Macro Analysis of the Crypto Market: The Resonance of China and US Policies Drives Bitcoin to New Heights

I. Macroeconomic Background: Policy Easing and Market Sentiment Shift

In May 2025, the People's Bank of China implemented a "dual reduction" policy, lowering the reserve requirement ratio by 0.5 percentage points and reducing the policy interest rate by 0.1 percentage points to 1.4%. This policy not only has a profound impact on the traditional financial market but also brings potential opportunities for the crypto market and the Web3 ecosystem. At the same time, there are positive expectations for high-level economic and trade negotiations between China and the United States, further driving the global market's risk appetite.

1.1 The improvement of China-U.S. economic and trade relations boosts market sentiment.

The Sino-U.S. economic and trade relations are warming up, and the market's optimistic expectations for future cooperation are rising. This series of policy signals has reshaped investor sentiment, bringing a significant positive impact on the crypto market. Risk assets like Bitcoin have risen, reflecting a shift in market sentiment. Investors' acceptance of non-traditional assets such as cryptocurrencies is gradually increasing, with Bitcoin's price once approaching the historical high of 100,000 dollars.

1.2 Global liquidity increase

China's "double reduction" policy injects sufficient liquidity into the market, releasing 1 trillion yuan in funds. This monetary easing not only has a positive effect on the Chinese economy but may also trigger changes in global capital flows. Global capital will more actively seek new investment channels, and the demand for cryptocurrencies will significantly increase. Bitcoin, as "digital gold," stands out in the global monetary easing environment, becoming an important tool against inflation and currency depreciation.

1.3 Federal Reserve policy and interest rate cut expectations

The Federal Reserve faces dual pressures of high inflation and high unemployment, and may maintain its current interest rate policy in the short term. The strengthening of the dollar has a profound impact on global capital flows. Nevertheless, demand for crypto assets has not significantly declined; instead, there has been a resurgence of "digital gold" as a safe-haven asset. Investors, amid uncertainty over Federal Reserve policy, are seeking stable value storage tools, which has increased the demand for Bitcoin.

1.4 Market Sentiment Shift and Investment Strategy

The resonance of Chinese and American policies and the shift in market sentiment have a profound impact on the global capital markets, especially the crypto market. Global risk appetite has significantly increased, leading to a surge in demand for cryptocurrencies. The price of Bitcoin is nearing its historical high of $100,000, indicating a high level of market recognition. However, investors still need to respond cautiously to potential risks, maintain flexible strategies, and pay attention to Web3 projects with practical application scenarios.

2. Bitcoin Market Dynamics: Price Approaches 100,000 USD

In 2025, Bitcoin is showing a strong upward trend, repeatedly approaching the historical psychological barrier of 100,000 USD. The driving forces behind the rise include the resonance of macro policy background, the evolution of the internal structure of the crypto industry, as well as the interplay of sentiment and expectations. Bitcoin has once again become the focus of global capital, reflecting the release of risk aversion demand, institutional recognition, influx of institutions, and valuation reconstruction.

Institutional investors have become the dominant force in this round of price increase. Large asset management institutions are positioning themselves for Bitcoin ETFs, driving Bitcoin towards institutional allocation. Financial products related to crypto assets in places like Hong Kong and Dubai are becoming increasingly diverse, and regulatory transparency is improving, attracting more traditional capital. This has reduced Bitcoin's market volatility, making the rise more structural and sustainable.

The logic of supply-side scarcity continues to amplify the value of Bitcoin. The halving event in April 2024 compresses new supply, reinforcing its "deflationary currency" attributes. On the demand side, driven by multiple factors such as ETF listings and institutional allocations, there is exponential growth. The asymmetry in the supply-demand structure supports a medium to long-term price increase.

However, the process of Bitcoin approaching $100,000 is accompanied by intense emotional fluctuations and technical adjustments. Whale accounts concentrating their trading and algorithmic games have led to increased short-term volatility. Some early investors are taking the opportunity to cash out, while new investors are concentrating at high levels. The market structure is transitioning from early users to mainstream users.

In terms of public opinion, the "FOMO effect" attracts a large number of retail investors to enter the market, but it also brings excessive speculation risks. Although the long-term logic supports breaking new highs, there is still a possibility of intense fluctuations in the short term, as the market enters a stage of heated competition between enthusiasm and risk.

Overall, Bitcoin approaching 100,000 USD represents its asset positioning leap within the global capital system. Against the backdrop of de-dollarization and a resurgence of risk aversion sentiment, Bitcoin has become a strategic asset in a new round of global wealth redistribution. Although there are short-term adjustment risks, in the medium to long term, this round of increase opens a new consensus cycle. Investors need to find a balance between enthusiasm and calmness, understanding the deeper meaning behind Bitcoin's price.

