Crypto Assets favored under global economic uncertainty

In May, new changes emerged in the global economic situation. The China-U.S. trade talks exceeded expectations, leading to a rise in U.S. stocks and Crypto Assets. However, at the end of the month, the ruling by the U.S. International Trade Court brought new variables to the tariff war, marking a new phase in the reconstruction of global trade rules. Against this backdrop, the decentralized and cross-sovereign characteristics of Crypto Assets are increasingly attracting the attention of investors.

The economic data from the United States in April is mixed. The non-farm employment data is better than expected, indicating that the labor market remains robust. A temporary agreement was reached in the China-U.S. trade talks, alleviating market concerns about a breakdown in the global supply chain. The consumer confidence index rebounded significantly, recording the largest monthly increase in four years.

However, the US Treasury market is facing challenges. The yield on 30-year US Treasuries has surged to a nearly 20-year high. New legislation introduced by the Trump administration may significantly increase the ratio of US debt to GDP, raising concerns in the market about the fiscal outlook for the United States. In addition, the Federal Reserve maintains a pause on interest rate cuts, believing that inflation may be more persistent than expected.

Overall, the US economy is in a "stable yet risky" phase. Short-term growth supports the market, but the background of fiscal and monetary policies may limit the upside potential. Whether US policies can alleviate the contradiction of "stimulating short-term growth while overdrawn on long-term credit" remains unknown.

Affected by the easing of tariffs, the US stock market performed strongly in May. The S&P 500 Index and the Nasdaq recorded their strongest May performances since 1990 and 1997, respectively. Tech giants became the biggest beneficiaries, but the rise in US Treasury yields may squeeze corporate profit margins, resulting in a market characterized by "high volatility and high differentiation."

Bitcoin, as a digital asset barometer, performed outstandingly in May. It surged from a fluctuation range of $95,000 at the beginning of the month to $105,000 at the end of the month, achieving a monthly increase of 12%. This resonance effect with the US stock market suggests that investors are re-anchoring their assets amid policy uncertainty.

The flow of funds shows that investors are shifting from traditional gold to Bitcoin. The U.S. Bitcoin ETF is attracting a significant influx of funds, while gold funds are experiencing outflows. Mainstream financial institutions are also beginning to embrace Bitcoin, with JPMorgan announcing that it will allow clients to invest in Bitcoin.

The regulatory environment in the United States is becoming more lenient. The new chairman of the SEC proposed the goal of creating a "global Crypto Assets capital" and announced a shift in regulatory model. The United States and Hong Kong have successively advanced stablecoin regulatory bills, bringing new funding channels to the digital currency market while providing institutional support for the development of the Web3 ecosystem.

In the future, the volatility of traditional financial markets may become a driving force for the rise of Crypto Assets. Market concerns triggered by rising US Treasury yields may prompt safe-haven funds to flow into the crypto market. In the long term, the deterioration of the US fiscal situation may enhance the safe-haven appeal of Crypto Assets.

The performance of the Crypto Assets market in May reflects that, against the backdrop of global economic uncertainty, Bitcoin is becoming a new choice for capital to hedge against the "uncertainties of the old order." As regulatory easing moves from expectation to reality, this process of restructuring may accelerate. Despite still facing numerous challenges, Bitcoin's positioning as "digital gold" has entered mainstream discourse.