This article is written by EVCRY for market observation and research perspectives only and does not constitute any investment advice or income commitments.
I. From Peak to Pullback: The Market is Digesting "Overly High Expectations"
If one were to describe the current crypto market in one sentence: Prices are pulling back, structures are upgrading, and sentiments are cooling down.
- In the second quarter of 2025, the total global cryptocurrency market capitalization rebounded to approximately $3.5 trillion, nearing the year's high, with Bitcoin’s market cap accounting for over 60% and showing significant strength.
- As of recent, the overall market cap has retreated to around $3.2 trillion, with consecutive declines over the past several weeks, and most of the top 100 tokens recorded intra-day losses.
- After Bitcoin reached a new high above $120,000 in October, it fell more than $40,000 within six weeks — a drop of about one-third, currently hovering just over $80,000, erasing all gains for the year and sparking debate over whether it’s a bull-to-bear transition.
This downturn is not only a numerical price retreat but also a comprehensive repricing of the market's high expectations for "halving + ETF + AI bull market".
II. The Three Main Lines of This Cycle: Halving, ETF, and Macroeconomic Liquidity
1. Bitcoin Halving: The Long-term Logic of Supply Tightening Remains
In April 2024, the fourth Bitcoin halving will reduce the block reward from 6.25 BTC to 3.125 BTC, with the daily new supply dropping from about 900 to 450 coins, reinforcing the "scarce asset" narrative of Bitcoin.
Historically, halving does not usually immediately affect the price but is reflected gradually over subsequent quarters through the supply-demand structure. What is different in this round is that the market's expectation for halving was traded far in advance, combined with macro liquidity and ETF funds, which jointly boosted previous price increases and magnified the current pullback intensity.
2. Spot Bitcoin ETF: From an Entrance for Incremental Funds to an "Emotion Amplifier"
Since multiple Spot Bitcoin ETFs were approved in the U.S. in January 2024, the threshold for traditional funds entering encrypted assets has been significantly lowered. In the first half of 2025, a massive influx of funds through ETFs was viewed as one of the important drivers for Bitcoin's breakthrough above $100,000.
But during the recent downturn, we've seen another side:
- One of the largest Bitcoin ETFs globally, BlackRock’s IBIT, saw a single-day redemption exceeding $500 million, setting a record since its inception, with net outflows for consecutive days.
- Bitcoin’s price has fallen about 30% from its high, over $1 trillion of crypto market cap has been erased, massive leveraged positions have experienced chain liquidations, with forced liquidation exceeding $20 billion in a single day.
From EVCRY's perspective, Spot Bitcoin ETFs have played a "double-edged sword" role in this cycle:
On one hand, it paves a compliant pathway for institutional funds; on the other hand, through the subscription and redemption mechanism, it quickly transmits short-term emotions and leverage cycles to the spot market.
3. Macroeconomic Environment: The Overarching Switch for Risk Appetite Remains in Traditional Markets
Bitcoin’s recent steady retreat isn’t an isolated event but accompanies the overall volatility in global risk assets:
- There is an increasing concern over interest rate paths, economic growth rates, and the valuation of AI-related assets. Investors' risk appetite for high-volatility assets has noticeably cooled.
- Funds have temporarily flowed back into U.S. Treasuries and gold, challenging Bitcoin's “digital gold” narrative with real-world capital flows in the short term.
In other words, halving and ETFs provide structural support, but whether they can evolve into a long-term bull market ultimately relies on the macro liquidity and risk appetite as the two "main gatekeepers".
III. Structural Changes: ETF Siphoning, On-chain Migration, and Stablecoin "Fear Index"
1. Decline in CEX Volume, Rise of DEX and On-chain Derivatives
According to industry statistics, even though the overall market cap rebounded in the second quarter of 2025, the spot trading volume of centralized exchanges decreased nearly 30% quarter-on-quarter, while the spot and perpetual contract trading volume of decentralized exchanges increased by about 25% and nearly $900 billion, respectively, hitting new highs.
This indicates:
- Trading behavior is partly migrating from traditional CEX to DEX and on-chain derivatives;
- Institutions and professional traders prefer hedging and strategy-setting on-chain, while retail investors enter and exit the market through ETFs and mainstream CEX;
- The functions of "price discovery" and "capital inflow" are being redistributed among CEX, DEX, and ETF.
From EVCRY’s perspective, this kind of division of labor might make the market seem "fragmented" in the short term, but in the medium to long term, it’s conducive to enhancing the ecosystem's risk-resisting capability.
2. Rise in Stablecoin Proportion: USDT as a Risk Appetite Barometer
Recent data points out that Tether USDT's market cap proportion in the market is nearing or breaking 6%, with stablecoins' share in the overall market cap continuously rising, viewed as a signal that funds are increasing their "watchful positions".