3. Development of Web3 Ecosystem: Driven by Both Policy and Technology

The Web3 ecosystem is entering a new development cycle, gradually evolving into a foundational architecture for global digital governance, cross-border collaboration, and the value internet. The three forces of policy guidance, technological innovation, and application expansion are mutually reinforcing, driving Web3 from concept to large-scale implementation.

1. Policy Support

The U.S. cryptocurrency and Web3 policy is shifting from "regulatory suppression" to "strategic acceptance." New Hampshire has passed the "Bitcoin Reserve Bill," requiring the state government to hold a portion of its financial reserves in Bitcoin. This marks Bitcoin being viewed in certain areas as a "digital gold" with long-term value storage capabilities, which may trigger a trend of "local government BTC-ization."

Multiple state governments are in the early stages of "policy competition," advancing experimental legislation for encryption mining, on-chain finance, smart contracts, and more. At the federal level, the "Financial Innovation and Technology Future Act" is being promoted to clarify the definition of mainstream digital assets like Bitcoin and to push for the establishment of a unified regulatory framework. These dynamics strengthen long-term institutional confidence in the market, providing policy anchor points for businesses and capital to enter.

2. Technical Progress

Modular blockchain and foundational infrastructure technologies such as zero-knowledge proofs have entered a practical stage, significantly enhancing the performance, composability, and privacy protection capabilities of Web3 networks. The modular design allows developers to choose the optimal combination based on business needs. Zero-knowledge proof technology empowers Web3 with dual capabilities of "computation + privacy," with ZK-rollup entering the large-scale deployment phase as a core Layer 2 solution.

The MCP-type protocol integrating AI and Web3 is taking shape, bringing the training, invocation, and verification processes of AI models on-chain. These new technologies are breaking through the existing bottlenecks of the Web3 system, enabling on-chain applications to compete with the experiences of Web2.

3. Application Scenario Expansion

Cross-border payments have become an important application scenario in Web3. More and more small and medium-sized enterprises are using stablecoins for direct settlement, avoiding the efficiency problems of the traditional financial system. Digital identity authentication ( DID ) systems are integrated into DAO governance, device access, cross-chain credit evaluation, and other aspects, addressing the fundamental issues of "who is the user" and "who owns the data."

The driving force behind Web3 applications comes from three aspects: the "chain reform" upgrade needs of traditional industries; the evolution of native encryption demands; and the cultural resonance of global youth and developers for free collaboration and value sovereignty. These factors together constitute the long-term development motivation of the Web3 ecosystem.

4. Risk Factors and Investment Strategies

Despite the strong growth of the Web3 ecosystem and the Bitcoin market, investors still need to pay close attention to potential risks:

1. Uncertainty in global interest rate policy direction. Rising inflation data or escalating geopolitical conflicts may force the Federal Reserve to shift back to a hawkish stance, impacting the valuations of risk assets.

2. Regulatory disturbances remain a significant external variable. Before the new regulatory framework is officially implemented, there exists a gray area in law enforcement standards. The implementation of the EU's MiCA framework may also impose compliance pressure on certain projects.

3. Technical risks cannot be ignored. New technologies such as zero-knowledge proofs, Layer 2 bridging, etc. still face issues such as attacks and code vulnerabilities.

4. Structural differentiation in the market may lead to phase-based bubbles. Hot assets emerge one after another, and some projects may be overvalued.

Investment strategy advice:

• Low-risk preference investors should consider Bitcoin as a long-term allocation and gradually increase their positions during pullbacks.

• Growth-oriented investors can focus on projects in the infrastructure track that have real applications and active ecosystems, such as Layer2, ZK, modular chains, etc.

• Utilize batch building, rolling adjustments, and set take profit and stop loss strategies for dynamic management.

• Strengthen the consideration of "policy sensitivity" dimension and prioritize the layout of emerging projects in regions with clear compliance trends.

5. Conclusion

In the first half of 2025, the crypto market will enter a new round of structural rising cycle driven by policy resonance, warming liquidity, and technological innovation. Bitcoin is approaching the $100,000 mark, and the Web3 ecosystem application scenarios are further expanding. However, uncertainties in policies, regulatory uncertainties, market speculation, and technical security risks still exist. Investors should maintain calm judgment during structural prosperity, follow the strategic logic that combines value-driven, policy-oriented, and safety bottom line, and grasp the core dividends of the next stage.