1. Macroeconomic Background: Sino-US Policy Resonance and Market Sentiment Shift
In May 2025, the Peoples Bank of China announced the implementation of a double reduction policy, namely, reducing the deposit reserve ratio (RRR) by 0.5 percentage points, releasing about 1 trillion yuan of long-term liquidity, and reducing the policy interest rate by 0.1 percentage points to 1.4%. The introduction of this policy not only has a profound impact on the traditional financial market, but also brings potential strategic opportunities to the crypto market and Web3 ecology. At this time, the expectations of high-level economic and trade negotiations between China and the United States are positive, which further promotes the risk preference sentiment of the global market.
1.1 Sino-US trade recovery: a strong stimulus to market sentiment
The economic and trade relations between China and the United States have always been the focus of global market attention. In the past few years, due to the impact of the Sino-US trade war and tariff policies, the global economy has faced considerable uncertainty, and investors risk appetite has declined. However, with the release of the double reduction policy of the Peoples Bank of China, the markets expectations for the recovery of Sino-US economic and trade relations have increased significantly, and the prices of risky assets have generally risen, especially in the crypto market. The Chinese government has conveyed an important signal behind the double reduction policy: the easing cycle of monetary policy has arrived, and economic growth is expected to gain new support. Under the background of this policy, market liquidity will be released, and investment enthusiasm for traditional assets such as stocks and commodities will be high. At the same time, high-level economic and trade negotiations between China and the United States are about to begin, especially the meeting between Chinese Vice Premier He Lifeng and US Treasury Secretary Bensont, which further enhanced the markets optimistic expectations for future economic and trade cooperation. This series of policy signals not only reshaped investors sentiment, but also brought huge positive impacts to the crypto market. The rise of risky assets such as Bitcoin is a direct reflection of the shift in market sentiment. The increase in risk appetite has gradually increased investors acceptance of non-traditional assets such as cryptocurrencies, and the price of Bitcoin once approached a record high of $100,000.
1.2 “Double Reduction” Policy and Global Liquidity
Chinas double reduction policy has an important global impact. By reducing the reserve requirement ratio and policy interest rate, the Chinese central bank has injected sufficient liquidity into the market and released 1 trillion yuan of funds. This monetary policy easing has not only had a positive effect on the Chinese economy, but may also trigger a wave of changes in capital flows around the world. In particular, Chinas policy is particularly attractive in the context of the US economy still facing the risk of high inflation and high unemployment. Investors in the global capital market, especially in the Asian market, have responded positively to this policy. With the substantial release of liquidity, global capital will be more actively looking for new investment channels. Against this background, investors in traditional asset markets and crypto markets have significantly increased their demand for cryptocurrencies such as Bitcoin. As digital gold, Bitcoins value is highlighted in the global monetary easing environment, and it has become an important tool for investors to fight inflation and currency depreciation.
The double reduction policy of the Peoples Bank of China has not only promoted the recovery of the domestic economy, but also significantly increased the risk appetite of the international market. Asian stock markets have risen sharply, and the prices of commodities such as iron ore and steel have continued to rise. Investors in traditional markets have turned to the crypto market for new investment opportunities. Due to the fixed supply and anti-inflation properties of Bitcoin, more and more capital regards it as a long-term value storage tool.
1.3 Fed policy and interest rate cut expectations
As global market liquidity has increased significantly, the Federal Reserves monetary policy trend has also become the focus of market attention. Previously, due to the continued high inflation in the United States, the Federal Reserve has maintained a high interest rate level. However, recent economic data show that although the US economy is still expanding steadily, the dual pressures of high inflation and high unemployment have made the Federal Reserves monetary policy face greater challenges. The Feds expectations for interest rate cuts have gradually weakened, and the market generally believes that the Fed will maintain the existing interest rate policy in the short term to avoid over-stimulating the economy. This weakening expectation of interest rate cuts has directly led to the strengthening of the US dollar. The appreciation of the US dollar has had a profound impact on global capital flows, especially in the crypto asset market. Despite the strength of the US dollar, the demand for crypto assets in the market has not declined significantly. Instead, there has been a resurgence in digital gold as a safe-haven asset. Investors are looking for stable value storage tools under the uncertainty of the Federal Reserves policies, and the demand for Bitcoin has increased.
