Macro Outlook for the Crypto Market in the Second Half of 2025

In the first half of 2025, the Crypto market was significantly affected by various macro factors, among which the three most critical aspects were: the tariff policy of the Trump administration, the interest rate policy of the Fed, and the geopolitical conflicts in the Russia-Ukraine and Middle East regions.

Looking ahead to the second half of the year, the Crypto market will continue to move forward in a complex and changing macro environment, and the following major macro factors will continue to play an important role:

1. The Derivative Impact of Trump's Tariff Policy is Inflation Expectations

Tariffs are an important policy tool in Trump's administration. The Trump administration hopes to achieve a series of economic goals through tariff negotiations: first, to expand U.S. exports and reduce trade barriers from other countries; second, to maintain a base tariff of over 10% to increase U.S. fiscal revenue; third, to enhance the domestic competitiveness of specific industries and stimulate the return of high-end manufacturing.

As of July 25, the tariff negotiations between the United States and major economies in the world have made varying degrees of progress:

• Japan: The two sides have reached an agreement. The U.S. tariff on Japanese goods will be reduced from 25% to 15% (including automotive tariffs), while Japan has committed to investing $550 billion in the U.S. (covering the semiconductor and AI sectors), opening up the automotive and agricultural markets, and increasing the import quota for U.S. rice.
• EU: The deadline is August 1. EU negotiators arrived in the United States on July 23 for final consultations, but the negotiation results have not yet been made public.
• China: The third round of trade negotiations will be held in Sweden from July 27 to 30. After the previous two rounds of negotiations, the U.S. tariffs on China were reduced from 145% to 30%, and China's tariffs on the U.S. were reduced from 125% to 10%; there are reports that the deadline for the China-U.S. tariff negotiations will be extended by another 90 days, and if no new agreement is reached in the third round of trade negotiations, the suspension of tariffs may be adjusted.

In addition, the United States has reached a tariff agreement with the Philippines and Indonesia. The most关注的 issue now is the third round of tariff negotiations between China and the United States. Although the uncertainty surrounding tariff policies is gradually decreasing, the possibility that negotiations with key economies may not achieve substantial progress cannot be ruled out, and financial markets may face greater shocks at that time.

From an economic theory perspective, tariffs represent a negative supply shock and have a "stagflation" effect. In international trade, although the taxpayer subject of tariffs is enterprises, companies often pass this tax burden onto American consumers through price transmission mechanisms. Therefore, it is expected that the U.S. may experience a round of inflation in the second half of the year, which could significantly impact the Fed's interest rate cut pace.

In summary, Trump's tariff policy may lead to a phase of rising inflation in the US economy for the second half of the year. Unless data indicates that inflationary pressures are not significant, this will result in a slowdown in the pace of interest rate cuts.

2. The dollar tidal cycle is in a weak dollar phase, which is favorable for the cryptocurrency market.

The dollar tidal cycle refers to the systematic outflow and return process of the dollar globally. Although the Fed did not cut interest rates in the first half of the year, the dollar index has already weakened: it has fallen from a peak of 110 at the beginning of the year to 96.37, showing a clear "weak dollar" state.

The weakness of the US dollar may have multiple reasons: First, Trump's government tariff policy has suppressed the trade deficit, disrupting the dollar's circulation mechanism, while tariff barriers have weakened the attractiveness of dollar assets, raising market concerns about the stability of the dollar system; Second, the fiscal deficit has dragged down credit, with the continuous increase in the scale of US debt and the repeated rise in US debt interest rates deepening market doubts about fiscal sustainability; Third, the expiration of the petrodollar agreement without renewal has reduced the share of global central banks' dollar reserves from 71% in 2000 to 57.7%, while the share of gold reserves has increased, triggering attempts at "de-dollarization"; In addition, the policy orientation reflected in the rumored "Mar-a-Lago Agreement" may also play a boosting role.

According to past cycles of dollar tides, the strength and weakness of the dollar index has almost dominated the trend of changes in global liquidity. Global liquidity often follows a complete dollar tide cycle of 4-5 years, showing a pattern of periodic fluctuations. Among them, the weak dollar cycle lasts approximately 2 years to 2.5 years. If we start counting from June 2024, this weak dollar cycle may last until mid-2026.

