Industry Overview
At the beginning of 2025, the cryptocurrency market unfolded amid a complex emotional interplay of optimism and uncertainty. The industry had multiple expectations for the new year: the potential dividend of the Federal Reserve's monetary policy shift, the second outbreak of AI technological revolution, and the "crypto-friendly" regulatory framework promised by the new U.S. government were all seen as catalysts for industry breakthrough. However, as the first quarter settled, the market presented a vivid landscape of "macro narrative strong oscillation and micro innovation deep dormancy".
Global macroeconomic conditions became the core variable driving market rhythm. The Federal Reserve struggled to balance inflation fluctuations and recession risks. Although the unexpected recession rate cut expectation in March briefly boosted risk appetite, it failed to offset the liquidity panic triggered by the U.S. stock valuation bubble burst. The Trump administration's fulfillment of campaign promises, promoting BTC national strategic reserves, digital asset strategic reserves, and implementing the "Digital Asset Regulation Clarification Act", released structural benefits for the industry. However, the parallel of policy dividends and SEC enforcement leniency also intensified market debates about "compliance transformation costs". After BTC again broke through the $100,000 historical high in January and suffered a 30% deep correction, it exposed market funds' staged profit-taking on the "halving narrative". The Altcoin market performed generally flat, but the birth and delivery of products focusing on RWA and user entry still injected underlying innovative momentum into the industry. Notably, Binance and other CEXs are accelerating DEX ecosystem layout, promoting seamless user access to DeFi and other dApps through on-chain liquidity aggregation and account abstraction technology, and for the first time allowing CEX users to directly trade DEX assets within their accounts. This paradigm shift of "centralization and decentralization integration" may become a key fulcrum for growth and breakthrough in the next cycle.
Macroeconomic Environment and Impact
In the first quarter of 2025, the U.S. macroeconomic environment profoundly and complexly influenced the cryptocurrency market. From the BTC spot ETF approval, the entire crypto market's positive correlation with U.S. stocks has increasingly strengthened, with Nasdaq's trend directly determining the cryptocurrency market's direction. Although BTC was previously dubbed "digital gold", cryptocurrencies now lean more towards risk assets rather than safe-haven assets, more significantly affected by market liquidity. ArkStream will continue to focus on macroeconomic trend changes. The macroeconomic core lies in the balance between inflation and economic strength, with markets trading future expectations: if inflation is too high or the economy too robust, the Federal Reserve will tend to postpone rate cuts, which is unfavorable to capital markets; conversely, if economic performance is too weak, it might trigger recession risks, equally detrimental to market confidence and capital flow. Therefore, macroeconomic conditions need to find a delicate balance between strength and weakness to provide a favorable environment for capital markets. The Doge sector's massive layoffs of government personnel directly caused unemployment rate increases. Simultaneously, Trump's tariff policies directly raised prices of affected goods and related service industry costs, exacerbating inflationary pressures and increasing the possibility of U.S. economic recession.
These policy series increased market instability factors, leading to increased capital market volatility. Considering the high gains from the 2024Q4 election scenario and potential short-term market massive fluctuation withdrawal risks, ArkStream Capital contracted investment plans in 2025Q1, focusing more on OTC strategy business exploration and channel expansion. However, considering these policies might not be purely economic regulation measures, but the Trump administration's attempt to increase political negotiation chips with other countries or deliberately create chaos to achieve specific political-economic objectives—such as forcing the Federal Reserve to quickly implement emergency defensive rate cuts by manufacturing economic recession signs to simultaneously alleviate U.S. national debt issues and stimulate economic growth and capital market performance—we remain optimistic about subsequent cryptocurrency market performance.
In the first quarter, the cryptocurrency market demonstrated high sensitivity to macroeconomic data. Below is a month-by-month analysis of market performance in January, February, and March.
