Author: OxCousin, IOBC Capital
In the first half of 2025, the Crypto market was significantly influenced by multiple macro factors, with three key aspects being: Trump administration's tariff policy, Federal Reserve's interest rate policy, and geopolitical conflicts in the Russia-Ukraine and Middle East regions.
Looking ahead to the second half of the year, the Crypto market will continue to navigate through a complex and changing macro environment, with the following macro factors playing crucial roles:
I. Derivative Impact of Trump's Tariff Policy is Inflation Expectations
Tariffs are an important policy tool for Trump's governance, with the Trump administration hoping to achieve a series of economic goals through tariff negotiations: first, expand US exports and reduce trade barriers in other countries; second, maintain a 10%+ basic tariff to increase US fiscal revenue; third, enhance the competitiveness of specific industries and stimulate the return of high-end manufacturing.
As of July 25, tariff negotiations between the US and major world economies have made different levels of progress:
Japan: Both sides have reached an agreement. The US tariffs on Japanese goods have been reduced from 25% to 15% (including automotive tariffs), and Japan has promised to invest $55 billion in the US (covering semiconductor and AI fields), open up automotive and agricultural markets, and increase US rice import quotas.
European Union: The deadline is August 1. EU negotiation representatives arrived in the US on July 23 for final consultations, but the negotiation results have not been publicly disclosed.
China: The third round of trade negotiations will be held in Sweden from July 27 to 30. After the previous two rounds of negotiations, US tariffs on China have been reduced from 145% to 30%, and Chinese tariffs on the US from 125% to 10%; there are reports that the US-China tariff negotiation period will be extended by 90 days, and if no new agreement is reached in the third round of trade talks, tariff suspension may be rolled back.
Additionally, the US has reached tariff agreements with the Philippines and Indonesia. Currently, the most watched is the third round of tariff negotiations between the US and China. Although the uncertainty of tariff policies is gradually decreasing, the possibility of failing to make substantial progress in negotiations with key economic entities cannot be ruled out, which could lead to greater impacts on financial markets.
From an economic theory perspective, tariffs are a negative supply shock with a "stagflation" effect. In international trade, while enterprises are the taxpayers of tariffs, they often transfer this tax burden to US domestic consumers through price transmission mechanisms. Therefore, it is expected that the US may experience a round of inflation in the second half of the year, which could significantly impact the Federal Reserve's interest rate reduction pace.
In summary, the impact of Trump's tariff policy on the US economy in the second half of the year may be a periodic rise in inflation. Unless data shows low inflation pressure, it will lead to a slowdown in the interest rate reduction pace.
II. US Dollar Tidal Cycle in Weak Dollar Phase Favors Crypto Market
The US dollar tidal cycle refers to the process of systematic outflow and inflow of the US dollar globally.Although the Federal Reserve did not cut interest rates in the first half of the year, the US dollar index has weakened:dropping from a high of 110 at the beginning of the year to 96.37, showing a clear "weak dollar" state.
The weakening of the US dollar may have multiple reasons: first, the Trump administration's tariff policy suppressed trade deficits, disrupted the US dollar's circulation mechanism, and weakened the attractiveness of US dollar assets, triggering market concerns about the stability of the US dollar system; second, fiscal deficits drag down credit, with continuous increases in US debt scale and repeated rises in US debt interest rates, deepening market doubts about fiscal sustainability; third, the petrodollar agreement expired without renewal, and global central banks' US dollar reserve proportion dropped from 71% in 2000 to 57.7%, with gold reserve proportion increasing, triggering "de-dollarization" attempts; additionally,rumors about the policy direction reflected in the "Mar-a-Lago Agreement" may have also played a boosting role.
According to previous US dollar tidal cycles, the US dollar index strength almost dominates the global liquidity change trend.Global liquidity often followsa complete 4-5 year US dollar tidal cycle, showing a cyclical fluctuation pattern.Among them,the weak dollar cycle typically lasts 2-2.5 years, and if calculated from June 24, this weak dollar cycle may continue until mid-26.
