Binance Research Report: Crypto’s H1 2025 Performance and H2 Outlook

Binance Research has released its Half-Year Report 2025 on July 17, offering a comprehensive analysis of the crypto market's performance in the first half of the year and its outlook for the months ahead. The report highlights key developments across macroeconomic trends, Bitcoin and Ethereum ecosystems, DeFi evolution, and stablecoin adoption. While Binance Research also covers areas such as consumer crypto, frontier technologies, and institutional regulation, this article focuses on selected insights and the ten major themes expected to shape the crypto landscape in the second half of 2025.

Crypto Market Inches Up 1.99% in H1 2025 Amid Volatility and Recovery

After surging by 96.2% in 2024, the total cryptocurrency market saw a more subdued performance in the first half of 2025, with market cap increasing just 1.99% year-to-date as of June 30.

The year began with a sharp correction. Q1’25 saw an 18.61% decline, wiping out a portion of the previous year’s gains. This downturn was largely attributed to rising geopolitical tensions and tariff-related uncertainty that spooked investors. However, the market rebounded strongly in Q2’25, climbing 25.32%.

The report notes that key areas to watch include global monetary policies, trade tariffs, institutional interest, the merging of crypto and AI, and renewed market narratives. It also expects more crypto IPOs following Circle's success.

Bitcoin Outperforms as Crypto Markets Navigate Global Economic Divergence in H1 2025

In the first half of 2025, global markets were shaped by sharp monetary divergence. The U.S. economy slowed as inflation cooled and the Federal Reserve paused rate hikes. Meanwhile, China delivered 5.4 percent GDP growth in the first quarter, driven by aggressive stimulus. This split fueled a $5.5 trillion jump in global liquidity, the largest six-month increase in four years. A brief U.S.-China trade war added to volatility, with tariffs peaking at 145 percent.

Bitcoin gained 13 percent during the period, cementing its status as a leading macro asset. Its market cap stayed above 2 trillion dollars, with dominance hitting 65.1 percent, the highest in over four years. Spot ETFs attracted strong institutional flows, and over 140 companies now hold a combined 848,100 BTC, supported by clearer regulations and accounting standards.

Despite slower on-chain activity and lower fees, Bitcoin’s network remained secure with high hash rates. Scaling solutions advanced, and Bitcoin DeFi surged, with total value locked up more than 550 percent year-on-year, even as speculative activity cooled.

Layer 1 Blockchains Show Diverging Strengths in H1 2025

In H1 2025, major Layer 1 networks took distinct paths, each carving out specific strengths.

• Ethereum held its lead in market cap (US$297.2B), DeFi TVL (US$61.4B), and developer activity (7,661 devs), backed by strong institutional flows and upgrades like Pectra.

• Solana dominated in raw throughput with 328.6M daily transactions, a 66.5% staking ratio, and growing institutional adoption ahead of its Firedancer upgrade.

• BNB Chain led in usage with 4.4M daily active addresses and 16.6M daily transactions, expanding into DEXs, memecoins, RWAs, and AI via Pascal and Maxwell upgrades, though it lags in developers and DeFi TVL.

• Tron posted the highest revenue (US$1.9B), driven by stablecoin settlement volume, despite a smaller dev base.

• Sui saw the highest staking ratio (76.4%) and doubled its DeFi TVL, outperforming Avalanche in dev count and ecosystem growth.

• Avalanche trailed in most metrics but remained focused on enterprise subnet adoption.

Overall, Ethereum leads in fundamentals, Solana in speed, BNB in user activity, Tron in stablecoin flows, while Sui and Avalanche continue building in niche verticals.

Base and Arbitrum Lead as L2s Capture 90% of Ethereum Activity

By mid-2025, Ethereum Layer 2 (L2) networks have firmly established themselves as the main engines of transactional activity, accounting for over 90 percent of all Ethereum transactions, as shown in the chart. These rollups continue to play a key role in scaling Ethereum, especially for high-frequency use cases. However, the growth cycle has become more complex, shaped by user churn, fragmented liquidity, and rising competition from modular chains.

In H1 2025, Layer 2 fee revenue became increasingly concentrated, with Base and Arbitrum capturing the majority of value. Base alone accounted for over 80 percent of L2 transaction fee revenue in January, driven by steady retail and institutional flows without relying on aggressive subsidies. Together, Base and Arbitrum dominated around 90 percent of all L2 on-chain value transfer, setting the benchmark for profitable, high-usage rollups.

The OP Stack ecosystem also gained momentum. Uniswap's Unichain launched as a dedicated OP chain, allocating roughly 20 percent of fees to its treasury, while World Chain and other Superchain projects helped expand the network. OP Stack teams tested native interoperability tools to enable seamless messaging and asset transfers between chains, without the need for external bridges.

