Looking ahead to the second half of the year, investors should maintain calm judgment amidst structural prosperity, following a strategy that combines value-driven, policy-oriented, and safety net approaches to truly navigate the cycle and seize the core dividends of the next phase.

Summary

In May 2025, the People's Bank of China announced a reduction in the reserve requirement ratio and policy interest rates, while promoting high-level economic and trade talks between China and the United States, bringing optimism to the global economy. As a result, Bitcoin prices approached $100,000, and demand for crypto assets surged significantly. The Web3 ecosystem welcomed new development opportunities driven by both policy support and technological innovation. China's loose monetary policy and the "Bitcoin Reserve Act" officially passed in New Hampshire in May 2025 brought positive and optimistic confidence regarding Bitcoin's potential as a global reserve asset and the industry's development. On the technology front, innovations such as zero-knowledge proofs and modular blockchains provided strong support for the implementation of Web3 applications. The growing demand for application scenarios like cross-border payments and digital identity verification further propelled the development of Web3. Overall, against the backdrop of resonating policies between China and the U.S. and a shift in market sentiment, the crypto market demonstrated strong growth momentum. Investors should closely monitor macro policies and technological advancements to seize this historic opportunity.

I. Macroeconomic Background: Resonating Policies Between China and the U.S. and a Shift in Market Sentiment

In May 2025, the People's Bank of China announced the implementation of a "double reduction" policy, which included a 0.5 percentage point reduction in the reserve requirement ratio (RRR), releasing approximately 1 trillion yuan of long-term liquidity, and a 0.1 percentage point reduction in the policy interest rate to 1.4%. This policy not only had a profound impact on traditional financial markets but also brought potential strategic opportunities for the crypto market and the Web3 ecosystem. At this time, the expectations for high-level economic and trade negotiations between China and the U.S. were positive, further driving a shift in global market risk appetite.

1.1 Recovery of China-U.S. Economic and Trade Relations: A Strong Stimulus for Market Sentiment

The economic and trade relationship between China and the U.S. has always been a focal point for the global market. In recent years, due to the impact of the China-U.S. trade war and tariff policies, the global economy faced considerable uncertainty, leading to a decline in investors' risk appetite. However, with the announcement of the People's Bank of China's "double reduction" policy, expectations for a recovery in China-U.S. economic and trade relations surged, resulting in a general increase in the prices of risk assets, especially in the crypto market. The Chinese government conveyed an important signal behind the "double reduction" policy: the era of loose monetary policy has arrived, and economic growth is expected to receive new support. In this policy context, market liquidity will be released, and investment enthusiasm for traditional assets such as stocks and commodities will soar. Meanwhile, high-level economic and trade negotiations between China and the U.S. were about to commence, particularly with the meeting between Chinese Vice Premier He Lifeng and U.S. Treasury Secretary Janet Yellen, which further enhanced market optimism regarding future economic cooperation. This series of policy signals not only reshaped investor sentiment but also had a significant positive impact on the crypto market. The rise of risk assets like Bitcoin is a direct reflection of the shift in market sentiment. The increase in risk appetite has gradually enhanced investors' acceptance of cryptocurrencies as non-traditional assets, with Bitcoin prices nearing the historical high of $100,000.

1.2 "Double Reduction" Policy and Global Liquidity

China's "double reduction" policy has significant global implications. By lowering the reserve requirement ratio and policy interest rates, the central bank of China injected ample liquidity into the market, releasing 1 trillion yuan in funds. This monetary policy easing not only had a positive effect on the Chinese economy but could also trigger a wave of capital flow changes globally. Particularly in the context of the U.S. economy still facing high inflation and high unemployment risks, China's policy appears especially attractive. Investors in global capital markets, especially in Asia, reacted positively to this policy. With the substantial release of liquidity, global capital will more actively seek new investment channels. In this context, the demand for cryptocurrencies like Bitcoin among investors in traditional asset markets and the crypto market has significantly increased. As "digital gold," Bitcoin's value has become prominent in a global environment of monetary easing, making it an important tool for investors to combat inflation and currency devaluation.

The People's Bank of China's "double reduction" policy not only promoted the recovery of the domestic economy but also significantly increased the risk appetite in international markets. Asian stock markets surged, and prices of commodities such as iron ore and steel continued to rise, prompting traditional market investors to seek new investment opportunities in the crypto market. Due to Bitcoin's fixed supply and anti-inflation properties, an increasing amount of capital views it as a long-term store of value.