Graphic: IOBC Capital
As shown in the image, Bitcoin trends often show a negative correlation with the US dollar index. When the US dollar weakens, Bitcoin typically performs strongly. If the "weak dollar" cycle continues in the second half of the year, global liquidity will shift from tight to loose, continuing to benefit the crypto market.
III. Federal Reserve Monetary Policy May Remain Cautious
There are four monetary policy meetings in the second half of 2025,and according to the CME"Fed Watch" tool, the probability of 1-2 interest rate cuts is relatively high.Among them,the probability of maintaining the interest rate unchanged in July is as high as 95.7%; the probability of a 25 basis point cut in September is 60.3%.
Since Trump took office, he has repeatedly criticized the Federal Reserve's slow interest rate reduction pace on X platform, even directly blaming Fed Chair Powell and threatening to fire him, which has subjected the Federal Reserve to certain political intervention pressures. However, the Federal Reserve did not cut interest rates in the first half of the year despite the pressure.
According to the normal term arrangement, Fed Chair Powell will officially step down in May 2026, and the Trump administration plans to announce the nomination for a new chair in December 2025 or January 2026. In this context, the voices of major dovish committee members within the Federal Reserve are gradually receiving market attention and are viewed as potential "shadow chair" influence. Nevertheless, the market generally believes that the monetary policy meeting on July 30 will continue to maintain the current interest rate level.
There are three core reasons for predicting delayed interest rate cuts:
1️⃣Persistent inflation pressure——Influenced by Trump's tariff policy, US CPI rose 0.3% month-on-month in June, and core PCE inflation rose to 2.8% year-on-year. It is expected that the tariff transmission effect will further push up prices in the coming months. The Federal Reserve believes that the path to bringing inflation down to the 2% target is obstructed and more data is needed to confirm the trend;
2️⃣Economic growth slowdown——The expected growth rate in 2025 is only 1.5%, but short-term data such as retail sales and consumer confidence exceed expectations, alleviating the urgency of immediate interest rate cuts;
3️⃣Labor market resilience——Unemployment rate remains low at 4.1%, but corporate hiring is slowing down,with market predictions suggesting a potential gradual increase in unemployment rate in the second half of the year,with Q3 and Q4 unemployment rate forecasts at 4.3% and 4.4% respectively.
In summary, the probability of an interest rate cut on July 30, 2025, is extremely low.
Overall, the Federal Reserve's monetary policy is expected to remain cautious, with potential rate cuts of 1-2 times throughout the year.However, when we examine the historical trend chart of Bitcoin and the Federal Reserve's interest rates, there is actually no significant correlation between the two. Compared to changes in the Federal Reserve's interest rates, global liquidity under a weak dollar state may have a more significant impact on Bitcoin.
IV. Geopolitical Conflicts May Temporarily Affect the Crypto Market
The Russia-Ukraine war is currently in a stalemate, with dim prospects for diplomatic resolution. On July 14, Trump proposed a "50-day ceasefire period," stating that if Russia fails to reach a peace agreement with Ukraine within 50 days, the United States will impose 100% tariffs and secondary tariffs, and provide military assistance to Ukraine through NATO, including "Patriot" air defense missiles. However, Russia has already assembled 160,000 elite troops, planning to focus on key fortresses on the Donbas front. Meanwhile, Ukraine has not been idle, conducting a large-scale drone attack on Moscow airport on July 21. Additionally, Russia announced its withdrawal from a thirty-year military cooperation agreement with Germany, completely rupturing Russia-EU relations.
From the current situation, achieving a ceasefire by September 2 seems difficult. If a ceasefire is not reached by then, Trump's sanctions could trigger market turbulence.
