2025 Second Half Crypto Forecast: Market Excitement Grows Around “Crypto-Equity” While Viability Remains Unclear

The second half of 2025 is poised to be a pivotal period for the cryptocurrency market, driven in large part by the growing adoption of the “crypto-equity strategy” among publicly traded companies. This approach, which involves integrating digital assets like Bitcoin and Ethereum into corporate treasuries, is generating significant market interest and reshaping investment narratives.

While macroeconomic factors — such as interest rate policies, trade dynamics, and geopolitical tensions — continue to influence overall market conditions, it is the momentum behind this strategic shift that is capturing attention. Drawing on insights from IOBC Capital, this report examines how the “crypto-equity strategy” is fueling market enthusiasm, alongside the questions it raises about long-term sustainability and potential risks.

Crypto-Equity Strategy Heats Up the Market, but Sustainability Remains Uncertain

The growing adoption of crypto assets by public companies has emerged as a defining trend in 2025, often referred to as the “crypto-equity strategy.” This approach — where corporations hold Bitcoin and other cryptocurrencies on their balance sheets — draws inspiration from MicroStrategy’s now-famous multi-flywheel model, which has reshaped how traditional capital interacts with digital assets.

MicroStrategy’s Bitcoin strategy rests on three interlinked financial mechanisms:

• Stock-Crypto Premium Loop: The company trades at a significant premium over its net crypto asset value (currently 1.61x), enabling low-cost equity financing to accumulate more Bitcoin.

• Convertible Bond Flywheel: By issuing zero-coupon convertible debt, MicroStrategy minimizes cash obligations and gains flexibility on conversion terms, attracting arbitrage capital.

• Crypto-to-Fiat Arbitrage: The firm leverages depreciating fiat liabilities to acquire appreciating crypto assets — amplifying long-term balance sheet alpha.

In 2025, more listed firms have replicated this model — not just with Bitcoin, but with Ethereum, Solana, BNB, and even emerging tokens like TAO, DOGE, and FET.

According to BitcoinTreasuries.net and CryptoQuant, the total crypto holdings by public companies now exceed:

• 920,000 BTC across 35 companies

• 1.48 million ETH held by 13 companies

• 291,000+ SOL by 5 entities

This strategy not only enhances reserve diversification but also offers narrative leverage: investors reprice equity based on crypto exposure, often resulting in higher valuations and capital efficiency.

Yet, the sustainability of this approach remains uncertain. Several risks loom:

• Over-leveraging: Aggressive capital deployment into volatile assets may backfire during downturns.

• Regulatory ambiguity: Accounting standards for digital assets remain unsettled, and certain jurisdictions may soon impose reserve or valuation limits.

• Market reflexivity: The positive feedback loop that fuels gains in a bull market can unravel quickly in corrections, triggering forced liquidations.

In short, while the crypto-equity strategy has delivered short-term market enthusiasm and strong returns for early adopters, it also introduces new forms of systemic risk — especially in a macro environment defined by rate uncertainty and shifting liquidity.

Trump’s Tariff Push: A Geopolitical Bet with Inflationary Side Effects

As the “crypto-equity strategy” gains traction, it unfolds amid complex macroeconomic pressures. One significant driver in 2025 is the Trump administration’s renewed tariff campaign, which has re-emerged as a key source of global economic volatility.

These tariffs are not merely economic instruments — they serve as strategic levers in trade diplomacy, geopolitical realignment, and domestic industrial revival.

As of July 25, the U.S. has made varying progress in bilateral negotiations with key economic partners:

• Japan: A deal was finalized to cut U.S. tariffs on Japanese imports from 25% to 15%, including automotive products. In exchange, Japan pledged $550 billion in direct investment into U.S. industries like semiconductors and artificial intelligence.

• European Union: Final talks resumed in Washington on July 23 ahead of the August 1 deadline. While expectations are high for a breakthrough, no official agreement has yet been announced.

• China: After two rounds of tariff de-escalation — U.S. tariffs dropped from 145% to 30%, and China’s tariffs fell from 125% to 10% — a third round is underway in Sweden from July 27–30. There is speculation that the negotiation window could be extended by 90 days. However, if no deal is reached, the reduced tariffs may automatically revert to their previous highs.

The U.S. has also reached smaller-scale trade pacts with countries like the Philippines and Indonesia. But the spotlight remains squarely on U.S.-China talks, whose outcome could shape investor confidence and global capital flows for the rest of the year.

From an economic perspective, tariffs constitute a negative supply shock with stagflationary tendencies. While businesses are the initial payers of tariffs, studies show they pass the costs onto consumers. According to Peterson Institute for International Economics-backed research, U.S. firms and consumers bore nearly the entire cost of tariffs, with close to 100% pass‑through to domestic prices in the 2018–19 trade war.

Inflation data already reflects this trend:

• In June 2025, the U.S. CPI rose 2.7% yoy, while core CPI — which excludes food and energy — rose 2.9%.

• The core PCE price index, the Fed’s preferred inflation gauge, rose to 2.7%, up from 2.6% in May.

This inflationary uptick complicates the Federal Reserve’s path forward. Though markets anticipate one or two rate cuts in H2 2025, the Fed may delay action unless inflation shows a decisive downward trend. Monetary easing — long seen as a tailwind for crypto — could therefore come more slowly than previously expected.

For the crypto sector, this dynamic introduces a conflicting setup: while global macro uncertainty often drives demand for decentralized assets like Bitcoin, delayed monetary easing may suppress risk appetite and dampen near-term capital inflows into digital assets.

