PULP Research | Mid-May 2025 Crypto Market Update
Executive Summary
May 2025 has been a defining month in the current crypto cycle, marked by accelerating institutional adoption, diverging macroeconomic forces, and a maturing price narrative for both Bitcoin and altcoins. Despite a lackluster post-halving rally, Bitcoin continues to outperform traditional risk assets over a broader time horizon. Meanwhile, altcoins are showing early signs of rotation, although structural limitations and macro uncertainties are keeping broader rallies in check. This report explores the data-driven dynamics defining mid-May and offers forward-looking projections rooted in sentiment, liquidity, and regulation. PULP remains grounded in its long-term thesis that digital assets will anchor the next wave of financial innovation.
Market Overview
Bitcoin's dominance continues to climb in May, placing pressure on altcoins at a time when retail participation remains muted. This lack of retail engagement, seen through low volumes on Binance and similar platforms, suggests the current phase may be an accumulation window for institutional players. Bitcoin briefly surpassed $107,000 following softer U.S. inflation data and improved sentiment from Coinbase's inclusion in the S&P 500 index.
Institutions have now taken the role of marginal buyer, with large holders like Strategy reportedly controlling over 2.7% of total BTC supply. The market is increasingly macro-sensitive, responding more to interest rate trajectories, fiscal dynamics, and geopolitical shifts than to crypto-native catalysts. PULP sees Bitcoin as a barometer for the entire asset class and notes that recent underperformance relative to equities is more structural than fundamental. These short-term dislocations often lag headlines, which is why we maintain a longer-term perspective.
Derivatives markets support this thesis. Funding rates remain relatively low, averaging just over 6%, compared to 60% during the March rally. Leverage, as seen in BITX 2x ETF flows, is muted. BITX currently holds BTC-equivalent exposure of 51,305 BTC, down roughly 25,000 BTC from its December 2024 peak. Traders remain cautious, and PULP interprets this restraint as a sign of healthy market structure.
Macroeconomic developments remain broadly supportive. Easing inflation and a softening dollar continue to favor Bitcoin's store-of-value narrative. Rumors of a coordinated dollar devaluation effort—dubbed the "Mar-a-Lago Accord"—have not materialized, but Trump's policy stance, combined with the removal of Jerome Powell and a general weakening of the DXY, supports BTC appreciation. Institutional appetite for Bitcoin as a geopolitical and debasement hedge remains firm, further reinforced by global liquidity trends.
Altcoin Landscape
The altcoin market remains bifurcated. On one hand, structural inefficiencies, including low float/high FDV VC models and meme coin overexuberance, have eroded retail confidence. On the other, a growing divergence in sentiment is evident between institutional allocators, still largely focused on BTC and ETH, and a retail base hungry for asymmetric upside.
Ethereum has regained strength, climbing back to around $2,600 by mid-May. Despite muted ETF flows, Ethereum Layer-2 activity remains robust. Solana was a standout performer, buoyed by Canada's approval of a spot SOL ETF and strong staking inflows. ADA surged by over 20% on news of its inclusion in Grayscale's Digital Large Cap Fund and its integration into Brave browser wallets. Chainlink secured a notable integration with ONDO and J.P. Morgan, while XRP, XLM, HBAR, and ALGO largely tracked Bitcoin's price action without notable divergence.
Despite these individual narratives, broader altcoin performance remains hampered by macro headwinds. Altseason, historically driven by Bitcoin profit rotation, has yet to fully materialize. The structural limitations of ETF-driven inflows, channeling capital into BTC but not altcoins, has changed this cycle's dynamics. Nevertheless, the increase in stablecoin market cap, now up nearly 50% year-to-date, suggests that altcoin rotation may still occur later in the cycle.
Sentiment & Behavioral Trends
PULP's proprietary sentiment models flagged an inflection point prior to April's pullback. Sentiment reached multi-year lows in early Q2 but has since recovered steadily. The Fear and Greed Index, which averaged 28 in April, has risen to 73 by mid-May. While short-term holders have been taking profits, long-term holders continue to accumulate. Glassnode data indicates that over 94% of current BTC supply remains in profit, supporting bullish sentiment without the signs of overheating seen in previous cycle peaks.
Regulatory & Institutional Developments
The regulatory outlook has improved markedly in recent weeks. SEC Chair Paul Atkins has pledged to shift toward a more innovation-friendly regime, with a commitment to "fit-for-purpose" rules for digital assets. A 212-page bipartisan crypto regulation draft currently in Congress would clarify token classifications, stablecoin rules, and exchange registration requirements. Simultaneously, multiple U.S. states, including Texas, Arizona, and New Hampshire, have introduced bills allowing treasuries to hold BTC.
Institutional flows remain strong. Major asset managers continue to report record inflows into products like IBIT and Fidelity's spot ETFs. These inflows demonstrate that BTC is increasingly viewed not just as a risk asset, but as a macro reserve asset suitable for long-term strategic allocation.
Macro: The Dollar, Rates, and Inflation
The macro environment is shifting in crypto's favor. Trump's renewed focus on U.S. exports and his disapproval of a strong dollar is contributing to USD weakness. Speculation surrounding the "Mar-a-Lago Accord" and anticipated debt restructuring fuel broader de-dollarization narratives. While rate cuts are unlikely before H2 2025, M2 money supply continues to grow, creating favorable conditions for risk assets.
Declining U.S. 10Y yields and weakening DXY point to improving liquidity and reduced rate hike risks, which are classic ingredients for an altseason. Bitcoin has tracked the DXY inversely throughout 2025, and recent disruptions to this pattern appear to be short-lived aberrations. PULP maintains that BTC's scarcity, institutional adoption, and macro correlation with assets like gold make it a clear beneficiary of the weakening dollar trend.
Forward Outlook
PULP expects mild corrections in the near term, particularly if geopolitical news deteriorates or unexpected regulatory headlines cause temporary dislocations. However, we believe that structural support from institutional buyers, increasing global liquidity, and improving sentiment will set the stage for a continuation of the rally into Q3 and beyond.
We forecast Bitcoin reaching $140,000 under baseline assumptions, with $200,000 possible under optimal conditions. Ethereum could test $3,500–$5,000 if ETF demand strengthens and Layer-2s continue to gain traction. Solana's momentum remains strong, with technical targets around $190, and upside beyond $250 if staking inflows persist.
Altcoins should see selective upside, especially those with strong use cases and developer ecosystems. SOL, ADA, ETH, LINK, HBAR, ALGO, and XRP remain among our preferred exposure. We caution against chasing speculative assets and emphasize the importance of macro alignment, regulatory developments, and long-term conviction.
Final Thoughts
The crypto market is maturing, and its relationship with macro forces is more pronounced than ever. While the explosive altseason dynamics of past cycles may be dampened by structural changes, selective opportunities remain for thoughtful investors. Institutional adoption, evolving regulation, and rising money supply continue to serve as foundational pillars for the next leg of this bull cycle.
PULP believes that crypto's future belongs to adaptive thinkers. This cycle will reward long-term conviction, disciplined positioning, and informed flexibility. As always, we remain data-driven and committed to clarity in uncertain markets.
Stay focused. Stay data-driven. Stay locked in. PULP has you with the insights.
Disclaimer: This is not financial advice. Do your own research.