V. Crypto Regulatory Framework Takes Shape, Industry Enters Policy Honeymoon Period
The U.S. GENIUS Act will be implemented in July 2025, stipulating that "no interest shall be paid to token holders, but reserve interest belongs to the issuer and its purpose must be disclosed". However, it does not prohibit issuers from sharing interest earnings with users, such as Coinbase's USDC with a 12% annual yield. The restriction on paying interest to token holders limits the development of "yield-bearing stablecoins", originally intended to protect U.S. banks and prevent trillions of dollars from flowing out of traditional bank deposits that support loans to businesses and consumers.
The U.S. CLARITY Act clearly defines SEC regulation of security tokens and CFTC regulation of commodity tokens (such as BTC, ETH). It introduces the concept of a "mature blockchain system", where regulatory conversion can be achieved through certification - decentralized, open-source code, blockchain projects running automatically based on preset rules can be certified (by submitting proof of no centralized control) and be deemed "mature", thus completing the regulatory compliance upgrade from "securities" to "commodities", with regulatory authority completely transferred to CFTC, and SEC no longer exercising securities regulatory rights. Additionally, it provides partial exemptions for DeFi - activities such as writing code, running nodes, providing front-end interfaces, and non-custodial wallets are typically not considered financial services and are exempt from SEC regulation, only needing to comply with basic anti-fraud and anti-manipulation provisions.
Overall, the accelerated advancement of the GENIUS Act, CLARITY Act, and Anti-CBDC Monitoring National Act marks the U.S. transition from a "regulatory ambiguity" phase to a "sunshine regulation" era.It also reflects the policy intent to "maintain the U.S. dollar's global trade currency status". With the gradual improvement of the regulatory framework,the stablecoin market scale is expected to further expand, and stablecoin projects and DeFi protocols that can meet compliance requirements will benefit.
VI. "Coin-Stock Strategy" Activates Market Enthusiasm, Sustainability Remains to be Observed
As MicroStrategy completes an epic transformation with its "Bitcoin strategy", a crypto asset reserve revolution led by listed companies is sweeping the capital market. From ETH to BNB, SOL, XRP, DOGE, HPYE, TRX, LTC, TAO, FET, and over a dozen other mainstream Altcoins are becoming new anchors for corporate treasuries, and this "coin-stock strategy" is becoming this year's market trend.
Analyzing this capital alchemy using MicroStrategy's "triple flywheel":
Stock-Coin Resonance Flywheel: Stock price is long-term premium relative to net asset value (currently 1.61x), establishing a low-cost financing channel; fundraising → increasing BTC holdings → pushing up coin price → amplifying per-share gold content → feeding back valuation, forming a spiral upward closed loop.
Stock-Debt Synergy Flywheel: Zero-interest convertible bonds cleverly transform debt pressure, with no principal repayment burden, and the conversion right in the company's hands; attracting hedge fund arbitrage capital, injecting low-cost liquidity.
Coin-Debt Arbitrage Flywheel: Replacing depreciating fiat debt with appreciating crypto assets, completing long-cycle arbitrage layout.
Moreover, using a tiered sales strategy to precisely capture three types of capital: preferred stocks lock in fixed-income investors, convertible bonds attract arbitrage funds, stocks carry risk betting. Specific logic canrefer to《Understanding MSTR MicroStrategy's Bitcoin Strategy in One Article》.
This year, more and more listed companies are adopting the "coin-stock strategy" (configuring crypto assets as reserve assets on their balance sheets), with continuously expanding reserve asset scale and increasingly diversified asset allocation. According to incomplete statistics: 35 listed companies collectively reserve over 920,000 BTC; 13 listed companies collectively reserve over 1.48 million ETH; 5 listed companies collectively reserve over 2.91 million SOL. Other details will be omitted, and we will elaborate on each project's reserve details in the next article.
The integration of traditional finance and the crypto world is a unique market variable in this cycle,when listed companies transform their balance sheets into crypto asset platforms,we must also be wary of risks when the tide recedes.
Summary
If we simulate the foreseeable macro events in chronological order, the second half of the year can be divided into the following stages:
Graphic: IOBC Capital
The market is like a vast ocean, we cannot predict storms, we can only adjust our sails in the storm.
