The market, project, currency, and other information and views mentioned in this report are for reference only and do not constitute any investment advice.
The strong trend of the risk equity market has left Wall Street hedge funds stunned, making everyone doubt what hidden information they might have missed.
After the rebound in April, the three major US stock indices continued to rise strongly, while BTC hit a new historical high.
Behind this, the "reciprocal tariff war" has somewhat eased but has not made a breakthrough in reaching an agreement, and the "Russia-Ukraine war" remains stuck between negotiations and offensives.
However, capital inflows are surging, with BTC Spot ETF channel inflows exceeding $2.7 billion. Long positions are approaching their peak, exchange holdings continue to decline, and BTC's supply and demand are very strong.
On the policy front, the BTC reserve bill at the state level in the United States has also achieved a historic breakthrough. The "GENIUS ACT" related to stablecoins has also passed a Senate vote.
The US economic employment data is strong, inflation continues to decline, and GDP expectations are beginning to rise. This may be the fundamental reason for the market's strength. However, with the tariff war unresolved and the US debt panic caused by the "Beautiful Big Plan" not yet dissipated, the US stocks and BTC's performance this month already includes the most optimistic estimates. The future market may oscillate to eliminate uncertainty, waiting for the interest rate cut in the third quarter.
Macro Finance: The Impact of "Reciprocal Tariffs" is Generating a "Mild Recession" in the US Economy
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Strategy Company's Position Statistics
Based on the announcement data of Strategy companies included in the Nasdaq 100, they have increased their holdings by 133,850 coins since 2025, with a total holding of 580,250 coins.
Since January 2024, 11 BTC Spot ETFs were approved, and in May 2024, the U.S. House of Representatives passed the Financial Innovation and Technology Act (FIT21), gradually establishing crypto assets and blockchain technology as key development areas in the United States. Since then, crypto assets represented by BTC have become further mainstream in the U.S.
In March 2025, U.S. President Trump signed an executive order to establish a "Strategic Bitcoin Reserve", designating approximately 200,000 bitcoins held by the government as national reserve assets.
Subsequently, over 20 U.S. states began proposing state-level bitcoin reserve bills. This demand saw a breakthrough in May. On May 7th, the New Hampshire governor signed a bill, becoming the first state to formally include cryptocurrency in strategic reserves. The bill allows the state treasurer to invest up to 5% of state government funds in cryptocurrencies. Bitcoin reserve bills in Texas and Arizona have also passed Senate votes and are awaiting signature by the governors to take effect.
On the blockchain and Web3 front, the GENIUS ACT to regulate stablecoin development passed a procedural vote in the Senate on May 19th with 66 votes in favor and 32 against, paving the way for the final signing. In the same month, the Hong Kong Legislative Council formally passed a bill on the 21st to establish a licensing system for fiat stablecoin issuers.
Several major U.S. banks are discussing collaboration to launch a joint stablecoin. Currently, this involves JPMorgan, Bank of America, Citigroup, and Wells Fargo.
Stablecoins with an issuance scale exceeding $240 billion will now enter a compliant development era. Beyond BTC, stablecoins are highly likely to become the second widely adopted crypto asset and potentially the first killer application in the Web3 domain to break through 1 billion users. This establishes a use case foundation for blockchain, especially smart contract platforms.
After being incorporated into the compliance system, BTC and blockchain are becoming a technological high ground that the United States must occupy. The investment and speculative sentiment triggered by this trend is spreading. Following Strategy, multiple companies worldwide, including the Trump Media Group, are initiating accumulation plans for BTC and other crypto assets (such as ETH, SOL).
The expansion of use cases and the FOMO sentiment and purchasing power sparked by compliance breakthroughs have become the primary drivers of price increases for BTC and other crypto assets.
Funds: Optimistic Pricing + Forceful Expansion
During the U.S. stock market crash in March and April, BTC Spot ETF inflows came to an abrupt halt, causing BTC to adjust by over 30% (the largest pullback in this cycle). However, with the strong rebound of U.S. stocks from April to May, BTC Spot ETF buying power has also strongly recovered, with inflows of $605 million and $2.775 billion respectively, pushing BTC to recover all previous losses and set a new all-time high of $112,000.
Capital Flow (Monthly)
In terms of stablecoins (not entirely used for Crypto trading), there has also been expansion, with inflows of $5.375 billion and $5.567 billion in April and May, though the changes are relatively small compared to the BTC Spot ETF channel.
We previously noted that BTC's pricing power has been transferred from internal funds to BTC Spot ETF channel funds and institutional players like Strategy. Such institutions exhibit long-term bullish characteristics, primarily due to the continuous breakthrough progress of BTC and Crypto assets at the U.S. policy level. This is both the reason why BTC quickly rebounded in April and May and outperformed the Nasdaq in creating a new all-time high, and the underlying logical support for long-term optimism.
However, it's important to note that U.S. stocks have already priced in an extremely optimistic trade war scenario and may implicitly assume the U.S. economy will not experience a significant recession. Currently, the U.S. is struggling to break new highs, and volatility is inevitable. Although institutions like Strategy continue to flow in, and BTC Spot ETF is unlikely to create an independent trend different from the Nasdaq, expecting BTC to break new highs in the short to medium term is overly optimistic.
Chip Structure: Continuous Decline in BTC Exchange Inventory
During the downturn in March and April, long-term BTC investors once again started accumulating, objectively acting as a balancing mechanism to reduce market selling pressure.
Long and Short Holding Structure (Monthly)
By the end of May, long-term holdings reached 14.4199 million coins, near an all-time high, while centralized exchange inventory continues to decline, currently at only 298,820 coins, close to the level in November 2020.
In previous cycles, when liquidity surged, long-term holders selling objectively curbed price increases, but during price declines, long-term holders would slow down selling or even start accumulating, and this cycle is no exception.
The difference from previous cycles is that in the past, long-term holders' "secondary selling" would end the bull market, but this time, the market chose to continue upward after the "secondary selling". We understand this as the inclusion of institutional players like Strategy in the long-term holder structure, which triggered changes in market trends. Whether this change is permanent or temporary remains to be closely monitored.
Conclusion
While we maintain a long-term optimistic attitude about BTC's use case expansion and long-term trend, the current price strength and momentum still exceed our most optimistic estimates.
This is due to the excessive optimism in risk markets, including U.S. stocks, and the investment and speculative fervor triggered by BTC's massive use case expansion in the United States. We are confident about the latter, but we believe the pricing of an "equivalent trade war" by U.S. stocks and BTC markets is overly optimistic, and there will undoubtedly be many twists and turns. Additionally, we have lowered our expectations for the Federal Reserve's interest rate decisions.
In our March report, we anticipated BTC would initiate a reversal in the summer, but the market response exceeded expectations, reaching new highs in May. Considering various uncertainties and delayed liquidity expectations, we believe that in the next two months, BTC will likely fluctuate with U.S. stocks, and breaking to a new high and reaching a new price level is a low-probability event.
If everything goes well, reaching a new level should be a story in the third quarter!
EMC Labs
EMC Labs was established in April 2023 by crypto asset investors and data scientists. Focusing on blockchain industry research and Crypto secondary market investment, with industrial foresight, insights, and data mining as core competencies, committed to participating in the booming blockchain industry through research and investment, and promoting blockchain and crypto assets for human benefit.
For more information, please visit: https://www.emc.fund
