This week, the risk appetite in traditional financial markets and the cryptocurrency market has significantly rebounded, driving U.S. cryptocurrency funds to recover the capital lost during the pullback in February and March, with weekly inflows surpassing $7.5 billion.
On May 21, Bitcoin (BTC) broke its historical peak, following a post by President Trump on the X platform two days earlier (May 19) confirming that ceasefire negotiations between Russia and Ukraine were underway.
Meanwhile, renowned analyst and Global Macro Investor CEO Raoul Pal warned that fiat currencies will continue to depreciate, urging investors to increase their allocations in cryptocurrencies and NFTs (non-fungible tokens), stating, "These assets will never be cheaper than they are now."
In an era of exponential currency depreciation: "You don't hold enough crypto assets and NFTs"
Analysts and industry leaders point out that in an era of exponential currency devaluation, cryptocurrencies and NFTs can help investors protect their shrinking purchasing power.
Raoul Pal, founder of Global Macro Investor, stated that in a "world of exponential times and currency devaluation," investing in digital assets is becoming crucial. "You don't hold enough crypto assets. Once you fill that gap, you'll find your NFT holdings are also insufficient—because art is the upstream vehicle of wealth. The prices of these two asset classes will never be cheaper than they are now."
In another response, he added, "NFTs are the most outstanding long-term wealth storage tools I know, and you can still get in early before the network effects explode."
"To some extent, NFTs and extended artworks will indeed become asset allocation tools for the wealthy after reaching a certain level of wealth," wrote Nansen research analyst Nicolai Sondergaard, calling it the "natural selection" of asset diversification.
He told Cointelegraph, "For traders and investors with smaller amounts of wealth, the NFT portion is for speculating on future returns," adding that besides creating wealth, NFTs also benefit from the appeal of strong communities.
As investor interest grows, U.S. cryptocurrency fund inflows surpass $7.5 billion in 2025
In 2025, U.S. cryptocurrency investment products have attracted over $7.5 billion in investments, with net inflows for five consecutive weeks indicating a growing demand for digital assets.
According to a report from digital asset management firm CoinShares on May 19, U.S. cryptocurrency investment products attracted $785 million in investments last week, pushing the total inflow for the year to over $7.5 billion.
The latest data marks the fifth consecutive week of net inflows, following nearly $7 billion in outflows during February and March.
The U.S. leads with $681 million in inflows, followed by Germany ($86.3 million) and Hong Kong ($24.4 million).
White House's suspension of tariff increases boosts risk appetite in the crypto market
On May 12, the White House announced a 90-day suspension of tariff increases on China, and after the simultaneous reduction of import tariff rates between the U.S. and China by 24%, investor demand for risk assets like cryptocurrencies has significantly rebounded.
The day after the announcement, Coinbase saw a net outflow of 9,739 Bitcoins (worth over $1 billion) in a single day—Bitwise's European research director André Dragosch noted that this set a record for institutional withdrawals in 2025, indicating that "institutional allocations are accelerating."
VanEck to launch Avalanche ecosystem fund
VanEck revealed in a statement to Cointelegraph that it plans to launch a private digital asset fund focused on Web3 tokenization projects on the Avalanche blockchain network in June.
The fund will be available only to qualified investors and will focus on liquid tokens and venture projects in Web3 areas such as gaming, financial services, payments, and artificial intelligence. VanEck stated that idle funds will be allocated to Avalanche (AVAX) real-world asset (RWA) products, including tokenized money market funds.
The fund will be managed by the VanEck Digital Asset Alpha Fund (DAAF) team, which manages over $100 million in net assets as of May 21. DAAF portfolio manager Pranav Kanade emphasized, "The next wave of value in the crypto space will come from real businesses, not infrastructure."
Report shows: Yield-bearing stablecoin supply surges to $11 billion, accounting for 4.5% market share
The circulation of yield-bearing stablecoins has surged to $11 billion, accounting for 4.5% of the total stablecoin market. This figure represents explosive growth from $1.5 billion (1% share) at the beginning of 2024.
The decentralized protocol Pendle has become one of the biggest winners. The protocol allows users to lock in fixed income or speculate on floating rates. According to a report co-authored by analysts from Spartan Group and Modular Capital for Cointelegraph, Pendle currently accounts for 30% of the total locked value (TVL) of yield-bearing stablecoins, approximately $3 billion.
The report noted that of its $4 billion total locked value, stablecoins account for as much as 83%, a significant increase from less than 20% a year ago. In contrast, assets like Ethereum (ETH) that historically contributed 80%-90% of Pendle's TVL have now shrunk to less than 10%.
Traditional stablecoins like USDT and USDC do not pay interest to holders. Given that the current stablecoin circulation exceeds $200 billion and the Federal Reserve's interest rate is at 4.3%, Pendle estimates that stablecoin holders miss out on over $9 billion in annual yield opportunities.
Tether's U.S. Treasury holdings surpass Germany's $111 billion scale
The stablecoin giant with a market cap of $151 billion has surpassed Germany in its holdings of U.S. Treasury securities, showcasing the advantages of its diversified reserve strategy—this strategy effectively helps the company operate steadily amid volatility in the cryptocurrency market.
U.S. Treasury Department data shows that Tether, the issuer of the world's largest stablecoin USDT, currently holds more U.S. Treasuries than Germany's $111.4 billion.
Tether's U.S. Treasury holdings exceed $120 billion
According to Tether's Q1 2025 attestation report, its holdings of U.S. Treasuries have surpassed $120 billion. This makes Tether the 19th largest entity globally in terms of U.S. Treasury investments, surpassing many sovereign nations.
"This milestone not only confirms the company's conservative reserve management strategy but also highlights Tether's increasingly important role in the large-scale distribution of U.S. dollar liquidity," Tether emphasized in the report.
As reported by Cointelegraph in March 2025, Tether was the seventh largest buyer of U.S. Treasuries in 2024, with its holdings surpassing major economies such as Canada, Taiwan, Mexico, Norway, and Hong Kong.
DeFi Market Weekly Report
Cointelegraph Markets Pro and TradingView data show that most of the top 100 cryptocurrencies by market capitalization saw gains this week.
Worldcoin (WLD) led the top 100 cryptocurrencies with a 32% weekly increase, followed closely by Hyperliquid (HYPE) with a 30% increase.
Thank you for reading our summary of the most influential DeFi developments this week. Join us next Friday for more stories, insights, and knowledge about this thriving field.
Original article: “Finance Redefined: Cryptocurrencies and NFTs are Lifeboats in a Sinking Fiat System”
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