Bitcoin Hits New Highs: Analysis of the Driving Factors Behind It

The price of Bitcoin recently broke the $112,000 mark, setting a new historical record. This surge is driven by multiple factors, including the continued weakening of the dollar, abundant global liquidity, and the accelerated entry of institutional capital. This article will review recent market dynamics, analyze the impact of geopolitical conflicts and economic data on risk assets, and explore Bitcoin's performance and future direction in this rebound.

June Market Review

In June 2025, the market is shrouded in trade uncertainty, geopolitical conflicts, and complex economic data. Despite the severe macro backdrop, risk assets generally rebounded. The U.S. stock market rose across the board, with both the Nasdaq 100 index and the S&P 500 index reaching all-time highs. Bitcoin briefly fell below $100,000 mid-month but then rebounded strongly, ending the month up 2.84%. In contrast, the overall crypto market fell by 2.03%, with Ethereum experiencing significant volatility and underperforming other major assets, recording a decline of 2.41%.

At the beginning of the month, the overall market is optimistic, and investors are relatively proactive in digesting macro data and geopolitical situations. Although the US-China trade relationship became tense for a time, it eased after a call between the leaders of the two countries. China's manufacturing PMI has fallen to a recent low, and the OECD has again lowered its global growth expectations. US economic data is mixed: employment data shows strong performance, but retail sales have declined. June CPI is again below expectations, reinforcing the view of cooling inflation. The Federal Reserve kept interest rates unchanged in June, stating that it needs to wait for more signals on inflation and the job market.

The cryptocurrency market experienced several short-term shocks in June, including policy disputes and escalating geopolitical tensions. At the end of the month, Bitcoin rebounded alongside improved market sentiment and increased institutional participation. Bitcoin ETF saw a net inflow of over $4 billion in June. Ethereum, on the other hand, faced significant volatility and corrections. Meanwhile, cryptocurrency treasury strategies gained attention, with multiple companies starting to allocate non-Bitcoin assets, indicating market recognition of this strategy.

Geopolitics became the focus in late June. The situation in the Middle East was once tense, but the ceasefire agreement alleviated short-term market panic. The cryptocurrency market gradually recovered after the ceasefire, while traditional safe-haven assets fell back, reflecting a decrease in market worries over prolonged conflict.

Diversification of Corporate Crypto Asset Allocation

In 2025, corporate crypto treasury strategies rapidly became popular, especially in June when the trend significantly accelerated, with the number of related companies nearly doubling. In that month, the scale of corporate purchases of Bitcoin exceeded the total net inflow of the US spot Bitcoin ETF.

More and more enterprises are beginning to allocate a wider range of crypto assets, such as SOL and BNB, showing an increasing trend of diversification beyond mainstream coins. Currently, there are 53 confirmed crypto treasury companies, involving 8 different crypto assets.

The market has a strong expectation for the continuation of this strategy, with some companies continuing to advance it and the market also showing a willingness to provide financial support. However, concerns about potential leverage risks have begun to emerge, especially as some companies allocate crypto assets through debt financing.

In contrast, the method of increasing cryptocurrency assets through the issuance of stocks carries less risk and is more easily accepted by the market. Currently, most debts of Bitcoin treasury companies will mature in 2027-2028, which does not pose a systemic threat in the short term. However, if more companies adopt short-term debt in the future, potential risks will gradually accumulate.

The Stablecoin Industry Reaches a Turning Point

June 2025 will be a key turning point for the stablecoin industry, mainly driven by two major events: a well-known stablecoin issuer successfully going public, and the U.S. Senate passing stablecoin legislation.

As the world's second-largest stablecoin issuer, the company has become the first native stablecoin company to be listed in the United States, with its stock price surge reflecting investors' recognition of the future role of stablecoins.

The new legislation has passed in the Senate, marking a breakthrough after a long struggle. The bill has now been handed over to the House of Representatives, where some members have suggested incorporating it into a broader bill. However, in the context of the president's public opposition, the outlook remains uncertain.

