Original author: David Duong
Compiled and edited by: BitpushNews
The trend of companies purchasing crypto assets with leveraged financing may trigger systemic risks in the medium and long term, such as forced selling or motivated selling, but we believe that the risks are controllable in the short term.
The U.S. regulatory environment is undergoing positive changes, stablecoin legislation is being promoted, and the crypto market structure bill is also under discussion.
Our constructive outlook for the crypto market in the second half of 2025 is based on several core factors: more optimistic US economic growth prospects, possible interest rate cuts by the Federal Reserve, growing corporate financial adoption of cryptocurrencies, and clarity on US regulation.
While there are still some potential risks, such as a steepening U.S. Treasury yield curve and selling pressure triggered by listed crypto instruments, we believe these risks are manageable in the short term.
We believe that there are three key themes in the crypto market in the second half of the year:
Improved macro outlook: The risk of a U.S. recession has significantly decreased, and overall growth momentum has strengthened;
Enterprises use encryption as a means of asset allocation: although it may bring systemic risks in the long run, it will form a strong demand side in the short term;
The regulatory path is becoming clearer: in particular, the legislative progress on stablecoins and crypto market structure will have a profound impact on the development of the crypto ecosystem.
Despite the risks, we still expect Bitcoin to maintain its upward trend. The performance of altcoins may be more dependent on individual factors.
For example, the SEC is reviewing multiple ETF applications involving physical subscription and redemption, pledge, combination funds and single altcoin ETFs, and is expected to make a ruling by the end of 2025. These decisions may reshape the market structure.
Market Outlook: Second Half of 2025
We maintain our previous forecast that the first half of 2025 will be the bottom of the crypto market, and the second half of the year may hit a record high.
Despite Bitcoins rebound in late May, we still believe there could be further upside in the next 3-6 months.
In our view, the macro disruption caused by trade tariffs is nearing its end. Looking ahead, risk appetite is expected to improve as the government moves forward with plans for more market-friendly fiscal legislation, which is expected to be completed by the end of summer.
However, one risk worth noting is that the fiscal spending bill may cause the U.S. Treasury yield curve to steepen, especially in the 10-30 year period.
In fact, due to deficit concerns, the yield on 30-year US Treasury bonds rose to 5.15% in May, a 20-year high. This may intensify financial tightening, increase financing costs for businesses and consumers, and thus weaken the foundation for growth, which in turn affects market confidence.
If long-term yields rise too quickly, it could trigger volatility in stock and credit markets, especially if investors begin to question the United States’ ability to run sustained high deficits without triggering systemic risks.
This development path will challenge the current main narrative of front-loaded fiscal stimulus or force the market to reassess risky assets in advance, especially when economic data or Fed policies fail to meet expectations.
But at the same time, we think this could also be beneficial for store-of-value assets like gold and Bitcoin, especially against the backdrop of a weakening dominance of the U.S. dollar.
Three major themes
Theme 1: The shadow of recession has been greatly weakened
Trade disruptions at the beginning of the year sparked concerns that the United States would fall into a technical recession, especially after GDP fell 0.2% year-on-year in the first quarter of 2025.
At that time, mainstream media including The Economist and The Wall Street Journal issued warnings such as Trumps tariff war may trigger a global recession and Trumps reciprocal tariffs may ignite a US recession.
However, we have always maintained a relatively optimistic outlook for the second half of the year. We believe that the “extent” of the recession is the key, and the impact of a technical recession on the market may not be profound unless the macro momentum continues to deteriorate.
For example, the 2008 financial crisis saw a 53% decline in U.S. stocks, while the 2015 and 2022 recessions were much milder (see table below). In addition, the Atlanta Fed’s GDPNow forecast model has been significantly revised upward from 1.0% month-over-month growth in early May to 3.8% on June 5, reflecting improved economic data.
We therefore judge that even if there is a slowdown in 2025, it is more likely to be a mild recession or a soft landing rather than a severe recession or stagflation scenario.
Even so, the market impact may be limited to specific sectors rather than a full sell-off. Coupled with the expansion of US M2 money supply and global central bank balance sheets, we believe that the probability of asset prices returning to 2024 levels is low. Bitcoins upward trend is expected to continue. Moreover, most of the tariff shock has been absorbed by the market, and although there are still individual policies (such as the end of the reciprocal tariff suspension period on July 9) pending, the overall risk margin is weakening.
Comparison of cyclical declines of various assets (high to low):
Topic 2: The wave of corporate adoption of crypto assets is coming - is the replica strategy coming?