In addition, the Feds monetary policy direction also affects the regulatory expectations of the crypto market. As the Fed may take more easing measures, the markets expectations for policy support for crypto assets are gradually rising, especially as some states in the United States have passed legislation on cryptocurrency reserves. In the future, as the US government further relaxes its regulation of the crypto market, the crypto asset market will usher in a broader institutional dividend period.
1.4 Shift in market sentiment and investment strategies
Overall, the resonance of China-US policies and the shift in market sentiment will have a profound impact on the global capital market, especially the crypto market. With the implementation of Chinas double reduction policy and the recovery of Sino-US economic and trade relations, global risk appetite has increased significantly, and investors sentiment has turned more positive, especially in the cryptocurrency market, where demand for risky assets such as Bitcoin has surged. The price of Bitcoin is close to its historical high of $100,000, showing the markets high recognition of this asset. However, in this macro context, investors still need to be cautious in dealing with potential risks in the market. With changes in global monetary policy, the strength of the US dollar and the uncertainty of the Feds policy may bring volatility to the crypto market. Therefore, investors need to maintain a flexible strategy, adopt a core + satellite investment portfolio, use Bitcoin as a basic configuration of digital gold, and pay attention to Web3 projects with practical application scenarios, especially innovations in cross-border payments, digital identity authentication and other fields.
In general, driven by the resonance of Sino-US policies and the shift in market sentiment, the crypto market and Web3 ecosystem have ushered in new development opportunities. This macro background not only improves investors risk appetite, but also lays the foundation for the future development of crypto assets and blockchain technology.
2. Bitcoin Market Dynamics: Price Approaching $100,000
Bitcoin showed a strong upward trend in 2025, and its price approached the historical psychological threshold of $100,000 many times, becoming one of the most eye-catching assets of the year. The forces driving this round of rise are complex and diverse, including the resonance of the macro policy background, the structural evolution within the encryption industry, and the two-way game of emotions and expectations. At a time when the traditional financial system is generally facing uncertainty, Bitcoin has once again become the center of global capital vision. Behind the price curve, there is not only the concentrated release of risk aversion demand, but also the reality of institutional recognition, institutional influx, and valuation reconstruction.
Looking back at the end of 2024 and the beginning of 2025, the trend of Bitcoin has benefited significantly from the pace of policy easing in major economies around the world. In particular, the synchronous dovish monetary and fiscal policies of China and the United States have injected unprecedented liquidity into the market. China has lowered the deposit reserve ratio and policy interest rate in two rounds, which has led to a rapid increase in the risk appetite of domestic funds. The Federal Reserve was forced to suspend interest rate hikes under the pressure of Trump and released expectations of future interest rate cuts. The weakening of the US dollar index and the decline in US real interest rates have further raised the anchor of global assets. In this context, Bitcoin, as a scarce, non-sovereign, and strong consensus digital asset, has once again become a dual role of safe haven currency + growth asset in the eyes of global investors. While hedging the depreciation of fiat currency, it also assumes the alternative function of digital gold in the structural cracks of the monetary system.
The biggest difference from previous bull market cycles is that institutional investors have become the dominant force in this round of gains. Large American asset management institutions such as BlackRock, Fidelity, and ARK have deployed Bitcoin spot ETFs to push Bitcoin onto the right track of institutionalized allocation. In Hong Kong, Dubai, Europe and other places, financial products for crypto assets are becoming increasingly abundant, and regulatory transparency is improving, allowing Bitcoin to enter more traditional capital pools in a compliant manner. The addition of this institutional-level capital has not only increased the depth and stability of the Bitcoin market, but also significantly reduced its past pure emotion-driven volatility structure, making its rise more structural and sustainable.
At the same time, the logic of scarcity on the supply side is also continuing to amplify Bitcoins value anchoring ability. The fourth Bitcoin halving event in April 2024 will reduce the single block reward from 6.25 to 3.125, greatly compressing the 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 of deflationary currency has been further strengthened. The demand side has grown exponentially under the multiple pulls of ETF listing, central bank purchases, sovereign fund allocations, and global risk aversion. The asymmetry of the supply and demand structure constitutes the fundamental support for the medium- and long-term rise in Bitcoin prices.
