May Crypto Market Analysis Report

1. Macroeconomic Situation

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 phase, trade policy brings new uncertainties, and fiscal measures affect market expectations through operations similar to quantitative easing 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 revaluation.

1.1 Inflation Trends

The annual CPI in April fell to 2.3%, the lowest since February 2021, indicating that price pressures continue to ease. The seasonally adjusted monthly CPI recorded 0.2%, showing insufficient momentum for a short-term inflation rebound. Meanwhile, the U.S. Treasury initiated a $40 billion Treasury bond repurchase operation, seen as a measure to release liquidity and refinance at low interest rates, becoming an important force supporting the prices of risk assets.

1.2 Labor Market

In April, non-farm employment increased by 177,000, far exceeding the expected 138,000, reflecting the resilience of the job market. This provides a basis for the Federal Reserve to maintain a wait-and-see approach to policy. The continued strength in employment not only alleviates market concerns about a recession but also diminishes the likelihood of multiple unexpected rate cuts within the year.

1.3 Monetary Policy Dynamics

The Federal Reserve Chairman stated that they 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 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 rise in long-term rates. The policy tone will be more flexible, and there is no urgency for preemptive rate cuts in the short term.

1.4 Trade Policy and Global Economic Outlook

In early May, the United States announced a 50% tariff increase on EU goods, which was later postponed to July 9, 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 combination, 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 market expectations for an improvement in Sino-U.S. relations heating up and risk appetite rising in tandem.

2. Crypto Market Overview

2.1 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. The overall market showed high volatility characteristics, with multiple instances of daily trading volume increasing by over 50%. During the two phases from May 6 to 12 and from May 21 to 22, trading volume surged significantly, with daily trading volume once exceeding $180 billion, and BTC prices breaking $100,000 and $110,000 respectively, leading to a significant rise in bullish sentiment in the market.

Market Capitalization Analysis

As of May 27, the total market capitalization of cryptocurrencies has rebounded to $3.56 trillion, up 17.0% from last month. Among them, BTC market share is 62.6%, and ETH market share is 9.6%, with the latter increasing 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 capitalization has risen past $3.3 trillion, and has steadily climbed since then, showing a clear trend of structural recovery in the market.

2.3 Popular New Coins

Among the popular tokens launched in May, projects with venture capital backgrounds still dominate, including Layer 2 projects SOPH and B2. Additionally, USD1, as one of the popular narratives in May, along with related stablecoins and associated projects such as B, Lista, and Staketone, has also garnered widespread attention in the market.

3. On-chain Data Analysis

3.1 ETF capital flow

In May, BTC ETF inflows reached $5.77 billion, while ETH ETF inflows amounted to $317 million. The price of Bitcoin rose from $94,212 at the beginning of the month to $108,969, an increase of approximately 13.5%. Ethereum performed even better, increasing from $1,794 at the beginning of the month to $2,635, with a growth rate of 31.9%.

3.2 stablecoin market

In May, the total circulation of stablecoins increased by approximately $7.28 billion, mainly driven by inflows from USDT and USDC. USDT, USDE, and DAI became the main drivers of growth this month.

4. Mainstream Currency Price Analysis

4.1 BTC trend

Bitcoin is struggling to maintain above $109,588, with buying pressure stepping in on 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 increases. Institutional investors continue to invest in Bitcoin ETF products, with $2.9 billion in inflows recorded last week. On the technical front, the rising moving averages and the RSI approaching the overbought zone indicate that the upward trend is still ongoing. Key support is located near the 20-day moving average at $104,886.

4.2 ETH trend

Ethereum rebounded from the 20-day moving average of $2,425 on May 25, showing strong demand at lower price levels. Bulls will attempt to break through the resistance level of $2,738 again. If successful, ETH/USDT may surge towards $3,000, potentially facing resistance around $2,850 in between. Support levels below are at $2,323 and $2,111.

4.3 SOL trend

Solana found support at the 20-day moving average of $169, and the bulls will attempt to break through the resistance at $188 again. If successful, SOL/USDT could surge towards $210 or even $220. The support below is near the 50-day moving average of $151, and a rebound from this level may cause the price to oscillate between $153 and $188.

5. Hot Event Analysis

5.1 USD1 ecological development

In mid-May, as BTC hit an all-time high and a trading platform launched USD1, its popularity soared. 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 political endorsement. Related projects in the USD1 ecosystem, such as Buildon and Lista DAO, saw significant increases in token prices, boosting the "WLFI+USD1" concept's popularity. If the US stablecoin bill is passed, USD1 and its partner projects may occupy a more important position in the future crypto ecosystem.

5.2 The rise of the Believe platform

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 capitalization nearing $310 million at one point. The platform focuses on the "social assetization" concept, where users can trigger token issuance by posting tweets in a specific format on social platforms. The platform's activity level surged rapidly, with the number of newly issued tokens jumping to third place on the MEME platform. However, the over-supported token $YAPPER plummeted by over 66% after its launch, raising concerns within the community. By the end of the month, Believe's total market capitalization was approximately $290 million, with Launchcoin accounting for nearly 63%.

6. Future Outlook

6.1 Progress of Stablecoin Legislation

The "GENIUS Act" passed the debate motion with 69 votes in favor and 31 votes against, entering the amendment process. The legislation is expected to be completed in Q4 2024. Core content includes issuance eligibility restrictions, reserve requirements, compliance obligations, and more. The Act aims to strengthen the international status of USD-pegged stablecoins and restrict foreign issuers. In the future, stablecoin projects with strong compliance are expected to gain greater market recognition.

6.2 Ethereum ETF staking approval

The US SEC has delayed its decision on Grayscale's Ethereum Trust ETF until June 1, with a final deadline at the end of October. In contrast, Hong Kong has approved several funds to provide staking services for Ethereum ETFs. The market expects that US regulators will soon reach a framework on the relevant mechanisms to advance the approval of Ethereum spot ETFs. Once achieved, it will not only promote the institutionalization process of Ethereum but also potentially usher in a new wave of market enthusiasm for related assets such as Lido and Eigen.