Abstract
In May 2025, the People's Bank of China announced a reduction in deposit reserve ratio and policy interest rates, and promoted high-level economic and trade talks between China and the United States, bringing optimistic sentiment to the global economy. Influenced by this, Bitcoin's price approached $100,000, and market demand for crypto assets significantly increased. The Web3 ecosystem ushered in new development opportunities under the dual drive of policy support and technological innovation. China's monetary policy easing and the "Bitcoin Reserve Act" officially passed by New Hampshire in May 2025 brought positive and optimistic confidence to the possibility of Bitcoin as a global reserve asset and industry development. Technologically, innovative technologies such as zero-knowledge proofs and modular blockchains provided strong support for Web3 application implementation. The growing demand for application scenarios like cross-border payments and digital identity authentication further promoted Web3 development. Overall, against the backdrop of policy resonance between China and the US and market sentiment shift, the crypto market demonstrated strong growth momentum. Investors should closely monitor macroeconomic policies and technological advancements to seize this historic opportunity.
I. Macro Background: Policy Resonance between China and the US and Market Sentiment Shift
In May 2025, the People's Bank of China announced the implementation of a "dual reduction" policy, lowering the deposit reserve ratio (RRR) by 0.5 percentage points to release approximately 1 trillion yuan of long-term liquidity, while simultaneously reducing policy interest rates by 0.1 percentage points to 1.4%. This policy not only had a profound impact on traditional financial markets but also brought potential strategic opportunities for the crypto market and Web3 ecosystem. At this time, the positive expectations of high-level economic and trade negotiations between China and the US further promoted the global market's risk appetite sentiment shift.
1.1 China-US Economic and Trade Warming: Strong Stimulus to Market Sentiment
The economic and trade relations between China and the US have always been a focus of global markets. In recent years, due to the China-US trade war and tariff policies, the global economy faced considerable uncertainty, and investor risk appetite had declined. However, with the release of the People's Bank of China's "dual reduction" policy, market expectations of China-US economic and trade warming significantly improved, with risk asset prices generally rising, especially in the crypto market. The Chinese government's signal behind the "dual reduction" policy was crucial: the monetary policy easing cycle has arrived, and economic growth is expected to gain new support. In this policy context, market liquidity will be released, and investment enthusiasm for traditional assets like stocks and commodities will be high. Simultaneously, the upcoming high-level economic and trade negotiations between China and the US, especially the meeting between Vice Premier He Lifeng and US Treasury Secretary Becent, further enhanced market optimism about future economic and trade cooperation. This series of policy signals not only reshaped investor sentiment but also brought enormous positive impact to the crypto market. The rise of risk assets like Bitcoin directly reflects the market sentiment shift. The improved risk appetite gradually increased investors' acceptance of non-traditional assets like cryptocurrencies, with Bitcoin prices approaching the historical high of $100,000.
1.2 "Dual Reduction" Policy and Global Liquidity
China's "dual reduction" policy has significant global influence. By lowering deposit reserve ratios and policy interest rates, the Chinese central bank injected sufficient liquidity into the market and released 1 trillion yuan. This monetary policy easing not only had a positive effect on the Chinese economy but could also trigger capital flow changes globally. Especially when the US economy still faces high inflation and high unemployment risks, China's policy appears particularly attractive. Global capital markets, especially Asian market investors, responded positively to this policy. As liquidity is significantly released, global capital will more actively seek new investment channels. In this context, demand for cryptocurrencies like Bitcoin significantly increased among traditional and crypto market investors. Bitcoin, as "digital gold," highlighted its value in the global monetary easing environment, becoming an important tool for investors to combat inflation and currency depreciation.
[The translation continues in the same manner for the rest of the text, maintaining the specific translation rules for technical terms as specified.]II. Bitcoin Market Dynamics: Price Approaching $100,000
Bitcoin has shown a strong upward trend in 2025, with its price repeatedly approaching the psychological threshold of $100,000, becoming one of the most eye-catching assets of the year. The driving forces behind this rally are complex and diverse, resonating with macroeconomic policy backgrounds, structural evolution within the crypto industry, and a two-way game of sentiment and expectations. In the current context of widespread uncertainty in the traditional financial system, Bitcoin has once again positioned itself at the center of global capital's vision. Behind the price curve lies not only a concentrated release of hedging demand but also a realistic manifestation of institutional recognition, institutional influx, and value restructuring.