It is worth noting that the current process of Bitcoin approaching $100,000 is also accompanied by violent emotional fluctuations and technical adjustments. On the one hand, there are continuous concentrated trading behaviors of whale accounts in the market, especially near key integers. With the game between high-frequency algorithms and large arbitrage, the market is pulled violently in a short period of time, and the volatility soars; on the other hand, some old funds take the opportunity to distribute, and the fear of heights of retail investors are superimposed, which triggers a phased callback. It can be clearly observed in on-chain indicators such as Glassnode that long-term holders gradually reduce selling pressure, new entrants are concentrated at high prices, and the market structure is in the transition period from early belief-based users to mainstream incremental users.
In terms of market opinion, the media widely publicized the historical significance of Bitcoin approaching $100,000, forming a strong FOMO effect (fear of missing out), attracting a large number of retail investors to enter the market in the short term. However, this kind of public opinion-driven enthusiasm also brought about typical bubble expectations, and some short-term funds engaged in excessive speculation, especially the concentrated trading of highly leveraged users, which can easily induce stampede liquidation at key points. Therefore, although long-term logic supports Bitcoin prices to break new highs, there is still the possibility of violent fluctuations in the short term, and the market has entered a game stage between enthusiasm and risk.
In general, Bitcoin is approaching $100,000, which is not only the result of the resonance of technical and policy aspects, but also represents the leap of its asset positioning in the global capital system. Under the macro framework of de-dollarization, the resurgence of global risk aversion, and the entry of institutional funds, Bitcoin is not only a speculative target, but also a strategic asset in the new round of global wealth redistribution. Although there are still adjustment risks in the short term, from a medium- and long-term perspective, this round of rise is not a flash in the pan, but the starting point of a new consensus cycle. Investors need to find a balance between enthusiasm and calmness, and understand that Bitcoin is not just a price, but also a resonance of faith, system and times.
3. Web3 Ecosystem Development: Policy and Technology Driven
With the easing of macroeconomic policies and the continuous breakthroughs in key technologies, the Web3 ecosystem is entering a new round of development cycle. It is no longer just a hype tool around encrypted assets, but has gradually evolved into an underlying architecture for global digital governance, cross-border collaboration, and the Internet of Value. In this process, the three forces of policy guidance, technological innovation, and application expansion are superimposed on each other, forming the main axis that drives Web3 from concept to large-scale implementation.
1. Policy support
Since 2025, the US policy attitude in the field of cryptocurrency and Web3 has been undergoing a critical transition from regulatory suppression to strategic acceptance, especially Bitcoin and core Web3 technology are gradually being incorporated into the long-term considerations of national financial and technological development. The most representative signal is the Bitcoin Reserve Act officially passed by New Hampshire in May 2025. The bill requires the states treasury to hold a portion of its state governments fiscal reserves (initially 5%) in the form of Bitcoin within the next 24 months, and supports the inclusion of Bitcoin in the public accounting system. Although this legislative move comes from local governments, it has far-reaching implications.
First, it indicates that Bitcoin is no longer just a risk asset in some jurisdictions, but is regarded as digital gold with long-term value storage capabilities, and has a functional role in fighting inflation and enhancing fiscal independence. This provides a pilot template for policymakers, including other states, which may trigger a round of local government BTCization trends and inject long-term institutional funding sources into the Web3 ecosystem. Secondly, the passage of the bill also enhances the policy certainty around Bitcoin and Web3 technology, and alleviates the uncertainty risks caused by previous conflicts in federal supervision such as the SEC and CFTC. For example, under the incentive of the bill, the New Hampshire Department of Finance has signed a memorandum of understanding with two local digital asset custodians, and clearly stated that it will explore ways to connect on-chain transparency with public accounts to provide a practical blueprint for the DAO-style fiscal system.
More broadly, several state governments in the United States are currently in the early stages of policy competition. In addition to New Hampshire, crypto-friendly states such as Texas and Wyoming are also promoting their own experimental legislation on crypto mining, on-chain finance, and smart contract compliance. At the same time, the federal level is promoting the Financial Innovation and Technology Future Act (FIT21), which proposes to define mainstream digital assets such as Bitcoin and Ethereum as non-securities commodities and promote the establishment of a unified regulatory framework to further clarify core issues such as asset issuance, exchange registration, and stablecoin audits. These dynamics have strengthened the U.S. markets long-term institutional confidence in the Web3 ecosystem and provided a clear policy anchor for the entry of enterprises and capital.