Currently, there are about 228 listed companies in the world holding a total of 820,000 BTC. Among them, about 20 companies (and another 8 ETH, SOL, and XRP holders) use leveraged financing methods similar to Strategy (formerly MicroStrategy).
The new FASB accounting standards, which will take effect on December 15, 2024, will significantly encourage companies to include crypto assets on their balance sheets.
Previously, U.S. Generally Accepted Accounting Principles (GAAP) only allowed companies to record impairment of crypto assets on their books, while the increase could only be reflected when they were sold.
The new rules allow for fair value disclosures, making financial statements more comparable and providing greater transparency for CFOs and auditors.
But we have observed that a new trend is taking shape - more and more listed companies are coin holding machines themselves, and the core of their business is to buy crypto assets.
They raise funds to buy coins by issuing stocks or convertible bonds, and their market value far exceeds their net assets. Strategy is a representative example, but now more imitators have emerged.
Two potential systemic risks:
Forced selling: Many PTCVs (listed crypto asset vehicles) rely on convertible bonds for financing. If the price of the underlying currency falls, or the market environment deteriorates and refinancing fails, these companies may have to sell their crypto assets to repay their debts.
Motivated selling: If a PTCV suddenly sells assets for operational or cash flow management purposes, it may trigger a chain reaction, spreading market panic and triggering a price collapse.
Nevertheless, we believe that such risks are not enough to cause a huge impact on the market in the short term. First, most debts will not mature until 2029-2030 (for example, Strategys $3 billion convertible bonds will first be redeemable at the end of 2026 and officially mature at the end of 2029), so the risk of short-term selling is low. Second, the current loan-to-value ratio (LTV) is still healthy overall, and some large companies have the ability to avoid forced sales through refinancing.
Of course, as more companies adopt this strategy and debts mature in a concentrated manner, systemic risks are still worth monitoring in the long term. And Strategys corporate currency holding model is also attracting more and more curious executive teams to join, indicating that the trend of corporate currency hoarding will continue in the second half of 2025.
Theme 3: Opening a new era of supervision
In the first half of 2025, the US encryption policy has undergone unprecedented changes. The White House abandoned the old path of replacing regulation with law enforcement and fully turned to supporting the development of the encryption industry.
We believe that stablecoin legislation is most likely to be implemented first. Currently, the House of Representatives is advancing the STABLE Act and the Senate is advancing the GENIUS Act, both of which have received bipartisan support.
On June 11, the Senate passed the GENIUS Act and sent it to the House of Representatives for deliberation. Both bills set reserve requirements, anti-money laundering compliance, bankruptcy protection, and consumer rights provisions.
The main differences are:
How to deal with non-US stablecoin issuers
How to set regulatory thresholds
The White House expects to complete a unified version of the bill and submit it to the president for signature before the congressional recess on August 4, which may lay the foundation for subsequent market structure bills.
Crypto Market Structure Act (CLARITY Act)
On May 29, 2025, the U.S. House of Representatives Financial Services Committee formally proposed the draft of the Digital Asset Market Clarity Act (CLARITY Act), which is considered to be the most transformative legislation of the year.
The bill aims to clarify the regulatory boundaries of the SEC and CFTC for crypto assets, and to divide the regulatory divisions based on asset attributes (such as digital commodities or investment contracts). The bill is based on the FIT 21 Act passed last year, and requires the SEC and CFTC to jointly define key terms and continue to formulate rules, which means that there is still room for evolution in the division of regulatory labor.
We believe this will become the basis for future negotiations between the two houses, but its complexity and uncertainty will be higher than stablecoin legislation.
ETF Development Timeline
The SEC is facing approximately 80 crypto ETF proposals by 2025, covering:
Multi-asset crypto index funds (Bitwise, Franklin, Grayscale, etc.): Decision to be made as early as July 2;
In-kind subscription/redemption mechanism: The result may be announced in July, and if delayed, it will be in October at the latest;
Staking inclusion: Limited by the transparency of 6 c-11, the SEC may make a decision in advance;
Single Altcoin ETFs: Most applications are due in October, and the SEC is expected to use the entire review period.
in conclusion
We are optimistic about the cryptocurrency market outlook through the third quarter of 2025, driven by a relatively optimistic outlook for U.S. economic growth, Federal Reserve rate cuts, rising corporate adoption of cryptocurrencies, and improved regulatory clarity in the U.S.
Although there are risks such as the steepening of the US Treasury yield curve and potential selling pressure on PTCVs, they are still controllable in the short term. We believe that the upward trend of Bitcoin will continue, although the market of altcoins needs to be judged based on the performance of individual projects.
