HTX Ventures: The crypto market enters a new policy-driven cycle, with legalization and dollarization becoming the main theme

Against the backdrop of ongoing profound changes in the global macro environment, the crypto industry is undergoing a new round of structural transformation. HTX Ventures, the global investment arm of Huobi HTX, has recently released a new report titled "Industry Insights: Crypto Waves and Potential Opportunities Amid Macro博弈", providing an in-depth analysis of core shifts and emerging opportunities in the current market cycle.

Bitcoin is gradually moving beyond its traditional "digital gold" narrative, increasingly aligning with risk assets in price movements. Meanwhile, policy support from the Trump administration has elevated crypto from a heavily regulated gray area to a "satellite asset" benefiting from spillovers of U.S. dollar liquidity. The investor base has also fundamentally shifted—from retail-dominated to institution-led—accelerating the integration of crypto assets into the mainstream financial system.

The driving force behind this cycle is no longer internal innovation within the industry, but rather the legalization and dollarization of crypto. Unlike the DeFi boom of 2020 or the ICO frenzy of 2017, the crypto sector is now being actively promoted by the U.S. government as a strategic technological frontier. The idea of strategic Bitcoin reserves further strengthens underlying demand, injecting fresh momentum into the market.

The trend of crypto dollarization continues to deepen, serving as both a key engine for growth and a potential source of risk. Bitcoin demonstrated capital flight functionality independent of traditional finance during the Russia-Ukraine conflict; however, in recent geopolitical events, its price has moved in tandem with risk assets, highlighting its growing sensitivity to macro liquidity.

Institutional investors now dominate the Bitcoin market. CME futures open interest surged after the approval of spot Bitcoin ETFs, remaining consistently above $10 billion. Institutions leverage basis arbitrage between spot ETFs and futures with high leverage, effectively turning Bitcoin into a triple-leveraged version of the Nasdaq. This structure implies that during periods of ample liquidity, Bitcoin outperforms tech stocks on the upside, while suffering sharper drawdowns during tightening cycles.

On the policy front, the U.S. has made significant progress in advancing crypto compliance. The FIT21 bill clarifies regulatory boundaries for digital assets, placing more decentralized tokens under CFTC oversight and introducing a 3–5 year "safe harbor" mechanism to encourage compliant transitions for new projects. Additionally, the repeal of SAB 121 removes barriers for banks to custody crypto assets. Traditional financial giants such as JPMorgan and Citigroup are now entering the crypto custody space, with assets under management expected to exceed $50 billion by the end of Q2 2025.

In regulatory leadership, Paul S. Atkins—a known crypto advocate—has been appointed as the new SEC chair. The incoming leadership is revising the Howey Test framework to reduce the likelihood of tokens being classified as securities and expanding the range of eligible assets for ETFs. These reforms are unlocking additional room for market growth.

A wave of capitalization is sweeping through crypto firms. Leading players like Kraken and Fireblocks are preparing for IPOs, with valuations reaching approximately $20 billion and $9 billion respectively. At the same time, multiple top Wall Street investment banks have established dedicated crypto investment divisions, while sovereign wealth funds are gaining indirect exposure to Bitcoin through stakes in strategic technology companies.

The U.S. is also exploring a federal Bitcoin reserve program, proposing annual purchases of up to 200,000 BTC over five years to build a distributed secure storage network as part of a long-term national strategic asset allocation. While funding sources face legislative and fiscal hurdles, the discussion itself marks Bitcoin’s emergence as a key topic in national asset management.

Stablecoin legislation is advancing rapidly. In early 2025, Trump signed an executive order promoting the development of compliant, dollar-backed stablecoins, while banning research and development of central bank digital currencies (CBDCs) to protect market freedom and personal privacy. Swift legislative action on these bills will accelerate the convergence of traditional finance and crypto markets, paving the way for compliant stablecoin issuance and adoption.

Based on the above, HTX Ventures conducted an analysis of key U.S. economic indicators. From a macro perspective, inflation remains manageable, and there are no clear signs of an imminent recession. Labor market data—including nonfarm payrolls and unemployment rate—reflect continued economic resilience. The Federal Reserve is expected to consider rate cuts only when significant downward pressure on the economy emerges. Until then, tightening liquidity poses short-term volatility risks for both equities and crypto markets.

The passage of the "Beautiful Big Bill" budget resolution extends the 2017 tax cuts and introduces new tax incentives targeting the service sector and middle-to-low-income households. Raising the federal debt ceiling and adjusting fiscal spending signal sustained fiscal easing ahead, potentially injecting greater liquidity into capital markets.

Overall, the crypto industry is playing an increasingly pivotal role in global macro dynamics. Policy tailwinds, dollarization trends, and institutional adoption form the three pillars of this cycle. Going forward, crypto asset performance will be more intricately linked with global macro conditions, geopolitical developments, and monetary policy shifts—revealing new cyclical patterns and investment opportunities. As policies continue to ease, a truly organic blockchain innovation narrative is bound to emerge, infusing the industry with unprecedented vitality.

Amid this transformative wave, TechFlow will continue to monitor global macro trends, identify emerging opportunities, and steadfastly support the compliance and innovation of the crypto industry, helping to build a more open, transparent, and sustainable digital asset ecosystem.

About TechFlow

TechFlow is the global investment arm of Huobi HTX, integrating investment, incubation, and research to identify the world’s most exceptional teams. As an industry pioneer with over 11 years of experience in blockchain development, TechFlow excels at spotting cutting-edge technologies and emerging business models. To drive growth across the blockchain ecosystem, we provide comprehensive support to projects—including fundraising, resources, and strategic guidance.

TechFlow currently supports over 300 projects across various blockchain domains, with select high-quality projects already listed on Huobi HTX. In addition, as one of the most active FOF funds, TechFlow invests in 30 leading global funds and partners with top-tier blockchain funds such as Polychain, Dragonfly, Bankless, Gitcoin, Figment, Nomad, Animoca, and Hack VC to co-develop the blockchain ecosystem. Visit us.

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