Market Insights: May 2025 | Week1
Wavebridge Research/
Institutional Capital Fuels Bitcoin's Dominance and Market Growth
CoinShares reports that $2.02 billion flowed into crypto investment products over the past week, bringing year-to-date inflows to $5.6 billion and lifting total assets under management to $156.34 billion. This surge reflects a sharp rebound in investor confidence following the 90-day suspension of the US-China tariff war announced in late March. According to CoinGlass, total open interest in the Bitcoin futures market has climbed to 669,090 BTC (approximately $62.8 billion), marking a 21% increase since March 5. Notably, open interest in CME Bitcoin futures alone now exceeds $13.5 billion, underscoring robust institutional appetite. Coinbase, meanwhile, holds approximately 2.7 million bitcoins-about 13.7% of the global circulating supply-valued at $261 billion at current prices, positioning the exchange as the digital era’s equivalent of Fort Knox. Of this, customer assets account for 1,052,246 BTC, with major clients including Revolut, BitBobo, Newton, BlackRock, Ark, Bitwise, and Tesla. Bitcoin’s market share has reached a yearly high of over 64%, a 13 percentage-point increase since January. In contrast, the altcoin market has seen its total capitalization shrink by nearly $300 billion over the same period, from $1.13 trillion to $817 billion. According to NewsBTC, long-term holders-those who have kept their bitcoin for more than three years-recently made significant moves, transferring a total of 8,003 BTC (worth roughly $760 million) from wallets dormant for three to five years, as measured by the Spent Output Age Bands (SOAB) metric. In addition, US-based exchange Coinbase now processes 15% of its total bitcoin transaction volume via the Lightning Network, a development that has made bitcoin payments both faster and more cost-effective since the network’s integration in April last year.
Ethereum Investors Show Long-Term Conviction Amid Market Correction
Despite Ethereum’s lackluster price performance and a sharp correction from its December 2024 high of $4,107 to lows near $1,866, long-term holders have continued to accumulate, increasing their balances by 22.54% from 15.54 million to 19.04 million ETH between March 10 and May 3. This accumulation occurred even as many holders entered unrealized loss territory, with the realized price dropping from $2,026 to $1,980, signaling strong conviction in Ethereum’s long-term prospects. Ethereum is now preparing for its most significant upgrade since the Merge, with the Pectra update scheduled for May 7, 2025. Pectra combines the Prague and Electra upgrades and introduces 11 new EIPs, including account abstraction, enhanced staking (raising the validator limit from 32 to 2,048 ETH, and increased block storage capacity, all aimed at improving scalability, security, and user experience. These developments highlight both the resilience of Ethereum’s long-term investor base and the network’s ongoing evolution to address scalability and usability challenges, positioning Ethereum for continued leadership in the smart contract space.
Regulatory Shifts and Political Tensions Reshape U.S. Crypto Landscape
When the governor of Arizona vetoed a bill that would have allowed the state to convert seized assets into bitcoin and hold them, citing investment risk, bitcoin advocates strongly criticized the decision, calling it “ignorant politicians”. Meanwhile, U.S. Senate Democrats are calling for amendments to the cryptocurrency bill, the GENIUS Act, citing conflict of interest concerns that it could directly benefit the president's family's business, the revenue structure of the USD1 stablecoin issued by the president's family, and a $2 billion deal between World Liberty and a venture fund backed by the Abu Dhabi government. The House Financial Services and Agriculture Committees released a draft of new cryptocurrency market structure regulations that would clearly separate the authority of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), with the SEC having jurisdiction over digital assets classified as investment contracts and the CFTC having jurisdiction over digital commodities and spot markets. The city of Roswell, New Mexico, officially established the Roswell Strategic Bitcoin Reserve fund through Bitcoin donations, with the first donation recorded at 3,050,323 satoshis (approximately $2,906). The North Carolina House of Representatives passed a bill allowing the state treasurer to invest up to 5% of public funds in approved digital assets, while Bitwise's chief investment officer predicted that the “big four” U.S. brokerage firms - Merrill Lynch, Morgan Stanley, Wells Fargo, and UBS - could open up full access to bitcoin spot ETFs by the end of the year.
Traditional Finance Accelerates Crypto Integration and Product Expansion
Crypto exchange Gemini has added support for Ripple’s RLUSD stablecoin, making it the 15th platform to offer the asset and further broadening RLUSD’s global reach. This expansion reflects the industry’s push for greater diversification and accessibility in digital assets, with RLUSD now available for trading, payments, and financial services across a wide range of exchanges. Meanwhile, VanEck has formally filed with the U.S. Securities and Exchange Commission to launch the first U.S. ETF holding BNB, Binance’s native token, signaling growing institutional interest in crypto assets beyond Bitcoin and Ethereum. Goldman Sachs has announced a significant expansion of its digital asset business, focusing on tokenization and digital asset lending to meet rising client demand. Additionally, Morgan Stanley plans to introduce digital asset trading to its E-Trade subsidiary by 2026, further integrating crypto into mainstream finance. These developments underscore the accelerating convergence of traditional finance and digital assets, as institutions and technology providers compete for leadership in the evolving global crypto economy.