Mapping: IOBC Capital

As can be seen from the above figure, the Bitcoin market often shows a negative correlation with the US dollar index. When the dollar weakens, Bitcoin usually performs strongly. If the "weak dollar" cycle continues in the second half of the year, global liquidity will shift from tight to loose, which will continue to benefit the cryptocurrency market.

3. The Fed's monetary policy may still maintain a cautious attitude

In the second half of 2025, there will be four interest rate meetings. According to the CME "Fed Watch" tool, there is a high probability of 1-2 rate cuts in the second half of the year. Among them, the probability of maintaining the interest rate unchanged in July is as high as 95.7%; the probability of a 25 basis point rate cut in September is 60.3%.

Since Trump took office, he has repeatedly criticized the Fed's slow pace of interest rate cuts on X platform, even directly accusing Fed Chairman Powell and threatening to fire Powell. This has placed a certain amount of political pressure on the independence of the Fed. However, in the first half of the year, the Fed withstood the pressure and did not carry out any interest rate cuts.

According to the normal term arrangement, Fed Chairman Powell will officially step down in May 2026. The Trump administration plans to announce a new chairman nominee in December 2025 or January 2026. In this case, the voices of the main dovish members within the Fed have gradually attracted market attention, seen as a potential reflection of "shadow chairman" influence. Nevertheless, the market generally believes that the interest rate meeting on July 30 will continue to maintain the current interest rate level.

The delay in predicting interest rate cuts is mainly due to three core reasons:

Inflation pressures persist - Affected by Trump's tariff policy, the U.S. CPI rose by 0.3% month-on-month in June, and core PCE inflation increased to 2.8% year-on-year. It is expected that the tariff transmission effects will further push up prices in the coming months. The Fed believes that the return of inflation to the 2% target is hindered and requires more data to confirm the trend.

Economic growth is slowing - the growth rate is expected to be only 1.5% in 2025, but short-term data such as retail sales and consumer confidence exceeded expectations, alleviating the urgency for an immediate interest rate cut.

The resilience of the job market remains - the unemployment rate stays at a low of 4.1%, but corporate hiring has slowed down, and the market predicts that the unemployment rate may rise slightly in the second half of the year, with predicted unemployment rates of 4.3% and 4.4% for Q3 and Q4, respectively.

In summary, the probability of a rate cut on July 30, 2025, is extremely low.

Mapping: IOBC Capital

Overall, it is expected that the Fed's monetary policy will remain cautious, with a possible 1-2 rate cuts throughout the year. However, when we observe the historical trend of Bitcoin and Fed interest rates, there is actually no significant correlation between the two. Compared to the changes in Fed interest rates, it is likely that the global liquidity in a weak dollar state has a greater impact on Bitcoin.

IV. Geopolitical conflicts may have a short-term impact on the Crypto market

The Russia-Ukraine war is currently still in a state of stalemate, with bleak prospects for a diplomatic resolution. On July 14, Trump proposed a "50-day ceasefire deadline"; if Russia does not reach a peace agreement with Ukraine within 50 days, the United States will impose a 100% tariff and secondary tariffs on it, and provide military assistance to Ukraine through NATO, including "Patriot" air defense missiles. However, Russia has already assembled 160,000 elite troops, planning to only supply the key fortifications on the Ukrainian Donbas front. Meanwhile, Ukraine has not been idle, launching a large-scale drone attack on Moscow airport on July 21. In addition, Russia announced its withdrawal from a thirty-year military cooperation agreement with Germany, leading to a complete rupture in Russia-European relations.

Given the current situation, achieving the goal of a ceasefire by September 2 seems a bit difficult. If a ceasefire is not reached by then, Trump's sanctions may trigger market turmoil.