From an international perspective, the US transformation also has a spillover effect. As the center of global capital and technology, any positive legislation in the US is likely to drive policy follow-up in other countries or regional markets. For example, the financial regulatory authorities in the UK, South Korea, and Japan have recently begun to re-examine the compliance mechanism of stablecoins, or accelerate the opening of the Web3 regulatory sandbox, thereby driving the flow of Web3 capital and ecological synergy around the world.
2. Technological progress
The maturity of technology is the key prerequisite for Web3 to move from narrative economy to actual deployment. Since 2024, infrastructure technologies such as modular blockchain and zero-knowledge proof (ZKP) have entered the practical stage, greatly improving the performance, composability and privacy protection capabilities of the Web3 network. The design concept of modular blockchain separates execution, settlement and data availability, allowing developers to choose the optimal combination according to business needs. Projects such as Celestia and EigenLayer provide flexible underlying resource scheduling capabilities and provide on-demand customization infrastructure for on-chain applications. The explosive progress of zero-knowledge proof technology has given Web3 the dual capabilities of computing + privacy. ZK-rollup, as the core solution of Ethereum Layer 2, has entered the large-scale deployment stage. At the same time, cutting-edge cross-fields such as ZKML (zero-knowledge machine learning) have also begun to show great potential in on-chain model verification and off-chain data compliance calls.
In addition, MCP (Model Context Protocol) protocols that integrate AI and Web3 have also taken shape, which puts the training, calling, and verification processes of AI models on the chain, so that on-chain intelligence is no longer limited to script logic, but has the ability to self-evolve. These new paradigm technologies are gradually breaking through the bottlenecks of high gas fees, low interactivity, and weak privacy protection in the original Web3 system, making it possible for on-chain applications to compete with the Web2 experience.
3. Application scenario expansion
The ultimate goal of policy relaxation and technological breakthroughs is the continuous expansion of Web3 application scenarios and the rapid acceptance of real needs. Taking cross-border payments as an example, benefiting from the popularity of stablecoins (such as USDC, USDT) and the maturity of on-chain clearing mechanisms, more and more small and medium-sized export companies and digital service providers have begun to use stablecoins for direct settlement, effectively avoiding exchange rate fluctuations and low transfer efficiency in the traditional financial system. Especially in emerging markets such as Southeast Asia, Latin America, and the Middle East, where financial infrastructure is weak and encryption acceptance is high, Web3 payments have become a practical trend.
Digital identity authentication (DID) has also become an important breakthrough for the implementation of Web3. Against the backdrop of the proliferation of AI content and the intensification of the trust crisis of Web2 platforms, on-chain verifiable identity systems (such as Worldcoin, Polygon ID, Sismo, etc.) have been integrated into key links such as DAO governance, DePIN device access, and cross-chain credit assessment by more and more projects, solving the basic problems of who is the user and who owns the data. In addition, on-chain social networking, games, referendums, educational qualification verification and other scenarios have also ushered in explosive opportunities due to the maturity of the DID system.
From a broader perspective, three types of application drivers have been formed in the Web3 ecosystem: the first is the demand for chain reform upgrades from traditional industries, such as real estate, insurance, logistics, etc., which hope to improve efficiency and transparency through chain-based operations; the second is the advanced evolution of crypto-native needs, such as from DeFi 1.0 to Restaking, SocialFi, AI Agent and other innovative gameplay; the third is the cultural resonance of global youth and developer groups on free collaboration and value sovereignty, which constitutes the cultural foundation of the long-term centripetal force of the Web3 community.
IV. Risk Factors and Investment Strategies
Although the current Web3 ecosystem and Bitcoin market are showing strong growth, investors still need to pay close attention to potential systemic and non-systemic risks. At a time when the game between long and short forces continues to escalate and the linkage between policies and markets becomes increasingly complex, it is particularly important to formulate a rational and forward-looking investment strategy.