Driven by regulation, companies' interest in stablecoins continues to grow. Several major U.S. retail giants are considering issuing their own stablecoins, and payment giants are also expanding ecosystem support. The industry's focus has shifted from "whether to issue" to "whether it can be implemented"; the success of stablecoins will depend on the penetration of actual payment scenarios.

This trend is also spreading internationally, as Dubai has approved a company to issue a stablecoin, and the South Korean central bank is exploring the issuance of a stablecoin pegged to the Korean won. However, the United States is currently the most advanced in development.

Stablecoins are just the starting point, marking the first phase of bringing fiat currency onto the blockchain. The next phase focuses on the introduction of on-chain financial assets, with stock tokenization being the first. A well-known brokerage has launched stock tokenization trading in Europe, and other trading platforms are also seeking related licenses in the United States. These attempts pave the way for more traditional financial products to be brought on-chain.

The impact of geopolitical conflicts on the market is limited

In June 2025, the geopolitical situation in the Middle East became tense for a time, but the long-term impact on risk assets was limited. The market reacted mildly in the early stages of the conflict, and a subsequent airstrike from a certain country caused a sharp decline in crypto assets. However, with the ceasefire agreement reached, prices rebounded quickly. Despite sporadic conflicts remaining at the end of the month, the market overall had returned to a stable state.

The Bitcoin trend is rising in sync with the US stock market, showing no safe-haven attributes. Bitcoin performs better than gold and the overall crypto market, partly due to strong institutional support, including significant inflows into ETFs and continuous corporate purchases, indicating that the impact of geopolitical shocks is relatively short-lived.

The conflict has also raised concerns about the local cryptocurrency infrastructure in certain countries, particularly in the Bitcoin mining industry. There are rumors that some mining sites have been damaged, leading to a decline in network hash rate, but there is currently no clear evidence of systemic damage. Another explanation is that heatwaves in certain regions of the United States have forced miners to temporarily reduce their output.

This conflict has also sparked discussions about the role of cryptocurrency in the country's financial system. For a long time, the country has seen widespread adoption of cryptocurrencies by the public due to high inflation, sanctions, and other factors. However, in this round of conflict, the on-chain stablecoin transaction and settlement volume has not significantly increased, indicating that the overall usage pattern has not changed due to the war.

Although there is no abnormality in on-chain data, the cryptocurrency industry has emerged symbolically amid the conflict: the country's largest cryptocurrency exchange was hacked by an organization supporting the opposing side, leaving behind a political message. This resembles a cyber psychological warfare rather than an attack for profit.

For countries with severe currency depreciation and long-term sanctions, crypto assets indeed play an important role in cross-border capital flows. The political and network dimensions demonstrated in this round of conflict further indicate that crypto has become a part of the financial system in certain countries.

Key variables in July will influence the market direction

In July 2025, the market will focus on several key events and macro indicators that may affect asset pricing:

1. Fiscal Policy: The newly signed legislation may significantly expand the fiscal deficit, which is already above expectations.

2. Inflation Pressure: Recent data shows that inflation has eased, but premature interest rate cuts may reignite the risk of price increases.

3. Employment Market: Continues to be tight, providing greater flexibility for monetary policy. Currently, market expectations for interest rate cuts this year have decreased.

4. USD Trends: Continuing weakness helps explain the strong performance of risk assets currently. If monetary policy shifts to easing in the second half of the year, the dollar may come under further pressure.

5. Liquidity: M2 money supply is close to historical highs, and market liquidity is abundant.

Key time nodes in July:

• July 11: CPI data release
• July 16: PPI data and the Federal Reserve's Beige Book release
• July 30: FOMC Interest Rate Decision

These factors will collectively affect the market direction in the second half of the year, and investors need to closely monitor relevant data and policy changes.