5. The Crypto Regulatory Framework Takes Shape, the Industry Welcomes a Policy Honeymoon Period

The U.S. "GENIUS Act" was implemented in July 2025, stating that "interest shall not be paid to token holders, but the reserve interest belongs to the issuer and must disclose its use." However, it does not prohibit issuers from sharing interest earnings with users, such as Coinbase's USDC annualized at 12%. The prohibition on paying interest to token holders limits the development of "yield-bearing stablecoins," which was originally intended to protect American banks from losing trillions of dollars in deposits, as these deposits support loans to businesses and consumers.

The U.S. "CLARITY Act" clearly defines that the SEC regulates security tokens, while the CFTC oversees commodity tokens (such as BTC and ETH). It introduces the concept of a "mature blockchain system," allowing for regulatory transition through certification—blockchain projects that are decentralized, open-source, and operate automatically based on preset rules will be recognized as "mature" after certification (such as submitting proof of no centralized control), enabling them to transition from "securities" to "commodities" in terms of regulatory compliance, with regulatory authority fully residing with the CFTC, and the SEC no longer exercising its authority over securities regulation. Additionally, it provides some exemptions for DeFi—activities such as writing code, running nodes, providing front-end interfaces, and non-custodial wallets are generally not recognized as financial services, exempting them from SEC regulation. Only basic terms such as anti-fraud and anti-manipulation need to be adhered to.

Overall, the accelerated advancement of the "GENIUS Act", "CLARITY Act", and the "Anti-CBDC Surveillance National Act" marks the transition of the United States from a phase of "regulatory ambiguity" to an era of "sunshine regulation" regarding cryptocurrencies. At the same time, it reflects its policy intention to "maintain the global trade currency status of the US dollar". As the regulatory framework gradually improves, the market size of stablecoins is expected to expand further, and those stablecoin projects and DeFi protocols that can meet compliance requirements will benefit.

6. "Coin-Stock Strategy" Activates Market Heat, Sustainability to Be Observed

As MicroStrategy completes its epic transformation with the "Bitcoin Strategy," a revolution in crypto asset reserves led by publicly traded companies is sweeping through the capital markets. From ETH to BNB, SOL, XRP, DOGE, HPYE, TRX, LTC, TAO, FET, and more than a dozen other mainstream altcoins are becoming new anchor points for corporate treasury, and this "coin-stock strategy" is becoming the trend in the market this year.

A brief analysis of this capital alchemy through MicroStrategy's "Triple Flywheel":

• Stock Coin Resonance Flywheel: The long-term premium of stock price relative to net asset value (currently 1.61x) creates a low-cost financing channel; fundraising → increasing BTC holdings → boosting coin price → amplifying the gold content per share → feeding back into valuation, forming a spiraling upward closed loop.
• Stock-Bond Synergy Flywheel: Zero-interest convertible bonds cleverly convert debt pressure, with no principal repayment burden, and the conversion rights are in the hands of the company; attracting hedge fund arbitrage capital, injecting low-cost liquidity.
• Currency-Debt Arbitrage Flywheel: Using depreciated fiat currency debt to exchange for appreciated crypto assets, completing a long-term arbitrage layout.

Moreover, a tiered sales strategy is adopted to accurately capture three types of capital: preferred shares lock in fixed income investors, convertible bonds attract arbitrage funds, and stocks carry risk speculation. For specific logic, refer to "Understanding MSTR MicroStrategy's Bitcoin Strategy in One Article."

Since the beginning of this year, an increasing number of listed companies have adopted the "coin-stock strategy" (i.e., allocating crypto assets as reserve assets on their balance sheets), with the scale of asset reserves continuing to expand and a trend towards diversification in asset allocation. According to incomplete statistics: 35 listed companies have a total reserve of over 920,000 BTC; 13 listed companies have a total reserve of over 1,480,000 ETH; and 5 listed companies have a total reserve of over 2,910,000 SOL. The rest will not be listed here, and we will provide a detailed analysis of the reserve details of each project in the next article.

The integration of traditional finance and the crypto world is a unique market variable in this cycle. As publicly traded companies transform their balance sheets into platforms for crypto assets, we must also be wary of the risks when the tide goes out.

Summary

If we extrapolate the aforementioned foreseeable macro events in chronological order, we can divide the second half of the year into the following stages:

Mapping: IOBC Capital