Analysis of the Reasons Behind Bitcoin's Historic New High

The price of Bitcoin broke through the $112,000 mark this morning, setting a new historical high. Behind this round of gains are multiple factors at play: the continued weakening of the dollar, ample global liquidity, and accelerated inflow of institutional funds. This article will review recent market dynamics, analyze the impact of geopolitical conflicts and economic data on risk assets, and explore Bitcoin's performance in this rebound and its future trends.

June Market Review

In June 2025, the market is shrouded in trade uncertainties, geopolitical conflicts, and complex economic data. Despite the harsh macro environment, risk assets generally rebound. The US stock market rises across the board, with the Nasdaq 100 and S&P 500 indices both hitting historical highs. Bitcoin briefly fell below $100,000 in the middle of the 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, underperforming other mainstream assets, recording a decline of 2.41%.

At the beginning of the month, the overall market is optimistic, and investors are actively digesting macroeconomic data and geopolitical situations. Although the US-China trade relationship was once tense, it has eased after a conversation between the leaders of both countries. China's manufacturing PMI has fallen to its lowest level since 2022, and the OECD has once again downgraded global growth expectations. In the US, economic data is mixed: employment data exceeded expectations, the unemployment rate remains stable, and the number of initial jobless claims unexpectedly decreased, but retail sales have declined. The June CPI once again fell below expectations, reinforcing the view of cooling inflation. The Federal Reserve has remained steady for the fourth consecutive time at the June FOMC meeting, stating that it needs to wait for more signals regarding inflation and the job market.

The crypto market experienced several short-term shocks in June, including public discussions by certain public figures regarding tax policies and a brief rise in geopolitical tensions. After two weeks of market pressure at the end of the month, Bitcoin rebounded as market sentiment improved and institutional participation increased. The total net inflow for Bitcoin ETFs in June exceeded $4 billion. Ethereum, on the other hand, faced greater volatility and pullbacks, with specific reasons still unclear. Meanwhile, crypto treasury strategies have garnered significant attention, with multiple companies beginning to expand their holdings to non-Bitcoin assets such as ETH, SOL, and BNB, indicating market recognition of this strategy.

Geopolitics became the focus in late June. Conflicts erupted in the Middle East on the 13th, and although the situation escalated at one point, the market initially remained stable. After an airstrike by a certain country on the 21st, the prices of crypto assets plummeted, while US stocks remained stable. A ceasefire agreement on the 24th alleviated short-term panic in the market. Although sporadic conflicts still occurred, the crypto market gradually recovered after the ceasefire, and traditional safe-haven assets like gold and oil retreated, reflecting a decrease in market concerns about long-term conflicts.

Institutional investors actively allocate assets beyond Bitcoin

An unexpected trend in 2025 is the rapid adoption of crypto treasury strategies by enterprises, particularly in June when this trend significantly accelerated, with the number of related companies nearly doubling. Measured by trading volume, the scale of Bitcoin purchases by crypto treasury companies in June has exceeded the total net inflow of the US spot Bitcoin ETF of $4 billion in that month (.

Although Bitcoin and Ethereum still dominate, more and more companies are beginning to allocate a wider range of crypto assets, such as SOL, BNB, TRX, etc., indicating an enhanced diversification trend beyond mainstream coins. According to data, among the 53 confirmed crypto treasury companies, 36 focus on BTC, 5 allocate SOL, 3 allocate XRP, 2 allocate ETH and BNB respectively, and a few others allocate TRX, FET, etc.

This trend is expected to continue, with both companies continuing to advance and the market showing a strong willingness to provide funding and support for multi-asset allocation.

However, the market has begun to question this strategy, especially as some companies are financing the purchase of crypto assets through debt, raising concerns about potential leverage risks. Currently, zero-coupon or low-interest convertible bonds are commonly used, which, if "in the money" at maturity, can be converted into shares, and if "out of the money," need to be repaid in cash, potentially leading to liquidity issues. Some companies even lack sufficient cash to pay interest.

In the face of this situation, companies usually have four options:

1. Selling crypto assets to raise funds may depress prices;
2. Issue new bonds to repay old debts;
3. Issuing new shares for financing;
4. There may be a default when the asset value is insufficient.

The specific method will depend on the market conditions at maturity. In contrast, issuing stock to increase cryptocurrency assets carries less risk, as it does not involve mandatory repayment obligations.

According to the latest report, current market concerns about the leverage structure may be exaggerated. Most Bitcoin treasury company debts will mature between June 2027 and September 2028. Although there have been systemic risks in the industry due to high leverage in the past, such debt structures do not currently pose an urgent threat. However, if more companies adopt this strategy and issue short-term debts in the future, potential risks will accumulate.

The Stablecoin Industry Encounters a Major Turning Point

June 2025 will become a critical turning point for the stablecoin industry, mainly driven by two major events: a certain company successfully going public and the U.S. Senate passing the first comprehensive stablecoin legislation.

As the world's second largest stablecoin issuer, the company has become the first native stablecoin company to go public in the U.S., with its stock price skyrocketing over six times in June. Despite such a surge suggesting that the IPO pricing may have been too low, more importantly, investors' recognition of the future infrastructure role of stablecoins has significantly increased.

On June 25, the relevant bill was passed in the Senate with 68 votes in favor and 30 against, marking a breakthrough after months of negotiations. It has now been handed over to the House of Representatives, where some members have suggested incorporating it into a broader bill. However, the prospects for merging remain unclear, especially against the backdrop of certain individuals publicly expressing opposition.