First, from a macro perspective, the direction of global interest rate policy is still highly uncertain. Although the Federal Reserve has released easing expectations against the backdrop of slowing inflation and employment pressure, once inflation data rises again or geopolitical conflicts intensify, it may be forced to turn back to hawkishness, thereby hitting the valuation of risky assets. Especially at a time when Bitcoin has become highly financialized and its sensitivity to macro policies has greatly increased, any expectations of delayed interest rate cuts or return to balance sheet reduction may trigger drastic market fluctuations.
Secondly, regulatory disturbances still constitute a major external variable. Although the United States and other countries are advancing the process of crypto asset legislation, before the new regulatory framework is officially implemented, there is still a gray area in the enforcement scale of departments such as the SEC and CFTC. In extreme cases, they may even take selective enforcement actions against core infrastructure such as DeFi platforms, stablecoin projects, and DEX exchanges. In addition, the implementation of the EUs MiCA framework may also put compliance pressure on some projects, especially the public chain ecosystem involving KYC/AML mechanisms, which will have to face higher operating costs and identity governance challenges.
Third, from the perspective of the on-chain ecosystem itself, technical risks cannot be ignored. For example, although zero-knowledge proof, Layer 2 bridging technology, and modular blockchain have great potential, they still face problems such as attacks, code vulnerabilities, or immature protocols. For example, in the first quarter of 2025, a cross-chain bridge protocol was attacked by a smart contract logic vulnerability, resulting in the theft of more than $300 million in assets, which is a typical systemic black swan in the chain. This reminds investors that the other side of technological innovation is that systemic risks have not yet been fully priced by the market.
In addition, the structural differentiation of the market may bring about a periodic bubble. As the total market value of the crypto market approaches a record high, hot assets (such as Meme coins, AI coins, and modular concept coins) emerge in an endless stream, and there is no lack of capital speculation. Some projects that have not yet achieved commercial implementation may be overvalued under the influence of emotions. Once the hot spots recede, it is very easy to cause a concentrated retracement. This requires investors to maintain fundamental research and judgment capabilities and valuation discipline when pursuing high returns.
In this context, investment strategies need to be more inclined towards offense in defense. Specifically:
For investors with low risk appetite, Bitcoin should be used as an asset anchor in the crypto field for long-term allocation, and positions should be gradually increased in each round of pullback, with priority given to holding mainstream assets with institutional recognition.
Investors seeking growth returns can pay attention to projects in the infrastructure track that have real applications, active developer ecosystems, and clear protocol upgrade paths, such as Layer 2, ZK, modular chains, DePIN, etc., but should avoid heavy positions in short-term hot spots during periods of high market volatility.
In terms of operating strategies, priority should be given to dynamic management through methods such as building positions in batches, rolling position adjustments, and setting take-profit and stop-loss ranges to avoid extreme decisions driven by emotions.
In addition, the policy sensitivity dimension should be strengthened in project selection, and priority should be given to emerging projects that are growing in the context of clear compliance trends (such as the United States, Hong Kong, the United Arab Emirates, etc.) to enhance the portfolios ability to resist risks.
In general, the crypto market is at a cyclical turning point in 2025. Although it is full of opportunities, it also hides risks. Only by understanding the structural trends and building a portfolio configuration logic that crosses the cycle can we move forward steadily in the future market situation where market fluctuations and innovations go hand in hand.
V. Conclusion
In the first half of 2025, the crypto market entered a new round of structural rising cycle driven by the resonance of Sino-US policies, the warming of liquidity and the acceleration of technological innovation. As a value-anchored asset, Bitcoin continues to gain recognition from mainstream finance, and its price is approaching the $100,000 mark, sending a strong market signal; with the help of US policy tolerance and breakthroughs in underlying technologies such as ZK and modularization, the Web3 ecosystem has further expanded its application scenarios, presenting a dual-wheel resonance pattern of from technology to system. However, policy variables, regulatory uncertainty, market speculation and technical security risks are still shadows that must be guarded against. Looking forward to the second half of the year, investors should maintain calm judgment in structural prosperity and follow the strategic logic of combining value-driven, policy-oriented and security bottom line to truly cross the cycle and grasp the core dividends of the next stage.
