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

In the first half of 2025, the crypto market was significantly influenced by several macro factors, the three most critical being: tariff policies, interest rate policies, and geopolitical conflicts.

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

I. Tariff policies may trigger an increase in inflation expectations

Tariffs are an important policy tool for the current government. Through tariff negotiations, the government hopes to achieve the following economic goals: expand exports, reduce trade barriers of other countries; retain basic tariffs to increase fiscal revenue; enhance the domestic competitiveness of specific industries and promote the return of high-end manufacturing.

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

• An agreement was reached with Japan, where both parties mutually reduce tariffs and open up markets.
• Negotiations with the EU are nearing the end, with August 1st as the deadline.
• The third round of trade negotiations will be held with China, and if no new agreement is reached, tariffs may be adjusted.

From the perspective of economic theory, tariffs belong to negative supply shocks, having a "stagflation" effect. Enterprises often pass on the tax burden to consumers through price transmission. Therefore, the United States may experience a round of inflation in the second half of the year, which will affect the pace of interest rate cuts.

In summary, the impact of tariff policies on the U.S. economy in the second half of the year may manifest as a phase of rising inflation. Unless data shows that inflationary pressures are not significant, it may lead to a slowdown in the pace of interest rate cuts.

2. The Weak Dollar Cycle May Continue to Benefit the Crypto Market

The dollar tidal cycle refers to the systemic outflow and inflow of the dollar globally. In the first half of the year, the dollar index has weakened, dropping from a high of 110 at the beginning of the year to 96.37, showing a clear "weak dollar" status.

The weakening of the US dollar may have multiple reasons: tariff policies suppress trade deficits and disrupt the dollar circulation mechanism; fiscal deficits weigh on credit; the proportion of global central bank dollar reserves is declining, etc.

According to the historical patterns of the dollar tidal cycle, a weak dollar cycle lasts approximately 2-2.5 years. If we start counting from June 2024, this round of weak dollar cycle may last until mid-2026.

Historical data shows that Bitcoin prices are often negatively correlated with the US dollar index. If the "weak dollar" cycle continues in the second half of the year, global liquidity will shift from tight to loose, which may continue to benefit the crypto market.

3. The monetary policy is expected to maintain a cautious attitude.

There will be four interest rate meetings in the second half of 2025. According to the market prediction tools, 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 in July is as high as 95.7%; the probability of a 25 basis point rate cut in September is 60.3%.

Although the government has repeatedly criticized the slow pace of interest rate cuts, no rate cuts were made in the first half of the year. According to the normal term, the current chairman will step down in May 2026, and the new chairman candidate will be nominated at the end of 2025 or early 2026. In this situation, the voices of the main dovish committee members are gradually attracting market attention.

The interest rate meeting scheduled for July 30 is expected to maintain the current interest rate level, mainly due to:

1. Inflation pressure continues - affected by tariffs, the CPI rose by 0.3% month-on-month in June, and the core PCE increased to 2.8% year-on-year.
2. Economic growth slowdown - The expected growth rate is only 1.5% in 2025, but short-term data exceeds expectations.
3. The resilience of the job market remains - the unemployment rate stays at 4.1%, but hiring is slowing down, and a slight increase is expected in the second half of the year.

In summary, it is expected that the monetary policy will maintain a cautious attitude, with the number of interest rate cuts for the whole year possibly being 1-2 times. However, historical data shows that there is no significant correlation between Bitcoin and interest rate changes, and it may be more influenced by global liquidity.

4. Geopolitical conflicts may have short-term effects on the crypto market

The Russia-Ukraine war remains in a stalemate, and the prospects for a diplomatic resolution are bleak. The government has proposed a "50-day ceasefire deadline" demand, but Russia has gathered a large number of troops, and Ukraine has also carried out large-scale drone attacks. In addition, Russia has withdrawn from its long-term military cooperation agreement with Germany, worsening Russia-EU relations.

From the current situation, it is difficult to achieve the ceasefire goal by September 2. If a ceasefire cannot be reached, subsequent sanctions may trigger market turmoil.

5. The regulatory framework is gradually taking shape, and the industry is entering a favorable policy period.

The new legislation was implemented in July, making clear provisions for stablecoin issuance, token regulation, and other aspects. Overall, the advancement of the relevant legislation marks a shift in cryptocurrencies from a "regulatory gray area" to an era of "transparent regulation," while also reflecting the policy intent to maintain the dollar's status. With the improvement of the regulatory framework, compliant stablecoin projects and DeFi protocols are expected to benefit.

6. The "Coin-Stock Strategy" activates market enthusiasm, with sustainability yet to be observed.

An increasing number of listed companies are adopting the "coin-stock strategy", which involves allocating encryption assets as reserves on their balance sheets. According to incomplete statistics, 35 listed companies have a total reserve of over 920,000 BTC; 13 companies have reserves exceeding 1.48 million ETH; and 5 companies have reserves exceeding 2.91 million SOL. This strategy has created multiple effects such as stock-coin resonance, stock-debt synergy, and coin-debt arbitrage.

The integration of traditional finance and the encryption world is a unique variable in this cycle, but potential risks must also be heeded.

Summary

Overall, in the second half of 2025, the crypto market will experience several key time points:

• End of July: Third round of trade talks between China and the US, Federal Reserve interest rate meeting
• Early August: Deadline for US-EU tariff negotiations
• Early September: The ceasefire deadline between Russia and Ukraine, and the Federal Reserve may cut interest rates for the first time.
• November: Federal Reserve's interest rate meeting
• December: The Federal Reserve's last interest rate meeting of the year, new chairman nomination

The market is ever-changing, and we need to adjust our strategies at any time to cope with uncertainty.