I. Macroeconomic Background: Resonance of US-China Policies and Shift in Market Sentiment
In May 2025, the People's Bank of China announced the implementation of a "double reduction" policy, which involved lowering the reserve requirement ratio (RRR) by 0.5 percentage points, releasing approximately 1 trillion yuan of long-term liquidity, while also reducing the policy interest rate by 0.1 percentage points to 1.4%. This policy not only had a profound impact on traditional financial markets but also brought potential strategic opportunities for the cryptocurrency market and the Web3 ecosystem. At this time, the expectations for high-level economic and trade negotiations between China and the US were positive, further driving a shift in global market risk appetite.
1.1 US-China Economic and Trade Recovery: Strong Stimulus for Market Sentiment
The economic and trade relationship between China and the US has always been a focal point for global markets. In recent years, due to the impact of the US-China trade war and tariff policies, the global economy faced significant uncertainty, leading to a decline in investors' risk appetite. However, with the announcement of the People's Bank of China's "double reduction" policy, market expectations for a recovery in US-China economic and trade relations surged, resulting in a general increase in the prices of risk assets, particularly in the cryptocurrency market. The Chinese government conveyed an important signal behind the "double reduction" policy: the era of monetary policy easing 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 US were about to commence, especially with the meeting between Chinese Vice Premier He Lifeng and US Treasury Secretary Janet Yellen, which further enhanced market optimism regarding future economic and trade cooperation. This series of policy signals not only reshaped investor sentiment but also had a significant positive impact on the cryptocurrency 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's price once approaching 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 rate, 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 US 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 cryptocurrency market has significantly increased. As "digital gold," Bitcoin's value is highlighted in a global environment of monetary easing, becoming an important tool for investors to hedge against 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 the prices of commodities such as iron ore and steel continued to rise, prompting traditional market investors to seek new investment opportunities in the cryptocurrency 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 US, the Federal Reserve maintained a high interest rate level. However, recent economic data indicated that while the US 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 US dollar. The appreciation of the dollar had a profound impact on global capital flows, especially in the cryptocurrency market. Despite the strong dollar, demand for cryptocurrency 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, thereby increasing the demand for Bitcoin.
Moreover, the direction of the Federal Reserve's monetary policy also influenced regulatory expectations for the cryptocurrency market. As the Federal Reserve may adopt more easing measures, market expectations for policy support for cryptocurrency assets gradually increased, especially as some states in the US have already passed legislation regarding cryptocurrency reserves. In the future, as the US government further relaxes regulations on the cryptocurrency market, the cryptocurrency asset market will welcome a broader period of institutional benefits.
1.4 Shift in Market Sentiment and Investment Strategies
Overall, the resonance of US-China policies and the shift in market sentiment will have a profound impact on global capital markets, particularly the cryptocurrency market. With the implementation of China's "double reduction" policy and the recovery of US-China 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's price approaching the historical high of $100,000 reflects the market's high recognition of this asset. However, in this macro context, investors still need to cautiously address potential market risks. With changes in global monetary policy, the strength of the dollar, and the uncertainty of the Federal Reserve's policy, volatility may arise in the cryptocurrency 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 US-China policies and the shift in market sentiment, the cryptocurrency market and the Web3 ecosystem have ushered in new development opportunities. This macro context not only enhances investors' risk appetite but also lays the foundation for the future development of cryptocurrency assets and blockchain technology.
II. Bitcoin Market Dynamics: Price 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 increase are complex and diverse, involving both the resonance of macro policies and structural evolution within the cryptocurrency 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 realities 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 US and Chinese monetary and fiscal policies injected unprecedented liquidity into the market. China successively lowered the reserve requirement ratio and policy interest rate twice, rapidly boosting domestic risk appetite, while the Federal Reserve was forced to pause interest rate hikes under pressure from Trump and released expectations for future rate cuts, leading to a weakening dollar index and a decline in US real interest rates, further elevating the "anchor" for global assets. In this context, Bitcoin, as a scarce, non-sovereign, and strongly consensus-driven digital asset, once again became a "safe-haven currency + growth asset" in the eyes of global investors. It not only hedges against fiat currency devaluation but also assumes the role of "digital gold" in the structural fissures of the monetary system.
Unlike previous bull market cycles, the current round of price increases has seen institutional investors become the dominant force. Major US asset management firms such as BlackRock, Fidelity, and ARK have actively positioned themselves in Bitcoin spot ETFs, pushing Bitcoin towards institutionalized allocation. Meanwhile, in regions like Hong Kong, Dubai, and Europe, financial products related to cryptocurrency assets are becoming increasingly diverse, and regulatory transparency is improving, allowing Bitcoin to enter more traditional capital pools in a compliant manner. The entry of institutional-level capital not only enhances the depth and stability of the Bitcoin market but also significantly reduces its previous volatility structure driven purely by emotions, resulting in a more structured and sustainable upward trend.
At the same time, the supply-side scarcity logic continues to amplify Bitcoin's value anchoring ability. The fourth halving event of Bitcoin in April 2024 reduced the block reward from 6.25 to 3.125 coins, greatly compressing new supply. As the inflation rate of the Bitcoin blockchain has dropped to less than 1% and is 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 rise in safe-haven sentiment, 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 integer levels, 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 belief-driven users 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 capital engaging in excessive speculation, especially concentrated trading by high-leverage users, which can easily trigger cascading liquidations at critical points. Therefore, although long-term logic supports Bitcoin's price breaking new highs, there remains the possibility of significant fluctuations in the short term, as the market enters a stage of competition between enthusiasm and risk.
