Market Update - May 23, 2025

Bitcoin breaks ATHs, market structure turns more constructive

Bitcoin has officially smashed through all-time highs, hitting $111.8K. Momentum is red-hot: funding rates surged on Hyperliquid (161%) and Deribit (51%) annualized, while BTC spot volumes hit $216B across five major exchanges—clear signs of aggressive long positioning and bullish conviction as price pushes through key resistance levels.

Net inflows have been consistently strong, totaling $2.3B over the past six trading days. Meanwhile, CME futures are heating up again—trading with an 8.77% annualized basis and generating $10.8B in daily volume. The basis trade is back on.

Implied volatility has rebounded, hitting levels we haven’t seen since early 2024. The options market is leaning heavily bullish, with call premiums dominating and put-call skews between -4.7% and -5.4% across both short (1-week) and medium (6-month) tenors—signaling aligned optimism across maturities.

U.S. Flows & policy driving the charge

Recent U.S. trading sessions have reinforced this constructive setup:

• Two new BTC-linked SPACs (CEP and Nakamoto) debuted.

• Strategy has already deployed $2B out of its planned $21B BTC equity allocation, suggesting roughly 20 weeks of runway before the next ATM issuance.

• On the policy front, New Hampshire passed Bitcoin reserve legislation, with Texas and North Carolina likely to follow.

Macro backdrop: growing structural tailwinds for BTC

Bitcoin shrugged off the recent Moody’s downgrade, but the signal is clear: concerns about the U.S.’s fiscal path are growing. The latest macro data—from consumer to industrial sectors—has largely disappointed. Meanwhile, the “Big Beautiful Bill” continues through Congress without real resistance.

These structural imbalances are driving up long-dated yields:

• The 20-year Treasury auction cleared ~30bps above expectations, suggesting waning confidence in U.S. long-term creditworthiness.

• Part of this is technical—the 20Y is newer and less liquid than the 30Y, hence the premium—but we’re also seeing similar shifts globally, including Japan’s 40-year JGBs, which continue to climb amid weak demand.

In this kind of environment, hard assets like Bitcoin are looking increasingly attractive.

Altcoin roundup: AI, memes, DeFi take the lead

This week’s strongest sectors*:

• AI-related tokens: +4.1%

• Memecoins: +4.05%

• DeFi: +3.7%

• Layer 1s: +3.3%

These gains are being driven by:

• Memecoins: Social and cultural momentum.

• DeFi & L1s: Stronger token utility and cash flow mechanics.

• AI: High-conviction teams and globally resonant narratives.

Meanwhile, Gaming and L2s have lagged (+0.2% each):

• Gaming is still figuring out whether blockchain integration adds value and is weighed down by past project failures.

•  L2s (or secondary networks) are under pressure from major token unlocks, liquidity fragmentation, UX friction, and a growing shift in developer attention toward L1-native scaling solutions.

*Source: CoinMarketCap