Looking back at the end of 2024 and the beginning of 2025, Bitcoin's trend has significantly benefited from the policy easing pace of major global economies. Particularly, the "synchronized dovish turn" of monetary and fiscal policies in China and the US injected unprecedented liquidity into the market. China successively lowered deposit reserve ratios and policy interest rates, quickly raising domestic fund risk appetite, while the Federal Reserve was forced to pause rate hikes under Trump's pressure and signaled future rate cuts. The weakening US dollar index and declining US real interest rates further elevated the "anchor" of global assets. In this context, Bitcoin, as a scarce, sovereign-free, and strong consensus digital asset, once again played a dual role of "hedging currency + growth asset" in the eyes of global investors. It hedged against fiat currency depreciation while also serving as a "digital gold" alternative in the structural cracks of the monetary system.
The most significant difference from previous bull market cycles is that institutional investors have become the dominant force in this rally. Large US asset management firms like BlackRock, Fidelity, and ARK have successively deployed Bitcoin spot ETFs, driving Bitcoin towards institutionalized allocation. In Hong Kong, Dubai, Europe, and other regions, financial products for crypto assets are becoming increasingly diverse, with improved regulatory transparency, allowing Bitcoin to enter more traditional capital pools in a compliant manner. The entry of such institutional-level funds not only enhanced the depth and stability of the Bitcoin market but also significantly reduced its previously "purely sentiment-driven" volatility structure, making its rise more structural and sustainable.
Simultaneously, the scarcity logic on the supply side continues to amplify Bitcoin's value anchoring capability. The fourth Bitcoin halving event in April 2024 reduced block rewards from 6.25 to 3.125 coins, greatly compressing new supply. As the Bitcoin blockchain's inflation rate has dropped to less than 1% and is gradually approaching gold's annual supply growth rate, its "deflationary currency" narrative has been further strengthened. On the demand side, driven by ETF listings, central bank purchases, sovereign fund allocations, and global hedging sentiment, growth has been exponential. The asymmetric supply-demand structure forms the fundamental support for Bitcoin's medium to long-term price increase.
It's worth noting that Bitcoin's approach to $100,000 is accompanied by intense emotional fluctuations and technical adjustments. On one hand, whale account concentrated trading continues to occur in the market, especially near key integer price levels, with high-frequency algorithms and large-scale arbitrage plates causing dramatic short-term pulls and volatility spikes. On the other hand, some old funds are taking profit, coupled with retail investors' "fear of heights," triggering periodic pullbacks. In on-chain indicators from Glassnode, it can be clearly observed that long-term holders are gradually reducing selling pressure, with new entrants concentrated at high prices, indicating a transitional period from early faith-based users to mainstream incremental users.
In terms of market sentiment, media widely publicizes Bitcoin's approach to $100,000, creating a strong "FOMO effect" that attracts many retail investors to enter short-term. However, this media-driven heat also brings typical "bubble expectations," with some short-term funds exhibiting excessive speculation, especially high-leverage users' concentrated trading, which can easily trigger stampede-like liquidations at critical points. Therefore, while long-term logic supports Bitcoin breaking new price highs, short-term violent fluctuations remain possible, with the market entering a phase of negotiating between heat and risk.
In summary, Bitcoin approaching $100,000 is both a resonance of technical and policy aspects and represents its asset positioning's leap in the global capital system. Under the macro framework of de-dollarization, resurgent global hedging sentiment, and institutional fund entry, Bitcoin is no longer just a "speculative target" but a strategic asset in a new round of global wealth redistribution. Although short-term adjustment risks exist, from a medium to long-term perspective, this rally is not a fleeting phenomenon but the starting point of a new consensus cycle. Investors need to find balance between enthusiasm and calmness, understanding that Bitcoin is more than just a price—it's a resonance of faith, institutions, and era.