Under regulatory pressure, companies are increasingly interested in stablecoins. American retail giants are considering issuing their own stablecoins; a certain payment giant is integrating the stablecoin products of multiple companies to expand ecosystem support. These companies are not only competing to issue stablecoins but also hope to lead in terms of circulation scale and actual use. The industry focus has shifted from "whether issuance is possible" to "whether it can be implemented," and the success or failure of stablecoins will depend on their penetration in payment scenarios and user coverage.

Internationally, this trend is also spreading. For example, a certain company has obtained regulatory approval for stablecoins in Dubai, and the South Korean central bank is also exploring the issuance of stablecoins pegged to the Korean won. However, the United States is currently the most advanced in this regard.

Stablecoins are just the beginning, marking the first phase of bringing fiat currency onto the blockchain, achieving the deployment of infrastructure for all-weather and fast interoperability. The next phase focuses on the introduction of on-chain financial assets, starting with the tokenization of stocks.

A certain trading platform recently launched tokenized trading for 200 listed stocks in Europe, becoming a pilot for testing demand and execution quality. Another platform is also seeking corresponding licenses in the United States to promote similar products. These attempts pave the way for more traditional financial products to be brought on-chain, with expectations that the next steps will cover asset classes such as private credit and structured funds.

Limited impact of geopolitical conflicts on the market

The Middle East conflict that broke out on June 13, 2025, lasted for 12 days. Although it attracted global attention, its long-term impact on risk assets was limited. In the early stages of the conflict, the response from cryptocurrencies and the stock market was mild; however, after a country's airstrike on the 22nd, the prices of crypto assets experienced a significant drop. Following the announcement of a ceasefire agreement on the 24th, prices quickly rebounded. Despite sporadic conflicts still occurring at the end of the month and the war not officially concluding, the market overall has returned to stability.

In this instance, Bitcoin's price movement is rising in sync with the US stock market, showing no safe-haven attributes. Compared to April-May when it was seen as a store of value due to trade tariffs and tension in the bond market, this time it is more aligned with the logic of risk assets. Bitcoin's performance has outshined gold and the overall crypto market, partly due to strong institutional support, including a monthly inflow of $4 billion into ETFs, continuous purchases by treasury companies, and signs of sovereign buying, indicating that the impact of geopolitical shocks is temporary.

The conflict has also raised concerns about the local cryptocurrency infrastructure in a certain country, particularly the Bitcoin mining industry. According to estimates from 2021, approximately 4.5% of Bitcoin mining occurs in this country, primarily relying on low-cost subsidized electricity. During the Bitcoin bull market, this structure generates substantial profits.

After the airstrike, rumors suggest that some mining farms were damaged, leading to a decline in network hash rate. However, short-term fluctuations in hash rate are often caused by block time differences or data noise, and there is currently no clear evidence to indicate that the conflict has caused systemic damage to mining facilities. Another explanation is that a heat wave in certain regions has forced miners to temporarily reduce production.

Apart from infrastructure, the conflict has also sparked discussions about the role of cryptocurrency in the country's financial system. For a long time, high inflation, sanctions, and unstable exchange rates have prompted widespread adoption of cryptocurrency in the private and gray economies.

Past data shows that during certain events in 2024, the outflow of cryptocurrency assets from the country increased significantly.

Bitcoin and a certain public chain have historically been the main networks used in the country, especially the latter for stablecoin transfers. However, in this round of conflict, on-chain stablecoin trading and settlement volumes have not seen a significant increase, indicating that the overall usage pattern has not changed due to the war, and the on-chain activity of short-term holders has actually decreased.

Although there are no abnormalities in the on-chain data, the crypto industry is emerging symbolically: the country's largest cryptocurrency exchange suffered a $90 million hacking attack during the conflict, with the attackers being organizations supporting the opposing side, leaving behind messages of opposition. This exchange has previously been linked to certain entities' capital flows, and this attack seems more like a cyber psychological warfare rather than a profit-oriented motive.

The country is one of the most severely depreciated currencies globally and has been under long-term sanctions. In such societies, crypto assets play an important role in cross-border capital flows. The political and network dimensions exhibited during this round of conflict further indicate that crypto has become part of the financial system in certain countries.

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Key Variables in July Will Influence Macroeconomics and Market Trends

As we enter July 2025, market focus is concentrated on several key events and macro indicators that could have a significant impact on asset pricing and the overall environment.

A certain politician signed a new bill on July 4, which may significantly expand the already higher-than-expected fiscal deficit. According to the latest data, U.S. government spending continues to exceed revenue levels.

Inflationary pressure remains a core consideration, but recent data shows some easing. The core PCE index is on a downward trend, with only a single month of increase in February 2025, and the rise may primarily stem from prior pricing pressures related to tariffs. Currently, inflation seems to be under control, but the real risk lies in the possibility that the central bank may reignite price increases if it lowers interest rates too early.

The labor market remains tight, providing greater flexibility for central bank decisions. In June, new jobs exceeded expectations, and the unemployment rate fell to 4.1%, lower than the most optimistic predictions. This decrease is partly due to the labor force participation rate dropping from 62.4% to 62.3%. Currently, market expectations for a rate cut in July have fallen to zero, with an overall expectation of two rate cuts this year, depending on the direction of tariff and growth data.

Another trend that requires close attention is the continued weakness of the US dollar. Economic uncertainty, unclear fiscal policies, and expectations of possible interest rate cuts are driving the dollar lower. The US dollar index is heading toward its worst first half performance since 1973. Risk assets priced in dollars, the weakness of the dollar helps explain the current resilience of the stock market and the strong performance of Bitcoin, despite the complex fundamentals. At the same time, the US M2 money supply is close to historical highs, and market liquidity is abundant. If the central bank shifts to easing in the second half of the year, the dollar may come under further pressure.

Key time nodes to focus on in July:

• July 11: CPI Release
• July 16: PPI and central bank report released
• July 30: Interest Rate Decision

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