Trump Administration's Cryptocurrency Policies and Impacts
In March 2025, Trump signed an executive order requiring the establishment of a strategic Bitcoin reserve, primarily funded by approximately 200,000 confiscated Bitcoins (valued around $18 billion), and prohibiting government sales of these reserves. The aim was to elevate Bitcoin to a "sovereign reserve asset", enhancing its legitimacy and liquidity while promoting U.S. leadership in digital assets. Although Bitcoin's price initially surged over 8% and market confidence increased, it quickly fell as the market realized the reserve relied solely on confiscated assets with no new purchase plans. Long-term, this might inspire other countries to follow suit, potentially promoting Bitcoin as an international reserve asset. Additionally, other non-Bitcoin digital assets could be included in digital asset reserves, marking a transformation of cryptocurrencies from marginal assets to national strategic tools. In regulatory aspects, Trump pushed to dismiss SEC Chair Gary Gensler, established a crypto asset working group, clarified securities and non-securities token standards, and terminated litigation against companies like Coinbase. He also repealed the controversial accounting standard SAB 121, reducing corporate financial burdens. The significantly relaxed regulatory environment accelerated institutional investor entry and enabled traditional financial institutions to offer crypto custody services. Regarding stablecoins, the Trump administration established a federal regulatory framework, allowing stablecoin issuers to access the Federal Reserve's payment system while explicitly prohibiting the Fed from issuing a central bank digital currency (CBDC), preserving private cryptocurrency innovation space. In tariff policy, Trump signed the "Reciprocal Trade and Tariff Memorandum" in February 2025, requiring trade partners to match U.S. tariff rates and imposing additional tariffs on countries with value-added tax systems. This triggered global retaliatory measures and escalating trade tensions. Trump's cryptocurrency policies temporarily boosted market confidence and capital inflow, but long-term risks of centralization and policy volatility remain. The tariff policies, while claiming "America First", fragmented the global trade system, increased inflation, and accelerated economic recession expectations. The Trump family-supported DeFi project World Liberty Financial (WLFI) has significantly influenced the crypto industry since 2024. WLFI's strategic positioning and political background have attracted investor attention, with its USD1 stablecoin emphasizing compliance and institutional-grade custody. WLFI's heavy investments in cryptocurrencies like BTC, ETH, AAVE, ONDO, and ENA align with the government's "strategic crypto reserve" policy, potentially guiding more capital towards digital asset reserves.In summary, WLFI has a double-edged sword effect on the cryptocurrency industry. On one hand, it accelerates compliance through political empowerment, promotes the integration of DeFi with institutional capital, and explores the global application of USD stablecoins. On the other hand, relying on policy dividends may lead to market bubbles, and non-transparent interest distribution could trigger a trust crisis, with ineffective project execution potentially becoming a negative case study for the industry. In the future, key focus should be on WLFI's product implementation progress, USD1's market acceptance, and the supporting role of Trump administration policy continuity.
Connectivity and Fusion of CEX and DEX
Exchanges and Web3 wallets serve as crucial traffic entry points into the crypto world. Users typically first use fiat currency to deposit assets on mainstream exchanges and engage in financial activities such as cryptocurrency trading, lending, and wealth management, or interact with various dApps through Web3 wallets of different public chains. In the past, these were clearly delineated. Due to the high threshold and educational costs of Web3 wallets, ordinary users mostly began their Web3 journey from exchanges, while centralized exchanges retained users through more mature and liquid services compared to decentralized dApps. Especially entering 2025, exchange businesses have become more sophisticated compared to the previous cycle, with Binance announcing 200 million users in 2024, doubling from the previous cycle. In contrast, Web3 native on-chain users, constrained by various factors, have daily active users of only about 10% of centralized exchanges.
Since 2023, exchanges have leveraged their accumulated asset management experience in exchange wallets to enter the Web3 Wallet product market. OKX Wallet, in particular, has attracted numerous users through excellent product experiences, such as asset management, on-chain interaction, and transaction optimization. CEXs utilize their advantages in exchange wallet modules, like self-built RPC for different public chains, to create more comprehensive and superior wallet products, achieving user attraction and retention. However, OKX Wallet is essentially no different from traditional Web3 Wallets, merely a more high-quality and convenient multi-chain wallet, without breaking the usage threshold of native Web3 Wallets.
Binance Web3 Wallet is closely linked with the exchange account, initially supporting quick receiving and sending between in-platform assets and Web3 wallet, reducing users' security concerns when using Web3 wallets by providing guarantees from the exchange level. Additionally, Binance Web3 collaborates with mainstream DEXs in the ecosystem to launch multiple IDOs targeting ordinary users, attracting more platform users to participate and learn about on-chain knowledge. Moreover, its latest wallet functionality allows in-platform users to directly purchase Alpha series on-chain assets, achieving the ability to buy on-chain assets directly from within CEX, completely breaking the traditional boundaries between CEX and DEX.
Data source: Dune, https://dune.com/lz_web3/wallet-war
Unlike mainstream CEX-dominated Web3 Wallets, native crypto projects can focus on actual and urgent needs of on-chain users. Particle Network, leveraging years of accumulation in MPC and account abstraction technologies, seized the unified account demand generated by multi-chain trading, launching UniversalX. This product integrates wallet and trading platform, effectively solving asset transfer and trading difficulties across different chains, helping users manage and trade assets efficiently in a multi-chain environment. With this innovative product, Particle Network has gained positive market reputation and widespread recognition.
Data source: Dune
The fusion of CEX and DEX is not just a technological innovation, but a milestone in the cryptocurrency market's transition from "opposition and division" to "symbiotic collaboration". This transformation, while enhancing efficiency and inclusivity, also generates new challenges in regulation, security, and governance. In the future, whoever can better balance centralized efficiency with decentralized asset security and autonomy will lead the evolution of next-generation financial infrastructure.