1.3 Federal Reserve Policy and Interest Rate Cut Expectations

As global market liquidity increased significantly, the trajectory of the Federal Reserve's monetary policy also became a focal point for the market. Previously, due to persistently high inflation in the U.S., the Federal Reserve maintained a high interest rate level. However, recent economic data indicated that while the U.S. economy continued to expand steadily, the dual pressures of high inflation and high unemployment posed greater challenges for the Federal Reserve's monetary policy. Expectations for interest rate cuts by the Federal Reserve gradually weakened, and the market generally believed that the Federal Reserve would maintain its current interest rate policy in the short term to avoid overstimulating the economy. This weakening of interest rate cut expectations directly led to a strengthening of the dollar. The appreciation of the dollar had a profound impact on global capital flows, especially in the crypto asset market. Despite the strong dollar, demand for crypto assets did not significantly decline; instead, there was a renewed interest in "digital gold" as a safe-haven asset. Under the uncertainty of the Federal Reserve's policy, investors sought stable value storage tools, leading to increased demand for Bitcoin.

Additionally, the direction of the Federal Reserve's monetary policy also influenced regulatory expectations for the crypto market. As the Federal Reserve may adopt more easing measures, market expectations for policy support for crypto assets gradually increased, especially as some U.S. states had already passed legislation for cryptocurrency reserves. In the future, as the U.S. government further relaxes regulations on the crypto market, the crypto asset market will welcome a broader period of institutional dividends.

1.4 Shift in Market Sentiment and Investment Strategies

Overall, the resonance of policies between China and the U.S. and the shift in market sentiment will have a profound impact on global capital markets, particularly the crypto market. With the implementation of China's "double reduction" policy and the recovery of China-U.S. economic and trade relations, global risk appetite has significantly increased, and investor sentiment has turned more positive, especially in the cryptocurrency market, where demand for risk assets like Bitcoin has surged. Bitcoin prices approaching the historical high of $100,000 demonstrate the market's high recognition of this asset. However, in this macro context, investors still need to respond cautiously to potential market risks. As global monetary policies change, the strength of the dollar and the uncertainty of the Federal Reserve's policies may bring volatility to the crypto market. Therefore, investors should maintain flexible strategies, adopting a "core + satellite" investment portfolio, using Bitcoin as digital gold for foundational allocation, and focusing on Web3 projects with practical application scenarios, especially innovations in cross-border payments and digital identity verification.

In summary, driven by the resonance of policies between China and the U.S. and the shift in market sentiment, the crypto market and Web3 ecosystem have welcomed new development opportunities. This macro context not only enhances investors' risk appetite but also lays the foundation for the future development of crypto assets and blockchain technology.

II. Bitcoin Market Dynamics: Prices Approaching $100,000

In 2025, Bitcoin exhibited a strong upward trend, with its price repeatedly approaching the historical psychological barrier of $100,000, making it one of the most eye-catching assets of the year. The forces driving this round of price increases are complex and diverse, involving both the resonance of macro policies and structural evolution within the crypto industry, as well as a two-way game of emotions and expectations. In a time when the traditional financial system faces widespread uncertainty, Bitcoin has once again taken center stage in the global capital landscape, with its price curve reflecting both concentrated release of safe-haven demand and the reality of institutional recognition, influx, and valuation reconstruction.

Looking back from the end of 2024 to the beginning of 2025, Bitcoin's performance significantly benefited from the policy easing rhythm of major global economies. In particular, the "synchronized dovish turn" of China and the U.S. monetary and fiscal policies injected unprecedented liquidity into the market. China implemented two rounds of reductions in the reserve requirement ratio and policy interest rates, rapidly elevating domestic risk appetite, while the Federal Reserve, under pressure from Trump, was forced to pause interest rate hikes and signaled future rate cut expectations, leading to a weakening dollar index and a decline in U.S. real interest rates, further raising the "anchor" for global assets. In this context, Bitcoin, as a scarce, non-sovereign, and strongly consensus-driven digital asset, once again assumed a dual role as a "safe-haven currency + growth asset" in the eyes of global investors. It not only hedges against fiat currency devaluation but also serves as a substitute for "digital gold" in the structural cracks of the monetary system.

Unlike previous bull market cycles, the current upward trend is characterized by the dominance of institutional investors. Major U.S. asset management firms such as BlackRock, Fidelity, and ARK have actively positioned themselves in Bitcoin spot ETFs, pushing Bitcoin toward institutionalized allocation. Meanwhile, in places like Hong Kong, Dubai, and Europe, financial products related to crypto assets are becoming increasingly diverse, and regulatory transparency is improving, allowing Bitcoin to enter more traditional capital pools in a compliant manner. The inclusion of institutional-level funds not only enhances the depth and stability of the Bitcoin market but also significantly reduces its previous volatility driven purely by emotions, resulting in a more structured and sustainable upward trend.

