May 2025 Crypto Market Analysis

1. Macroscopic Perspective

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 the fiscal side impacts market expectations through operations similar to quantitative easing and adjustments in debt ratings. Against this backdrop, the crypto market demonstrates strong resilience, and the structure of global risk assets may undergo a new round of reassessment.

inflation trend

In April, the seasonally adjusted CPI year-on-year fell 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 below expectations, showing insufficient momentum for inflation to rebound in the short term. At the same time, the U.S. Treasury began a $40 billion Treasury bond repurchase operation, which the market generally views as a measure similar to quantitative easing, aimed at releasing liquidity by repurchasing 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 the market expectation 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 policy. The continued strength in employment has, on one hand, eased 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 would 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 the Fed to place more emphasis on 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, with no urgency for preemptive rate cuts in the short term, and it 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

In early May, Trump announced a 50% tariff on EU goods starting June 1. Although it was later postponed to July 9, the threat of high tariffs has already impacted market sentiment. Given the previous frequent changes in trade policy, the uncertainty regarding future policy paths has significantly increased. In terms of China and the U.S., the People's Bank of China 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, and the market's expectations for improvement in China-U.S. relations have warmed up, with risk appetite simultaneously rising.

Summary

In May 2025, the American economy enters a critical turning point:

• Inflation continues to decline, and expectations for easing are rising;
• Strong employment supports a wait-and-see approach to monetary policy;
• Fiscal policy is similar to quantitative easing operations, combined with a more dovish tone from the Federal Reserve, to jointly lower market interest rates;
• Global trade frictions have resurfaced, but the repair of China-US relations has increased market risk appetite;

In the crypto market, with the marginal improvement of the macro funding environment and the continuous inflow of ETFs, the price of Bitcoin has broken its historical high to $111,959. The resonance between current macro policies and global financial trends may be helping the crypto market to enter a new cycle of structural capital repricing.

2. Crypto Market Overview

Currency Data Analysis

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 recovery in capital activity. The overall market has shown high volatility characteristics, with multiple instances of daily 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 daily trading volume once breaking $180 billion. During this period, BTC prices broke through $100,000 and $110,000 respectively, and market bullish sentiment significantly intensified, leading to a concentrated release of trading momentum in the short term.

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, with a significant rise in total market value. Among them, BTC's market share is 62.6%, and ETH's market share is 9.6%, with the latter having grown by 29.7% compared to the previous period, indicating a continued preference for allocation to ETH in this round of funding. Since May 8, the total market capitalization has risen above $3.3 trillion, and has since been steadily climbing, showing a clear trend of structural market repair.

New Popular Tokens Launched in May

Among the popular tokens launched in May, venture capital-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 market attention along with stablecoin USD1 and its associated projects such as B, Lista, and Staketone.

3. On-chain Data Analysis

Analysis of inflows and outflows of BTC, ETH ETFs ###

In May, BTC ETF inflows reached $5.77 billion.

In May, as the United States reached a phased suspension agreement on tariff policies with multiple countries, 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 rose from $94,212 to $108,969 within the month, an increase of approximately 13.5%. Meanwhile, Bitcoin spot ETF funds showed a net inflow trend overall, with a cumulative inflow of about $5.77 billion in May.

In May, ETH ETF inflows reached $317 million.

In terms of Ethereum, 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 inflows, with a net inflow of approximately $317 million in May.

Analysis of Stablecoin Inflows and Outflows

In May, stablecoin inflows amounted to approximately $7.28 billion, mainly coming from USDT and USDC.

In May, with the suspension of tariff policies in the United States, the easing of macroeconomic policies led to a significant correction in the crypto market. 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. Price Analysis of Major Currencies

BTC price fluctuation analysis

Bitcoin is struggling to maintain above $109,588, indicating that there is buying interest every time there is a slight pullback. Bitcoin 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. A data platform reported on May 26 that Bitcoin ETP recorded $2.9 billion in inflows last week, accounting for a quarter of the total inflows for 2024.

Bitcoin bulls are working hard to push and maintain the price above $109,588, indicating that every pullback is being bought. The rising moving averages and the RSI nearing 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 decline in price to the psychological level of $100,000, where strong buying is expected to provide robust support.

ETH price change analysis

Ethereum bounced off 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 surge to $3,000, although bears may try 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 down to $2,111.

SOL Price Change 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 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 increases. Once the price breaks below this support level, it may test the 50-day SMA ($151), which could act as strong support. A rebound from the 50-day SMA could lead to the price consolidating between $153 and $188 for some time.

5. Hot Events of This Month

USD1 ecosystem

In mid-May, as BTC's price broke its historical high and a certain trading platform launched USD1, its popularity skyrocketed, leading to increased market attention on the USD1 ecosystem cooperation projects. As of May 28, 2025, the market capitalization of the USD1 stablecoin has surpassed $2.1 billion, making it the seventh largest stablecoin. Although USD1 does not have significant differences in mechanism design compared to other mainstream stablecoins, its core advantage lies in its issuance by WLFI, led by the Trump family, making it the first stablecoin project endorsed by a president.

The current narrative surrounding USD1 primarily revolves around "presidential endorsement + RWA track + expectations for stablecoin legislation." The official positioning of WLFI is that USD1 is mainly targeted at institutional users, while for retail investors, participating in projects within the USD1 ecosystem represents a better opportunity for benefit. Recently, the prices of several tokens related to USD1 partners such as Buildon, Lista DAO, StakeStone, Haedal, and Cookie have seen significant increases, fueling 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 cooperating projects, is expected to occupy a more important position in the future crypto ecosystem.

Believe has been promoted to a new MEME platform elite.

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

With the innovative token issuance mechanism and the skyrocketing of Launchcoin, the activity level of the Believe platform has rapidly increased, with tokens such as Dupe and Goonc following suit. The number of new tokens issued by the platform has surged to third place among MEME platforms. However, after the overly supported token $YAPPER launched, it plummeted over 66%, triggering community FUD and causing the ecological heat to drop sharply. As of May 28, Believe has issued more than 27,000 tokens, with a total market value of about $290 million, of which Launchcoin contributes nearly 63%, accounting for almost 72% of the total trading volume in the ecosystem. It is evident that the popularity of the 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. If the 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 MEME issuance logic.