The implication is:
- Some funds have withdrawn from high-volatility tokens but have not completely exited the crypto world; instead, they remain in dollar stablecoins;
- When the USDT share keeps rising while prices generally pull back, it often signifies the market fear is ascending, but without being "disheartened" to leave — one of the typical features of a "bull market midpoint adjustment".
IV. Ethereum and L2: Upgrading Infrastructure Amid "Bearish" Sentiment
In terms of price, ETH has underperformed relative to Bitcoin. Even though it rebounded from about $1800 to over $2400 in the second quarter of 2025, it is still below early-year levels.
However, from a technical and application standpoint, the Ethereum ecosystem is entering a very critical phase:
- The Cancun upgrade introduces EIP-4844 (Proto-Danksharding), which significantly reduces Rollup data costs by introducing "blob" data, an important step towards full Danksharding.
- With L2 fees declining, more high-frequency, small-amount on-chain applications (gaming, social, payment, derivatives) are becoming economically feasible.
This means: even if the market is short-term “bearish”, the expansion and cost optimization of the underlying infrastructure are still being pushed forward, laying the foundation for the next round of application-level explosions.
For EVCRY, we are more focused on:
- Whether L2 daily active addresses and transaction numbers remain resilient amid price pullbacks;
- Whether the DEX and on-chain derivatives share on L2 continues to grow; these on-chain data are more reflective of whether "real demand" exists than a single coin price.
V. Regulatory Framework Taking Shape: Moving from "Gray Area" to "Compliant Track"
Another unmissable mainline in 2025 is the clarity of regulation on a global scale:
- The European MiCA has started to take substantial effect, establishing unified rules for stablecoin issuance, trading platforms, etc., providing a clearer compliance path for institutional participation.
- In the U.S., new bills and regulatory guidance are gradually converging with MiCA, attempting to strike a balance between investor protection and maintaining innovation vitality.
The medium to long-term impacts on the industry include:
- Increased Licensing and Compliance Costs: High thresholds will weed out a batch of non-compliant small to medium platforms, benefiting leading exchanges and compliant custodians;
- Change in Project Financing Pathways: Shifting from early public offerings, ICO/IDO, etc., to compliant private placements, Reg-compliant issuance, or alignment with traditional capital market channels;
- Strengthened Stablecoin and RWA Narrative: Compliant stablecoins and on-chain bonds, bills, and other RWA assets are more easily accepted by institutions, becoming “bridge assets” connecting traditional finance and the crypto world.
From EVCRY's standpoint, regulatory clarity is a necessary but not a sufficient condition for institutions to increase allocation to crypto assets:
- Without rules, institutions can't enter the market on a large scale;
- With only rules, but without sufficient returns and liquidity, institutions still won't enter on a large scale.
The current stage seems more like "rules are set up, but the seats are not yet filled."
VI. Core Metrics EVCRY Focuses On: Using Data Instead of Sentiment for Decisions
At this stage, we tend to focus on the following types of metrics rather than short-term price fluctuations themselves:
Risk Appetite and Liquidity Metrics
On-chain Real Demand Metrics
Policy and Regulatory Schedule
These metrics together can help us determine:
Is the current adjustment more like a trend reversal, or is it a healthy shuffle in the middle of a bull market?
VII. Some Thoughts for Participants (Non-Investment Advice)
Finally, EVCRY wishes to emphasize several seemingly "clichéd" but especially important things at this stage — these are not buy or sell advice, but reminders of risk-thinking:
- Distinguish Between "Price Stories" and "Structural Changes"
Prices can swing back and forth by dozens of percentage points in a few weeks,
but structural changes like halving, ETF channels, regulatory frameworks, and Ethereum scaling are on cycles measured in years. - Beware of High Leverage and Single Narratives
The large-scale leverage liquidations in this downturn once again prove:
In the crypto market, position management is often more critical than "being right about the direction". - Reassess "Counterparty Risk"
This includes not only the risk of trading platforms but also:- The compliance and operational risks of ETFs and custodians;
- The reserve and regulatory status of stablecoin issuers.
Extend the Time Horizon
Based on past cycles,
what truly differentiates the returns of different participants is often not precise bottom-fishing, but whether one can withstand the period of intense volatility under a clear understanding.
From EVCRY’s perspective, we prefer to view the present as:
The "halftime break" of the crypto bull market, not the final whistle.
Prices may continue to oscillate, sentiments may continue to cool,
but long-term themes like halving, ETF, regulation, and L2 scaling will not disappear due to a few weeks of adjustment.