Crypto Market Analysis for May 2025

1. Macroeconomic Situation

In May 2025, the U.S. 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 influence 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 undergo a new round of reassessment.

inflation trend

In April, the seasonally adjusted CPI annual rate fell to 2.3%, lower than the market expectation of 2.4%, marking a new low since February 2021, indicating that price pressures continue to ease. The seasonally adjusted CPI monthly rate recorded 0.2%, also slightly below expectations, with 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, which the market generally views as a special measure aimed at releasing liquidity through the repurchase of already issued Treasury 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 Federal Reserve closely monitors employment data as a basis for policy adjustments. Continued strong employment alleviates market concerns about a recession on one hand, while also diminishing the likelihood of multiple unexpected rate cuts within the year.

monetary policy dynamics

The Federal Reserve Chairman stated that they 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 expand the balance sheet to increase holdings of medium- and long-term government bonds to control the rise in long-term interest rates. The policy tone will be more flexible, with no immediate urgency for preemptive rate cuts in the short term, and it emphasizes that the direction of policy in June will be determined based on data such as PCE, CPI, and tariff impacts.

Trade Policy and Global Economic Outlook

In early May, it was reported that the EU would impose a 50% tariff on goods, which was later postponed to July 9. However, the threat of high tariffs has already impacted market sentiment. Given the frequent changes in trade policy prior to this, the uncertainty regarding future policy paths has significantly increased. On the other hand, 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 beginning of a new round of easing, and expectations for improved Sino-U.S. relations have risen, along with a simultaneous increase in risk appetite.

2. Crypto Market Overview

trading volume and daily growth rate

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 continued recovery in capital activity, with the overall market showing high volatility characteristics. During this time, there were multiple instances of daily trading volume increasing by over 50%. In the two phases from May 6 to May 12 and from May 21 to 22, trading volume surged significantly, with daily trading volume once exceeding $180 billion. During this period, BTC prices broke through $100,000 and $110,000 respectively, and the market's 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% from last month, with a significant rise in total market value. Among this, 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, showing a continued preference for allocation of funds towards ETH in this round. Since May 8, the total market capitalization has risen past $3.3 trillion, and has been steadily climbing since then, indicating a clear trend of structural repair in the market.

May New Popular Tokens

Among the popular tokens launched in May, venture capital-backed projects still dominate, including Layer 2 project SOPH and B2. Additionally, USD1, as one of the hot narratives in May, has gained widespread attention in the market along with stablecoin USD1 and its associated projects such as B, Lista, Staketone, etc.

3. On-chain Data Analysis

BTC, ETH ETF inflow and outflow situation

In May, the price of Bitcoin increased from $94,212 to $108,969 within the month, a rise of approximately 13.5%. The overall trend of net inflow of funds for Bitcoin spot ETFs showed a net inflow, with a cumulative inflow of about $5.77 billion in May.

In terms of Ethereum, benefiting from expectations of the Pectra upgrade and a relaxation of macro policies, the price increase is more significant. 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 capital 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 its 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. Mainstream Currency Price Analysis

BTC price change

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 gains. Institutional investors see long-term opportunities and continue to inject funds into Bitcoin exchange-traded products.

The rising moving average and the RSI approaching 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 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 tempt short-term investors to take profits, potentially leading the price to decline to the psychological level of $100,000, where buying pressure is expected to form strong support.

ETH price changes

Ethereum rebounded from the 20-day EMA ($2,425) on May 25, indicating strong demand at lower price levels. Bulls will once again attempt to break through the resistance level at $2,738. 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 falls 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

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

However, sellers need to push the price below the 20-day EMA to prevent further upward movement. Once the price breaks below this support level, it may drop to the 50-day SMA ($151), which could act as strong support. If it rebounds from the 50-day SMA, it may lead to the price oscillating between $153 and $188 for some 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 led to a surge in its popularity, the USD1 ecosystem collaboration projects also began to attract market attention. As of May 28, 2025, the market capitalization of the USD1 stablecoin had surpassed $2.1 billion, making it the seventh largest stablecoin. Although there are no significant differences in mechanism design between USD1 and other mainstream stablecoins, its core advantage lies in the fact that it is issued by WLFI, led by the Trump family, making it the first stablecoin project endorsed by a president.

The current narrative around USD1 mainly revolves around "presidential endorsement + RWA track + expectations of the stablecoin bill." WLFI officially positions USD1 mainly for institutional users, while for retail investors, participating in USD1 ecosystem projects presents a better opportunity for benefits. Recently, the prices of several tokens related to USD1 partners such as Buildon, Lista DAO, StakeStone, Haedal, and Cookie have surged significantly, driving the market's enthusiasm for the "WLFI+USD1" concept. If the U.S. stablecoin bill 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 play a more important role in the future crypto ecosystem.

Believe has risen to become a new player on the MEME platform.

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 capitalization approaching $310 million at one point, making it one of the top-performing MEME coins recently. The platform was created by Ben Pasternak and focuses on the concept of "social assetization." Users only need to post tweets on social platforms containing $TICKER and @launchcoin to automatically trigger token issuance.

With the innovative token issuance mechanism and the surge of Launchcoin, the activity level of the Believe platform has rapidly increased, with tokens like Dupe and Goonc following suit. The number of newly issued tokens on the platform has jumped to third place among MEME platforms. However, the official over-support of the token $YAPPER resulted in a drop of over 66% upon its launch, triggering FUD in the community, and the ecological heat subsequently plummeted. As of May 28, Believe has issued over 27,000 tokens, with a total market capitalization of approximately $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 token heavily relies on the market performance of LAUNCHCOIN. However, this platform token has been criticized for lacking dividends and practical application scenarios, leading to significant concerns within the community about its long-term sustainability. If market enthusiasm is difficult to maintain, investor confidence may quickly decline, posing the 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, the stablecoin "GENIUS Act" passed the debate motion with a result of 69 votes in favor and 31 votes against, entering the revision process. With the rapid advancement of the stablecoin bills in both 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 content 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, undergo audits by registered accountants, and senior management must assume legal responsibility for the authenticity of the information. At the same time, issuers must establish a complete anti-money laundering and sanctions compliance system, and record and monitor transaction activities. The Act also imposes restrictions on overseas issuers and large technology companies, requiring them to adhere to equivalent U.S. regulatory standards to prevent systemic risks and market monopolies. In terms of consumer protection, holders have priority repayment rights in the event of the issuer's bankruptcy, and officials are prohibited from participating in stablecoin businesses during their terms. Furthermore, the Act clarifies that payment stablecoins do not fall under the category of securities or large.