May 2025 Crypto Market Analysis

1. Macroeconomic Situation

In May 2025, the US economy is at a critical turning point. Inflation continues to decline, the labor market remains resilient, monetary policy enters a wait-and-see phase, trade policy brings new uncertainties, and the fiscal side affects market expectations through repurchase operations and changes in debt ratings. Against this backdrop, the crypto market demonstrates strong resilience, and the structure of global risk assets may face a new round of reevaluation.

inflation trend

In April, the seasonally adjusted year-on-year CPI dropped to 2.3%, the lowest since February 2021, indicating that price pressures are continuing to ease. The seasonally adjusted month-on-month CPI was 0.2%, showing insufficient momentum for inflation to rebound in the short term. At the same time, the U.S. Treasury initiated a $40 billion Treasury bond repurchase operation, seen as a "quasi-QE" measure aimed at releasing liquidity and refinancing at low interest rates, becoming an important factor supporting the prices of risk assets.

labor market

In April 2025, non-farm payrolls added 177,000 jobs, far exceeding the expected 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 in employment has eased market fears of a recession, but it has also weakened the likelihood of multiple unexpected rate cuts within the year.

monetary policy trends

The Federal Reserve Chairman stated that the current monetary policy framework will be reassessed and the "average inflation targeting" mechanism may be abandoned. 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- to long-term government bonds through balance sheet expansion to control the upward trend of long-term interest rates. The policy tone will be more flexible, and there is no urgency for preemptive interest rate cuts in the short term.

Trade Policy and Global Economic Outlook

At the beginning of May, there were reports that the EU would impose a 50% tariff on goods, which was later postponed, but the threat of high tariffs has already impacted market sentiment. In China, the central bank implemented a "reserve requirement ratio cut + interest rate cut" policy, 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 expectations for improved Sino-US relations heating up, and risk appetite simultaneously increasing.

2. Crypto Market Overview

Trading Volume Analysis

As of May 27, the average daily trading volume in the market was $117.4 billion, an increase of 15.8% compared to the previous period, indicating a continuous recovery in capital activity. During this period, there were several instances of daily trading volume increasing by over 50%, with significant surges in trading volume during two phases: from May 6 to 12 and from May 21 to 22, where the daily trading volume once exceeded $180 billion, and BTC prices broke through $100,000 and $110,000 respectively, significantly warming market bullish sentiment.

market cap change

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 these, BTC's market share is 62.6%, and ETH's market share is 9.6%, with the latter growing by 29.7% compared to the previous period, indicating a continuous preference for fund allocation towards ETH. Since May 8, after the total market capitalization exceeded $3.3 trillion, it has steadily risen, showing a clear trend of structural market recovery.

popular new coins

Among the popular tokens launched in May, VC-backed projects dominate, including Layer 2 projects SOPH, B2, etc. In addition, USD1 has become a popular narrative in May, and its related projects such as B, Lista, Staketone, etc. have also garnered widespread attention.

3. On-chain Data Analysis

BTC, ETH ETF fund flow

In May, BTC ETFs experienced a net inflow of $5.77 billion, while ETH ETFs had a net inflow of $317 million. Bitcoin's price rose from $94,212 at the beginning of the month to $108,969, an increase of approximately 13.5%. Ethereum's price increased from $1,794 to $2,635, a rise of 31.9%.

stablecoin market changes

In May, the total circulation of stablecoins increased by approximately $7.28 billion, mainly driven by the growth of USDT, USDE, and DAI. As macro policies eased, the stablecoin market continued its strong growth momentum.

4. Mainstream Cryptocurrency Price Analysis

BTC price trend

Bitcoin is struggling to maintain above $109,588, with buying interest stepping in at each minor pullback. It has risen for seven consecutive weeks, and if it continues into the eighth week, it will pave the way for further gains. Institutional investors are continuously injecting funds into Bitcoin ETP, with recorded inflows of $2.9 billion last week.

Bulls are trying to push and maintain the price above $109,588. A breakout above $111,980 could surge to $130,000. The 20-day EMA ($104,886) is a key support level.

ETH price trend

Ethereum rebounded from the 20-day EMA ($2,425) on May 25, indicating strong demand at lower levels. Bulls will attempt to break the resistance at $2,738 again. If successful, it could rise to $3,000, while bears may halt the upward movement near $2,850.

If the price corrects and falls below the 20-day EMA, it may drop to $2,323, and then fall to $2,111.

SOL price trend

On May 25, Solana found support at the 20-day EMA ($169), and bulls will attempt to break through the resistance level of $188 again. If successful, it could rise to $210, or even $220.

If it falls below the 20-day EMA, it may test the 50-day SMA (151 USD). A rebound from that level could lead to a price consolidation between 153 and 188 USD.

5. Hot Events This Month

USD1 ecological development

In mid-May, with BTC reaching new highs and a certain exchange listing USD1, its popularity soared, attracting attention to related cooperation projects. As of May 28, the market capitalization of USD1 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 to receive a presidential endorsement.

The main narrative of USD1 revolves around "presidential endorsement + RWA track + expectations for stablecoin legislation". Recently, the prices of several USD1 partner tokens have surged, driving the market's enthusiasm for related concepts. If the US stablecoin legislation is passed, USD1 and its partner projects are expected to occupy an important position in the future crypto ecosystem.

The rise of the Believe platform

As of May 28, the core token Launchcoin of the Believe platform rose from $0.014 at the beginning of the month to a peak of $0.36, with a market cap that once approached $310 million. 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 level has rapidly increased, with the number of new tokens jumping to third place on the MEME platform. However, the official supported token YAPPER experienced a significant drop after its launch, triggering community FUD and leading to a decline in ecosystem enthusiasm. Currently, the platform has issued over 27,000 tokens, with a total market value of approximately $290 million, of which Launchcoin accounts for a large proportion.

Overall, the MEME market platform is highly homogeneous, and whether Believe can maintain its popularity depends on its ability to continuously innovate or create projects with wealth effects.

6. Outlook for Next Month

Progress of the Stablecoin Bill

This month, the "GENIUS Act" passed the debate motion with 69 votes in favor and 31 votes against, entering 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 issuance of compliance-based stablecoins pegged to the US dollar, attract global capital to US Treasury bonds, restrict offshore issuing entities, and comprehensively reinforce the international dominance of the digital dollar. Hong Kong has already passed the relevant regulatory bill, and the US is likely to follow suit. In the future, stablecoin projects with strong compliance are expected to gain greater market recognition.

Ethereum ETF staking approval

The SEC has postponed the decision on Grayscale's Ethereum Trust ETF to June 1, with a final deadline at the end of October. In contrast, the Hong Kong Ethereum ETF staking is progressing more quickly, with two funds already approved to provide staking services.

The market expects that the US regulatory authorities will soon reach a regulatory framework regarding the relevant mechanisms, promoting the final approval of the Ethereum spot ETF. Once achieved, it will not only accelerate the institutionalization process of the Ethereum asset class, but Ethereum and related assets such as Lido and Eigen may welcome a new wave of market enthusiasm.