Crypto Market Analysis for May 2025

1. Macroscopic Perspective

In May 2025, the US 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 the fiscal side affects market expectations through operations similar to quantitative easing and adjustments in debt ratings. Against this backdrop, the crypto market shows strong resilience, and the global risk asset structure may undergo a new round of reassessment.

inflation trend

In April, the seasonally adjusted CPI year-on-year dropped to 2.3%, lower than market expectations, marking a new low since February 2021, indicating that price pressures continue to ease. The seasonally adjusted CPI month-on-month recorded 0.2%, also slightly below expectations, showing insufficient momentum for a rebound in inflation in the short term. Meanwhile, the U.S. Treasury initiated a $40 billion government bond repurchase operation, which the market generally sees as a "quasi-QE" measure aimed at releasing liquidity through the repurchase of already issued government bonds and 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, reflecting the resilience of the job market. This data provides a basis for maintaining a wait-and-see approach in policy. The continued strength in employment alleviates market concerns about a recession on one hand, while on the other hand, it diminishes the likelihood of multiple unexpected rate cuts within the year.

monetary policy dynamics

The Chairman of the Federal Reserve stated that it 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 Federal Reserve 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 movement of long-term rates. The policy tone will be more flexible, with no immediate urgency for preemptive rate cuts in the short term, and emphasized that the direction of June's policy will be determined based on data such as PCE, CPI, and tariff impacts.

Trade Policy and Global Economic Outlook

At the beginning of May, relevant parties announced a 50% tariff on EU goods starting from June 1, which was later postponed to July 9. However, the threat of high tariffs has already impacted market sentiment. Given the previous frequent changes in trade policies, the uncertainty regarding future policy directions has significantly increased. In terms of China and the US, the People's Bank of China implemented a "reduction in reserve requirement ratio + 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, and market expectations for improved China-US relations have risen, along with an increase in risk appetite.

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, up 15.8% from the previous period, indicating a continuous recovery in capital activity, with the overall market exhibiting high volatility characteristics. There were multiple instances of single-day trading volume exceeding a 50% increase. During the two periods from May 6 to May 12 and from May 21 to 22, trading volume surged significantly, with single-day trading volume breaking through $180 billion at one point. During this period, the BTC price surpassed $100,000 and $110,000 respectively, with market bullish sentiment significantly warming.

total market capitalization and daily growth

As of May 27, the total market value 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%. The latter has increased 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 value has risen above $3.3 trillion and has steadily increased since then, showing a clear trend of structural recovery in the market.

New popular tokens launched in May

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 garnered widespread attention in the market along with stablecoin USD1 and its associated 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 the price of Bitcoin to rebound strongly and set a new historical high of $111,959. As of May 28, Bitcoin's price rose from $94,212 to $108,969 within the month, an increase of approximately 13.5%. The overall trend of net inflow of funds for Bitcoin spot ETFs in May was about $5.77 billion.

On the Ethereum front, benefiting from expectations of the Pectra upgrade and a relaxation of macro policies, the price increase is more significant. 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 also attracted 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 driving forces for growth this month, with the total circulation of stablecoins increasing by approximately $7.28 billion.

4. Price Analysis of Mainstream Currencies

BTC price analysis

Bitcoin is struggling to maintain above $109,588, indicating that every minor pullback is met with 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 increases. Institutional investors see long-term opportunities and continue to inject funds into Bitcoin exchange-traded products.

Bulls are working hard to push and maintain the price above $109,588. The rising moving average and the RSI nearing the overbought zone indicate that the easiest resistance direction is upward. If buyers can push the price up to $111,980, the BTC/USDT trading pair may soar to $130,000.

On the downside, the 20-day EMA ($104,886) is a key support level to watch. If the price falls below and closes under the 20-day EMA, it may entice short-term investors to take profits, leading to a drop in price to the psychological level of $100,000.

ETH price analysis

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

If the price retraces from the current level or encounters 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 to $2,111.

SOL price analysis

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

However, sellers need the price to break below the 20-day EMA to prevent further increases. Once the price falls below this support level, it may dip down to the 50-day SMA ($151), which could act as strong support. If it bounces from the 50-day SMA, it may lead to the price consolidating in a range between $153 and $188 for a period of time.

5. Hot Events of the Month

USD1 ecosystem

In mid-May, as the price of BTC broke through historical highs and the launch of USD1 on a certain trading platform caused its popularity to surge, the USD1 ecosystem cooperation projects also attracted market attention. As of May 28, 2025, the market capitalization of the USD1 stablecoin has surpassed $2.1 billion, rising to become the seventh largest stablecoin. Although USD1 does not have significant differences in mechanism design 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 surrounding USD1 mainly revolves around "presidential endorsement + RWA track + expectations of stablecoin legislation". The official positioning of WLFI for USD1 is primarily aimed at institutional users, while participation in USD1 ecosystem projects is seen as a better opportunity for individual investors. Recently, the prices of tokens related to several USD1 partners such as Buildon, Lista DAO, StakeStone, Haedal, and Cookie have surged significantly, driving the market's strong 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 market.

Believe has been promoted to a new player 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 peak of $0.36, with a market value approaching $310 million at one point, making it one of the MEME coins with the largest increase recently. The platform was created by Ben Pasternak, focusing on the concept of "social assetization," where users only need to post tweets containing $TICKER and @launchcoin on social platforms to automatically trigger token issuance.

With the innovative token issuance mechanism and the skyrocketing price of Launchcoin, the activity level of the Believe platform has rapidly increased, with tokens such as Dupe and Goonc following suit. The number of newly issued tokens on the platform has surged to the third position among MEME platforms. However, the token $YAPPER, which was overly supported by Believe's officials, plummeted by over 66% after its launch, triggering community FUD and causing a sharp decline in ecological activity. As of May 28, Believe has issued more than 27,000 tokens, with a total market cap of approximately $290 million, of which Launchcoin contributes nearly 63%, and its trading volume accounts for nearly 72% of the ecosystem's total. It can be seen that the popularity of platform tokens heavily relies on the market performance of LAUNCHCOIN. However, this platform token has been criticized for lacking dividends and practical application scenarios, raising significant concerns in the community regarding its long-term sustainability. Once market enthusiasm becomes 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 of issuing tokens through social platforms, 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's stablecoin "GENIUS Act" passed the debate motion with a result of 69 votes in favor and 31 votes against, entering the amendment process. With the rapid progress of the stablecoin bills in the House of Representatives and the Senate, there is a rare bipartisan consensus on the regulation of crypto assets, and the bill is expected to complete the legislative process in Q4 2024.

The core of the GENIUS Act includes key contents such as issuance qualification 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 separation of customer assets. Issuers must disclose reserve status monthly, accept audits by registered accountants, and senior management is legally responsible for the authenticity of information. At the same time, issuers must establish a complete anti-money laundering and sanctions compliance system, and record and monitor trading activities. The Act also imposes restrictions on overseas issuers and large technology companies, requiring them to adhere to equivalent regulatory standards in the U.S. to prevent systemic risks and market monopolies. In terms of consumer protection, holders have priority repayment rights in the event of bankruptcy of the issuing institution, and officials are prohibited from participating in stablecoins during their term.