At the same time, the scarcity logic on the supply side continues to amplify Bitcoin's value anchoring ability. The fourth Bitcoin halving event in April 2024 reduced the block reward from 6.25 to 3.125 coins, greatly compressing new supply. With the inflation rate of the Bitcoin blockchain dropping to less than 1% and gradually approaching the annual supply growth rate of gold, its narrative as a "deflationary currency" is further reinforced. On the demand side, driven by multiple factors such as ETF listings, central bank purchases, sovereign fund allocations, and a global increase in safe-haven demand, demand is growing exponentially. The asymmetry in the supply-demand structure forms the fundamental support for Bitcoin's long-term price increase.

It is worth noting that the current process of Bitcoin approaching $100,000 is also accompanied by intense emotional fluctuations and technical adjustments. On one hand, concentrated trading behaviors of whale accounts are frequently observed in the market, especially near key round numbers, accompanied by high-frequency algorithms and large-scale arbitrage plays, leading to short-term dramatic price swings and spikes in volatility; on the other hand, some older funds are taking the opportunity to distribute, combined with retail investors' "fear of heights" sentiment, triggering periodic corrections. On-chain indicators from sources like Glassnode clearly show that long-term holders are gradually reducing selling pressure, while new entrants are concentrated at high price levels, indicating a transition in market structure from early believers to mainstream incremental users.

In terms of market sentiment, media widely publicizes the historical significance of Bitcoin approaching $100,000, creating a strong "FOMO effect" (fear of missing out) that attracts a large number of retail investors for short-term entry. However, this media-driven enthusiasm also brings typical "bubble expectations," with some short-term funds engaging in excessive speculation, particularly concentrated trading by high-leverage users, which can easily trigger cascading liquidations at critical price points. Therefore, although long-term logic supports Bitcoin's price breaking new highs, there remains the possibility of significant volatility in the short term, as the market enters a phase of competition between enthusiasm and risk.

Overall, Bitcoin approaching $100,000 is not only a result of the resonance between technical and policy aspects but also represents its asset positioning within the global capital system. Under the macro framework of de-dollarization, a resurgence of global risk aversion, and the entry of institutional funds, Bitcoin has evolved from merely a "speculative asset" to a strategic asset in a new round of global wealth redistribution. Although there are still adjustment risks in the short term, from a medium to long-term perspective, this upward trend is not a fleeting moment but the starting point of a new consensus cycle. Investors need to find a balance between enthusiasm and calm, understanding that Bitcoin is not just about price, but also a resonance of belief, institutions, and the times.

III. Development of the Web3 Ecosystem: Dual Drivers of Policy and Technology

With the easing of macro policies and continuous breakthroughs in key technologies, the Web3 ecosystem is entering a new development cycle. It is no longer just a tool for speculation around crypto assets but is gradually evolving into the underlying architecture for global digital governance, cross-border collaboration, and the value internet. In this process, the three forces of policy guidance, technological innovation, and application expansion are interwoven, forming the main axis that drives Web3 from concept to large-scale implementation.

1. Policy Support

Since 2025, the U.S. policy stance on cryptocurrencies and Web3 has undergone a critical shift from "regulatory suppression" to "strategic acceptance," especially as Bitcoin and core Web3 technologies are gradually being incorporated into the long-term considerations of national financial and technological development. The most representative signal is the "Bitcoin Reserve Act" officially passed in New Hampshire in May 2025. This act requires the state treasury to hold a portion (initially 5%) of its state government financial reserves in Bitcoin over the next 24 months and supports the inclusion of Bitcoin in the public accounting system. Although this legislative move comes from a local government, it has far-reaching implications.

First, it signifies that Bitcoin is no longer merely a "risk asset" in certain jurisdictions but is viewed as "digital gold" with long-term value storage capabilities, serving a functional role in combating inflation and enhancing fiscal independence. This provides policymakers, including those from other states, with a "pilot template," potentially triggering a trend of "local government BTC adoption," injecting a long-term institutional funding source into the Web3 ecosystem. Secondly, the passage of this act has also enhanced policy certainty surrounding Bitcoin and Web3 technologies, alleviating the uncertainty risks previously caused by conflicts among federal regulators such as the SEC and CFTC. For example, incentivized by this act, the New Hampshire Treasury has signed memorandums of understanding with two local digital asset custody institutions and has explicitly stated its intention to explore on-chain transparency and public ledger integration, providing a practical blueprint for a DAO-style fiscal system.