In summary, Bitcoin's approach to $100,000 is both a result of the resonance of technical and policy factors and represents its asset positioning leap within the global capital system. Under the macro framework of de-dollarization, a resurgence of global safe-haven sentiment, and the entry of institutional capital, Bitcoin is no longer just a "speculative target" but 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 round of price increase is not a fleeting phenomenon 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: Driven by 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 cryptocurrency assets but is gradually evolving into a foundational architecture for global digital governance, cross-border collaboration, and the value internet. In this process, three forces—policy guidance, technological innovation, and application expansion—interact and overlap, forming the main axis that drives Web3 from concept to large-scale implementation.
1. Policy Support
Since 2025, the United States has been experiencing a critical shift in its policy attitude towards cryptocurrencies and the Web3 sector, moving from "regulatory suppression" to "strategic acceptance." Notably, Bitcoin and core Web3 technologies are gradually being incorporated into the long-term considerations of national financial and technological development. The most representative signal of this shift is the "Bitcoin Reserve Bill" officially passed in New Hampshire in May 2025. This bill requires the state treasury to hold a portion of its state government financial reserves (initially set at 5%) in Bitcoin over the next 24 months and supports the inclusion of Bitcoin in the public accounting system. Although this legislative initiative originates from a local government, it has far-reaching implications.
First, it signifies that Bitcoin is no longer merely viewed as a "risk asset" in certain jurisdictions but is regarded 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 "BTC adoption by local governments," injecting a long-term institutional funding source into the Web3 ecosystem. Secondly, the passage of this bill 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 instance, incentivized by this bill, 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 accounting integration, providing a practical blueprint for a DAO-style fiscal system.
More broadly, multiple state governments in the US 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 to establish a unified regulatory framework, further clarifying core issues such as asset issuance, exchange registration, and stablecoin auditing. These dynamics reinforce the long-term institutional confidence of the US market in the Web3 ecosystem and provide clear policy anchors for enterprises and capital entry.
From an international perspective, the US's shift also has "spillover effects." As a global center for capital and technology, any positive legislation from the US could lead to "policy follow-up" in other countries or regional markets. For example, recent financial regulatory authorities in the UK, South Korea, and Japan have begun to reassess stablecoin compliance mechanisms or accelerate the opening of Web3 "regulatory sandboxes," thereby driving global capital flows 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." Since 2024, foundational infrastructure 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 customization" 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 the Model Context Protocol (MCP), which focus on the integration of AI and Web3, are also taking shape, bringing 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 in the Web3 system, such as "high gas fees, low interactivity, and weak privacy protection," 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, thanks to the proliferation 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 such as Southeast Asia, Latin America, and the Middle East, where "weak financial infrastructure + high crypto acceptance" has made 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 such as 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 emerged within the Web3 ecosystem: first, the "chain reform" upgrade demands from traditional industries, such as real estate, insurance, and logistics, which seek 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
Despite the current strong growth trends in the Web3 ecosystem and the Bitcoin market, investors must remain highly vigilant regarding potential systemic and non-systemic risks. In a context where the tug-of-war between bulls and bears continues to escalate and the interplay between policies and markets becomes increasingly complex, 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 moderating inflation and employment pressures, any resurgence in inflation data or escalation of geopolitical conflicts could force a return 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 disruptions continue to pose significant external variables. Although countries like the US are advancing the legislative process for crypto assets, there remains a gray area in the enforcement standards of agencies like the SEC and CFTC before the new regulatory framework is officially implemented. In extreme cases, selective enforcement actions could be taken against core infrastructures such as DeFi platforms, stablecoin projects, and DEX exchanges. Additionally, the implementation of the EU's MiCA framework may impose compliance pressures on certain projects, particularly those involving KYC/AML mechanisms, which will face higher operational costs and identity governance challenges.
Thirdly, from the perspective of the on-chain ecosystem itself, technical risks cannot be overlooked. While zero-knowledge proofs, Layer 2 bridging technologies, and modular blockchains possess immense 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, exemplifying 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 into the market.
Moreover, structural differentiation in the market may lead to periodic bubbles. As the total market capitalization of cryptocurrencies approaches historical highs, hot assets (such as meme coins, AI coins, and modular concept coins) are emerging one after another, often driven by speculative capital. Some projects that have yet to achieve commercial viability may be overvalued under emotional influences, and once the hype subsides, concentrated withdrawals could easily occur. This necessitates that investors maintain fundamental analysis capabilities 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 deployments, active developer ecosystems, and clear protocol upgrade paths, such as Layer 2, ZK, modular chains, and DePIN. However, they should avoid heavily investing in short-term hot assets 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 emphasize "policy sensitivity," prioritizing emerging projects that grow under clear compliance trends (such as in the US, Hong Kong, UAE), enhancing the portfolio's risk resistance.
In summary, the cryptocurrency market in 2025 is at a cyclical turning point, filled with opportunities but also hidden risks. Only by understanding structural trends can investors build a portfolio allocation logic that transcends cycles, enabling them to navigate the future market's turbulence and innovation.
V. Conclusion
In the first half of 2025, the cryptocurrency market entered a new structural upward cycle driven by the resonance of US-China policies, warming liquidity, and accelerated technological innovation. Bitcoin, as a value anchoring asset, continues to gain mainstream financial recognition, with its price approaching the $100,000 mark, sending strong market signals. Meanwhile, the Web3 ecosystem, supported by the inclusive US policy and breakthroughs in foundational technologies like ZK and modularization, is further expanding its application scenarios, presenting a dual resonance pattern of "from technology to institution." However, policy variability, regulatory uncertainty, 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 amid structural prosperity, following a strategy that combines value-driven, policy-oriented, and safety baseline considerations to truly navigate the cycle and seize the core dividends of the next phase.
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