The Federal Reserve’s Cautious Stance on Monetary Policy: Inflation vs. Pragmatic Patience

Given the tariff-driven inflation pressures, the Federal Reserve has adopted a cautious stance on monetary policy. At its July 29–30 meeting, the Federal Open Market Committee (FOMC) held the Federal Funds Rate steady at 4.25%–4.50%, with markets pricing in an overwhelming ~97% probability of no change.

Despite political pressure, including calls from President Trump and some Fed-appointed officials for aggressive rate cuts, the majority of Fed policymakers are waiting for clearer inflation signals before loosening policy.

A Reuters survey of 105 economists shows 100% expected rates would remain unchanged at the July meeting; a slight majority (53%) anticipated a cut in September. Most forecast just one or two cuts for all of 2025.

Three major factors appear central to this cautious stance:

1. Inflation is still above target. June’s headline CPI rose 2.7% y/y, and core core PCE remained around 2.7%, both hovering above the Fed’s preferred 2% threshold.

2. The labor market remains resilient. Unemployment hovered at 4.1%, while job growth slowed modestly. Markets expect a gradual rise to 4.3–4.4% later in 2025, but only after persistent cooling.

3. Policy independence concerns persist. Economists warned that political pressure — particularly from President Trump — for aggressive rate cuts raises questions over the Fed’s autonomy. Still, Chair Powell’s term runs through May 2026, and the Fed avoided drastic shifts.

With high odds of no change in July and modest easing expected only later in the year, monetary policy will likely remain structurally tight through H2 2025. For crypto markets, often sensitive to liquidity shifts, this means the anticipated boost from rate cuts may arrive later than hoped.

Weak Dollar Phase in the Dollar Tide Cycle: Tailwinds Building for Crypto

Adding to the monetary backdrop, the U.S. Dollar Index (DXY) has weakened significantly — plunged from above 110 in January 2025 to around 96.38 by early July, marking a 10–11% year-to-date decline. This represents the steepest first-half drop for the dollar since 1973.

Morgan Stanley predicts that the downward trajectory may continue, forecasting an additional 9% drop over the next 12 months — to around 91 on the DXY scale, levels reminiscent of the early pandemic years.

A weaker dollar cycle typically loosens global liquidity, reduces safe-haven demand, and encourages capital flow into risk assets. Historically, Bitcoin and other cryptocurrencies perform strongly in such environments.

On-chain analytics support this inverse correlation: CryptoQuant data as of July 1, 2025, shows the DXY 6.5 points below its 200-day moving average — a rare deviation and bullish sign for crypto assets.

Academic studies echo this relationship: one researcher found a negative long-run co-integration between BTC and DXY, confirming that a stronger dollar usually correlates with weaker Bitcoin — and vice versa.

If the dollar’s weakness endures, it could provide sustained tailwinds for Bitcoin and the broader crypto market through increased liquidity and risk-on sentiment.

Geopolitical Escalation: Short‑Term Crypto Tailwinds Amid Heightened Risk

Tensions in Eastern Europe continue to escalate. On July 28, former President Trump sharply shortened his ceasefire ultimatum for Russia — from the original 50-day window to just 10–12 days, warning of 100% tariffs and secondary sanctions if Moscow fails to comply.

Despite mounting pressure, the geopolitical ground situation is worsening. Analysts expect the Sanctioning Russia Act of 2025 — featuring punitive tariffs on Russian oil importers and broader financial restrictions — to receive bipartisan support if diplomacy stalls.

Market Implications for Crypto:

Historically, geopolitical shocks tend to boost Bitcoin and Ethereum's short-term performance, as investors seek decentralized assets amid uncertainty and academic findings show positive immediate — but tempered long-run — impacts from conflict events.

While geopolitical escalation may spark short-lived spikes in crypto markets as investors pivot to decentralized assets, sustained conflict risks undermining broader financial confidence — and eventually dampening crypto demand.

Regulatory Clarity Arrives: GENIUS, CLARITY, and Anti‑CBDC Acts Reshape U.S. Crypto Policy Landscape

The GENIUS Act, effective since July 2025, sets clear ground rules for stablecoins:

• Prohibits issuers from directly paying interest to holders.

• Allows issuers to retain reserve interest, with mandatory disclosure.

• Indirect sharing of yield is not banned, enabling offerings like Coinbase’s 12% APY USDC.

This structure effectively limits the rise of yield-bearing stablecoins, a move designed to protect traditional banks and prevent a massive outflow of capital from deposit-based lending systems.

The CLARITY Act further clarifies digital asset classifications and regulatory jurisdictions:

• SEC regulates security tokens; CFTC oversees commodity tokens such as BTC and ETH.

• Introduces the “mature blockchain system” status for decentralized, open-source projects — qualifying them to exit SEC oversight.

• Provides DeFi exemptions: writing code, running nodes, offering front-end interfaces and non-custodial wallets are not regulated by the SEC, so long as no fraud or market manipulation occurs.

Meanwhile, the Anti-CBDC Act aims to prohibit the Federal Reserve from issuing a retail-facing digital dollar without Congressional approval.

These bills signal the U.S. transition from regulatory ambiguity to a sunshine regime. The shift prioritizes financial freedom and dollar sovereignty while paving clearer growth paths for compliant stablecoins and DeFi protocols.

Summary

If we were to sequence the aforementioned foreseeable macro events chronologically, the second half of the year could be divided into the following phases, according to IOBC Capital: