2025 Crypto Assets Market Review and Outlook

In early 2025, the Crypto Assets market experienced significant fluctuations. Changes in the political climate drove prices up, with Bitcoin and Solana hitting all-time highs in January. However, the market then saw a noticeable correction, mainly influenced by macroeconomic factors and industry-specific issues.

From a macro perspective, the market is concerned about increased policy uncertainty and the risk of stagflation. The tariff policy implemented by the new government has reduced consumer confidence and corporate profit expectations. The establishment of the Efficiency Department (DOGE) has also brought uncertainty to government employees and related businesses. The speed and magnitude of these changes are starkly different from previous governments, raising market concerns.

The digital asset industry also faces some unique challenges. Events such as the burst of the Memecoin bubble and a major exchange being hacked have weakened market confidence. In the first quarter, the median token price fell by more than 50%, with almost all token prices experiencing a decline. However, it is worth noting that tokens with strong fundamentals performed relatively well.

From a historical perspective, such pullbacks are not uncommon. In previous bull markets, Bitcoin has also experienced pullbacks of over 20% multiple times. Other tokens have even suffered pullbacks of 40-50%. After significant declines, a strong rebound usually follows.

Some market sentiment indicators suggest that the worst phase of selling may be over. The U.S. economic policy uncertainty index is at its highest level in 40 years. The Crypto Assets fear and greed index has also reached extreme fear levels. Bitcoin futures funding rates show that short positions are dominant. These extreme sentiments often indicate that prices may be nearing a bottom.

At the same time, favorable interest rates and liquidity conditions benefit risk assets. The yield on 10-year U.S. Treasury bonds continues to decline, and global liquidity conditions are improving. Historical data shows that the main upward trend of Bitcoin occurs during periods of increased liquidity.

From another perspective, the four-year cycle of Crypto Assets often aligns with significant macro events. The year 2025 may be another such moment, as the trust crisis of the dollar is evolving. As a non-sovereign store of value, Bitcoin is quite attractive in this context.

We have begun to see early signs of relative strength in digital assets. Since April, some digital assets have risen while U.S. stocks have fallen. Although it is still early, digital assets may rebound first.

It is worth noting that many positive industry developments are overshadowed by market fluctuations. This includes positive changes at the policy level, such as the establishment of digital asset working groups and the creation of strategic Bitcoin reserves. The fundamentals are also continuously improving, with blockchain enterprises generating considerable revenue and user activity steadily increasing.

Overall, despite the challenges in the first quarter of 2025, the long-term outlook remains positive. As the fluctuations caused by tariffs gradually subside, investors may refocus on the industry's long-term favorable factors and strong fundamentals. As a leading growth asset, Crypto Assets are expected to rebound first.