More broadly, multiple state governments in the U.S. are currently in the early stages of "policy competition." In addition to New Hampshire, crypto-friendly states like Texas and Wyoming are also advancing experimental legislation regarding crypto mining, on-chain finance, and smart contract compliance. Meanwhile, at the federal level, the "Financial Innovation and Technology Future Act" (FIT21) is being promoted, which proposes to define mainstream digital assets like Bitcoin and Ethereum as "non-security commodities" and push for the establishment of a unified regulatory framework to clarify core issues such as asset issuance, exchange registration, and stablecoin auditing. These dynamics strengthen the long-term institutional confidence in the Web3 ecosystem in the U.S. market and provide clear policy anchors for enterprises and capital entry.

From an international perspective, the U.S. shift also has "spillover effects." As the global center of capital and technology, any positive legislation from the U.S. could drive "policy follow-up" in other countries or regional markets. For example, recent financial regulators in the UK, South Korea, and Japan have begun to reassess stablecoin compliance mechanisms or accelerate the opening of Web3 "regulatory sandboxes," thereby promoting global capital flow and ecological collaboration in Web3.

2. Technological Progress

The maturity of technology is a key prerequisite for Web3 to transition from a "narrative economy" to "actual deployment." From 2024 to the present, foundational technologies such as modular blockchains and zero-knowledge proofs (ZKP) have entered the practical stage, significantly enhancing the performance, composability, and privacy protection capabilities of Web3 networks. The design concept of modular blockchains separates execution, settlement, and data availability, allowing developers to choose the optimal combination based on business needs. Projects like Celestia and EigenLayer provide flexible underlying resource scheduling capabilities, offering "on-demand customized" infrastructure for on-chain applications. The explosive progress of zero-knowledge proof technology has endowed Web3 with dual capabilities of "computation + privacy." ZK-rollup, as the core solution for Ethereum Layer 2, has entered the large-scale deployment phase, while cutting-edge cross-disciplinary fields like ZKML (zero-knowledge machine learning) are beginning to show great potential in on-chain model verification and off-chain data compliance calls.

Additionally, protocols like MCP (Model Context Protocol) that integrate AI and Web3 are also taking shape, making the training, calling, and verification processes of AI models on-chain, allowing "on-chain intelligence" to evolve beyond mere script logic and possess self-evolution capabilities. These new paradigm technologies are gradually breaking through the existing bottlenecks of "high gas fees, low interactivity, and weak privacy protection" in the Web3 system, making it possible for on-chain applications to compete with Web2 experiences.

3. Expansion of Application Scenarios

The relaxation of policies and technological breakthroughs ultimately point to the continuous expansion of Web3 application scenarios and the rapid accommodation of real-world demands. Taking cross-border payments as an example, benefiting from the popularity of stablecoins (such as USDC and USDT) and the maturity of on-chain settlement mechanisms, an increasing number of small and medium-sized export enterprises and digital service providers are beginning to use stablecoins for direct settlement, effectively avoiding issues related to exchange rate fluctuations and the low efficiency of traditional financial system transfers. This trend is particularly evident in emerging markets in Southeast Asia, Latin America, and the Middle East, where "weak financial infrastructure + high crypto acceptance" is prevalent, making Web3 payments a practical trend.

Digital identity verification (DID) has also become an important breakthrough for Web3 implementation. In the context of rampant AI content and a deepening trust crisis in Web2 platforms, on-chain verifiable identity systems (such as Worldcoin, Polygon ID, Sismo, etc.) are increasingly being integrated into key processes like DAO governance, DePIN device access, and cross-chain credit assessment, addressing fundamental questions like "who is the user" and "who owns the data." Furthermore, on-chain social interactions, gaming, civic voting, and educational credential verification scenarios are also experiencing explosive opportunities due to the maturity of DID systems.

More broadly, three types of "application drivers" have formed within the Web3 ecosystem: first, the "chain reform" upgrade demands from traditional industries, such as real estate, insurance, and logistics, which hope to improve efficiency and transparency through on-chain solutions; second, the evolutionary progression of crypto-native demands, such as innovations from DeFi 1.0 to Restaking, SocialFi, and AI Agents; third, the cultural resonance of global youth and developer communities regarding free collaboration and value sovereignty, forming the cultural foundation for the long-term centripetal force of the Web3 community.