Meanwhile, incentive-heavy models like Blast and Manta saw short-term usage but failed to maintain liquidity once rewards faded. The takeaway is clear: L2s with real usage, sustainable fee structures, and aligned incentives are best positioned to succeed as Ethereum’s scaling continues.

DeFi Enters Sustainable Growth Phase as User Base Surges 240% Year-on-Year

In H1 2025, decentralized finance (DeFi) entered a new phase of maturity, moving beyond speculative hype toward sustainable, real-world use. As of June 30, DeFi total value locked (TVL) reached US$151.5 billion, rising 28 percent over six months and 31 percent year-on-year, signaling steady capital inflows.

The standout growth came from users. Monthly active users hit 340 million, up 28 percent in six months and a massive 240 percent year-on-year. This surge reflects a shift fueled by real-world asset (RWA) integration, institutional adoption, and a spike in decentralized exchange (DEX) activity, with DEX spot volumes reaching a record 29 percent market share.

Despite strong user growth, DeFi’s market share remains limited, with dominance at 3.4 percent, reflecting a slight six-month increase but still down 9 percent year-on-year. Regulatory momentum in the United States has also shifted. The SEC’s DeFi roundtable and supportive comments from leadership have encouraged institutional participation.

DeFi is transitioning from speculative growth to practical utility. Its next phase is driven by real-world assets, stable cash flows, and growing institutional involvement. The primary challenge has moved beyond scalability and now centers on delivering secure, compliant, and efficient infrastructure to support large-scale traditional capital integration.

USDT and USDC Maintain Dominance as Stablecoin Market Expands in 2025

In H1 2025, the total market cap of stablecoin surged to over US$250 billion, up 22 percent from US$205 billion in December 2024, surpassing the previous all-time high set before the Terra-Luna collapse in 2022.

USDT remains the leading stablecoin, with a market cap of US$158 billion, reflecting a 40.3 percent year-on-year increase. However, its market share declined by 7.4 percentage points to 62.6 percent. USDC recorded the strongest growth, with its market cap nearly doubling to US$61.3 billion, a 92.2 percent increase year-on-year. Its market share rose by 4.4 percentage points, reaching 24.2 percent.

Institutional adoption of stablecoins is accelerating. Circle's NYSE listing raised over US$600 million, making it the first publicly traded stablecoin issuer in the U.S. Major banks such as JPMorgan, ANZ, and Société Générale expanded fiat-backed digital currency pilots, while Stripe rolled out stablecoin payments in over 100 countries. Retail giants are also entering the space. In June, Walmart and Amazon revealed plans to explore their own dollar-based stablecoins, aiming to cut costs and streamline payments.

Overall, H1 2025 marked a key shift in stablecoins’ evolution from niche crypto assets to integral components of mainstream financial infrastructure.

Key Themes for H2 2025

The Binance Research report is optimistic about the second half of 2025, highlighting ten key themes driving growth across macro trends, regulation, and crypto innovation:

1. Fed pivot and fiscal expansion fuel risk-on sentiment: Easing inflation and expectations of rate cuts, combined with potential fiscal stimulus, support a pro-cyclical rotation toward risk assets.

2. U.S. shifts from enforcement to legislative clarity in crypto regulation: Policymakers are replacing enforcement-driven actions with formal legislation, laying the groundwork for long-term industry stability.

3. TradFi and crypto integration accelerates via IPOs and M&A Increasing regulatory clarity and institutional trust are driving IPOs, ETF launches, and strategic deals that blur the lines between traditional and crypto finance.

4. Stablecoins gain ground as financial infrastructure: With rising institutional adoption and clearer regulations, stablecoins are evolving into essential tools for payments, treasury management, and cross-border settlement.

5. Tokenized RWAs shift toward secondary market liquidity: The next phase for tokenized real-world assets focuses on enabling active secondary trading, unlocking on-chain yield opportunities and challenging traditional settlement models.

6. BTCFi aims to turn Bitcoin into scalable collateral: Protocols are pushing to make Bitcoin a functional financial asset beyond storage, with emphasis on lending, stablecoins, and cross-chain integrations for institutional use.

7. Rollups enter maturity phase with emphasis on trust and value alignment: As incentives fade, rollups must prove sustainable usage, decentralization, and alignment with Ethereum’s long-term value chain to remain competitive.

8. AI-powered dApps drive next wave of user growth: AI integration into crypto is accelerating, powering intelligent, user-friendly dApps that now attract over 4 million daily users with minimal technical barriers.

9. Prediction markets evolve into real-time information infrastructure: Platforms like Polymarket are positioning beyond betting, aiming to serve as a global layer for probabilistic forecasting across finance, policy, and enterprise use cases.

10. Altcoins lag behind as Bitcoin dominance holds firm: Despite Bitcoin’s strong post-halving performance, altcoin momentum is lagging due to token oversupply and the lack of a strong narrative or innovation cycle, keeping capital concentrated in top assets.