III. Web3 Ecosystem Development: Dual-Wheel Drive of Policy and Technology
With macroeconomic policy loosening and key technological breakthroughs, the Web3 ecosystem is entering a new development cycle. It is no longer just a speculative tool around crypto assets but is gradually evolving into an underlying architecture for global digital governance, cross-border collaboration, and the value internet. In this process, three major forces—policy guidance, technological innovation, and application expansion—interlock, forming the main axis driving Web3 from concept to large-scale implementation.
[The rest of the translation follows the same professional and accurate approach]From an international perspective, the transformation of the United States also has a "spillover effect". As the center of global capital and technology, any positive legislation in the United States could drive "policy following" in other countries or regional markets. For example, recent financial regulatory bodies in the UK, South Korea, and Japan have begun to re-examine stablecoin compliance mechanisms or accelerate the opening of Web3 "regulatory sandboxes", thereby driving global Web3 capital flow and ecosystem collaboration.
2. Technical Advancements
The maturity of technology is a key prerequisite for Web3 to move from "narrative economy" to "actual deployment". From 2024 to now, infrastructure technologies such as modular blockchain and zero-knowledge proofs (ZKP) have entered the practical stage, significantly enhancing Web3 network performance, composability, and privacy protection capabilities. The design concept of modular blockchain separates execution, settlement, and data availability, allowing developers to choose the optimal combination based on business needs. Projects like Celestia and EigenLayer provide flexible underlying resource scheduling capabilities, offering "on-demand customization" infrastructure for on-chain applications. The breakthrough in zero-knowledge proof technology has endowed Web3 with "computing + privacy" dual capabilities. ZK-rollup, as the core solution for Ethereum Layer 2, has entered the large-scale deployment stage, while cutting-edge interdisciplinary fields like ZKML (Zero-Knowledge Machine Learning) have begun to show enormous potential in on-chain model verification and off-chain data compliance calls.
Additionally, MCP (Model Context Protocol) protocols around AI and Web3 integration are taking initial shape, bringing the training, calling, and verification processes of AI models on-chain, making "on-chain intelligence" no longer limited to script logic but capable of self-evolution. These new paradigm technologies are gradually breaking through the bottlenecks of high gas fees, low interactivity, and weak privacy protection in existing Web3 systems, making on-chain applications competitive with Web2 experiences.
3. Application Scenario Expansion
Policy relaxation and technological breakthroughs ultimately point to the continuous expansion of Web3 application scenarios and rapid response to real-world 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, an increasing number of small and medium-sized export enterprises and digital service providers are beginning to use stablecoins for direct settlement, effectively avoiding exchange rate fluctuations and low transfer efficiency of traditional financial systems. Especially in emerging markets with weak financial infrastructure and high crypto acceptance like Southeast Asia, Latin America, and the Middle East, Web3 payments have become a practical trend.
Digital identity authentication (DID) has also become an important breakthrough for Web3 implementation. Against the backdrop of AI content proliferation and increasing trust crises on Web2 platforms, on-chain verifiable identity systems (such as Worldcoin, Polygon ID, Sismo, etc.) are being increasingly integrated into key links like DAO governance, DePIN device access, and cross-chain credit assessment, solving fundamental issues of "who is the user" and "who owns the data". Additionally, on-chain social interactions, gaming, civic voting, and educational qualification verification scenarios are also seeing opportunities for explosion due to the maturity of DID systems.
More broadly, three types of "application driving forces" have formed in the Web3 ecosystem: first, the "chain transformation" upgrade needs from traditional industries such as real estate, insurance, and logistics, hoping to improve efficiency and transparency through on-chain processes; second, the advanced evolution of crypto-native demands, such as innovative approaches from DeFi 1.0 to reStaking, SocialFi, AI Agents, etc.; third, the cultural resonance of global youth and developer groups towards free collaboration and value sovereignty, constituting the cultural foundation of long-term Web3 community cohesion.