IV. Risk Factors and Investment Strategies

Although the current Web3 ecosystem and Bitcoin market show strong growth momentum, investors still need to pay close attention to potential systemic and non-systemic risks. In the context of an ongoing tug-of-war between bullish and bearish forces, and the increasingly complex interplay between policies and markets, formulating rational and forward-looking investment strategies is particularly crucial.

First, from a macro perspective, the direction of global interest rate policies remains highly uncertain. Although the Federal Reserve has released easing expectations against a backdrop of easing inflation and employment pressures, any resurgence in inflation data or escalation of geopolitical conflicts could force it to revert to a hawkish stance, thereby impacting the valuation of risk assets. Especially as Bitcoin has become highly financialized and its sensitivity to macro policies has significantly increased, any expectations regarding "delayed interest rate cuts" or "return to balance sheet reduction" could trigger severe market volatility.

Secondly, regulatory disturbances continue to pose significant external variables. Although countries like the U.S. are advancing the legislative process for crypto assets, until the new regulatory framework is officially implemented, the enforcement standards of departments like the SEC and CFTC still contain gray areas. In extreme cases, they may even engage in "selective enforcement" against core infrastructures such as DeFi platforms, stablecoin projects, and DEX exchanges. Additionally, the implementation of the EU's MiCA framework may also impose compliance pressures on certain projects, particularly those involving KYC/AML mechanisms, which will have to face higher operational costs and identity governance challenges.

Thirdly, from the perspective of the on-chain ecosystem itself, technical risks cannot be ignored. While zero-knowledge proofs, Layer 2 bridging technologies, and modular blockchains possess enormous potential, they still face issues such as vulnerability to attacks, code flaws, or immature protocols. For example, in the first quarter of 2025, a cross-chain bridge protocol suffered an attack due to a smart contract logic flaw, resulting in over $300 million in assets being stolen, which is a typical systemic "black swan" event within the chain. This serves as a reminder to investors that the other side of technological innovation is that systemic risks have not been fully priced by the market.

Moreover, structural differentiation in the market may lead to periodic bubbles. As the total market capitalization of the crypto market approaches historical highs, hot assets (such as meme coins, AI coins, and modular concept coins) are emerging one after another, often driven by speculative funding. Some projects that have not yet achieved commercial viability may be overvalued under emotional dominance, and once the hype subsides, concentrated withdrawals could easily occur. This requires investors to maintain fundamental judgment and valuation discipline while pursuing high returns.

In this context, investment strategies should lean towards "offensive defense." Specifically:

For risk-averse investors, Bitcoin should be treated as the "asset anchor in the crypto space" for long-term allocation, gradually increasing positions during each round of corrections, prioritizing mainstream assets with institutional recognition.

For investors seeking growth returns, attention should be paid to projects in the infrastructure sector that have real application deployment, active developer ecosystems, and clear protocol upgrade paths, such as Layer 2, ZK, modular chains, and DePIN, but they should avoid heavily investing in short-term hot spots during periods of high market volatility.

In terms of operational strategies, priority should be given to dynamic management methods such as phased position building, rolling adjustments, and setting profit-taking and stop-loss intervals to avoid extreme decisions driven by emotions.

Additionally, project selection should strengthen considerations of "policy sensitivity," prioritizing emerging projects that grow under clear compliance trends (such as in the U.S., Hong Kong, UAE, etc.) to enhance the portfolio's risk resistance.

In summary, the crypto market in 2025 is at a turning point in its cycle, filled with opportunities but also harboring risks. Only by understanding structural trends can investors build a portfolio configuration logic that traverses the cycle, enabling them to navigate the future market's turbulence and innovation steadily.

V. Conclusion

In the first half of 2025, the crypto market entered a new round of structural upward cycle driven by the resonance of China-U.S. policies, warming liquidity, and accelerated technological innovation. Bitcoin, as a value anchoring asset, continues to gain mainstream financial recognition, with prices approaching the $100,000 mark, sending strong market signals; the Web3 ecosystem, supported by the inclusive U.S. policy and breakthroughs in foundational technologies like ZK and modularization, is further expanding application scenarios, presenting a dual resonance pattern of "from technology to institutions." However, policy variables, regulatory uncertainties, market speculation, and technical security risks remain shadows that cannot be ignored. Looking ahead to the second half of the year, investors should maintain calm judgment amidst structural prosperity, following a strategy that combines value-driven, policy-oriented, and safety net approaches to truly navigate the cycle and seize the core dividends of the next phase.

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