for improved China-US relations have risen, along with an increase in risk appetite.

2. Crypto Market Overview

Trading Volume Analysis

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 recovery in capital activity. The overall market displayed high volatility characteristics, with multiple instances of daily trading volumes exceeding a 50% increase. During the two periods from May 6 to May 12 and from May 21 to 22, trading volumes surged significantly, with daily trading volume once exceeding $180 billion. During this period, the price of BTC broke through $100,000 and $110,000 respectively, and the market's bullish sentiment significantly intensified.

market capitalization change

As of May 27, the total market capitalization of cryptocurrencies has rebounded to $3.56 trillion, up 17.0% from 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 ETH in this round of funding allocation. 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 repair in the market.

popular new tokens

Among the popular tokens launched in May, projects with a strong background still dominate, including Layer 2 project SOPH and B2. Additionally, USD1, as one of the popular narratives in May, has gained extensive market attention along with the stablecoin USD1 and its associated projects such as B, Lista, and Staketone.

3. On-chain Data Analysis

BTC, ETH ETF fund flow

In May, BTC ETF net inflows reached $5.77 billion, while ETH ETF net inflows totaled $317 million. 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. For Ethereum, benefiting from expectations of technical upgrades and easing macro policies, the price increase was even more significant, rising by 31.9% during the month.

stablecoin market dynamics

In May, the total circulation of the stablecoin market increased by approximately $7.28 billion, mainly driven by inflows from USDT and USDC. With the easing of macro policies, the crypto market experienced a significant pullback, while the stablecoin market continued its strong growth momentum.

4. Mainstream Currency Price Analysis

BTC price trend

Bitcoin is struggling to maintain above $109,588, indicating that there is buying interest at every slight pullback. It has risen for seven consecutive weeks, and if it continues into the eighth week, it will pave the way for further increases. Institutional investors continue to inject funds into Bitcoin ETF products, showing optimism about the long-term outlook. The rising moving averages and the RSI nearing the overbought zone suggest that the upward trend may persist in the short term.

ETH price trend

Ethereum rebounded from the 20-day EMA ($2,425) on May 25, indicating strong demand at lower price levels. Bulls will attempt to break through the resistance at $2,738 again. If successful, the ETH/USDT trading pair could rise to $3,000, although there may be resistance around $2,850. If the price retraces and falls below the 20-day EMA, it could drop to $2,323 or $2,111.

SOL price trend

Solana found support at the 20-day EMA ($169) on May 25, indicating a positive market sentiment. Bulls will attempt to break through the $188 resistance level again. If successful, SOL/USDT could rise to $210 or even $220. However, sellers need to push the price below the 20-day EMA to prevent further increases. If this support is broken, it may drop to the 50-day SMA ($151).

5. Hot Events of This Month

USD1 ecological development

In mid-May, the popularity of the USD1 stablecoin surged, and its ecosystem partnership projects attracted market attention. As of May 28, the market capitalization of USD1 had exceeded $2.1 billion, making it the seventh largest stablecoin. Its core advantage lies in being issued under the leadership of the Trump family, making it the first stablecoin project endorsed by a president. USD1 primarily targets institutional users, while retail investors participating in its ecosystem projects may achieve better returns. Recently, the prices of several tokens related to USD1 partners have surged, fueling the market's enthusiasm for the "WLFI+USD1" concept.

The rise of the Believe platform

As of May 28, the core token Launchcoin of the Believe platform has surged in price, with its market capitalization nearing $310 million at one point. The platform focuses on the concept of "social assetization," allowing users to automatically trigger token issuance by posting on the X platform. The platform's activity has rapidly increased, with the number of new tokens jumping to third place on the MEME platform. However, a certain token supported by the platform plummeted after its launch, raising concerns in the community. As of May 28, Believe has issued over 27,000 tokens, with a total market cap of approximately $290 million, of which Launchcoin is dominant.

6. Outlook for Next Month

stablecoin bill progress

This month, the "GENIUS Act" has passed the motion for debate and entered the amendment process. The legislation may be completed in Q4 2024. The core content includes issuance qualification restrictions, reserve requirements, compliance obligations, user protection, and international applicability. The bill aims to strengthen the international status of dollar-pegged stablecoins, and in the future, compliant stablecoin projects are expected to gain greater market recognition.

Ethereum ETF pledge approval

The SEC has postponed its decision on the Ethereum ETF, with the final deadline set for the end of October. In contrast, Hong Kong has approved certain Ethereum ETFs for staking. The market expects that U.S. regulators may soon reach a framework for the relevant mechanism, advancing the approval of the Ethereum spot ETF. Once realized, it will promote the institutionalization process of Ethereum, and related assets such as Lido and Eigen may experience a new wave of market enthusiasm.