HashKey Jeffrey: Bitcoin hits all-time highs, and digital gold is crowning

By Jeffrey Ding, Principal Analyst, HashKey Group

On May 21, 2025, the price of Bitcoin broke through $109,565, setting a new all-time record. Under the triple logical resonance of trade easing, institutional overweight, and supply tightening, Bitcoin once again proved its unique value as digital gold, and scarcity and consensus were once again amplified at this moment.

It is worth noting that just before bitcoin broke through the barrier, the US Senate voted 66-32 to advance the procedural motion of the GENIUS stablecoin bill。 THE GENIUS STABLECOIN ACT WILL PROVIDE A FEDERAL-LEVEL REGULATORY FRAMEWORK FOR U.S. DOLLAR STABLECOINS, ENABLING TRADITIONAL BANKS TO LEVERAGE EXISTING DEPOSIT AND LOAN CHANNELS TO PROVIDE COLLATERAL AND CLEARING SERVICES FOR STABLECOIN ISSUANCES. Coupled with the on-chain interoperability of DeFi protocols, this "on-chain-off-chain" liquidity bridge will unleash huge financial momentum. From the perspective of liquidity spillovers, the large-scale expansion of stablecoin supply will directly push up the available funds of exchanges and DeFi platforms, significantly reduce transaction slippage, and improve the feasibility of leverage strategies. Market volatility and upward price momentum will also be further stimulated in the process.

Similar to the United States, Hong Kong passed the Stablecoin Bill in its third reading yesterday, which is expected to come into effect within this year, giving the industry enough time to understand the requirements under the licensing regime, and also means that Hong Kong has become one of the first jurisdictions in the world to complete stablecoin legislation. Hong Kong's stablecoin draft aims to provide a clear regulatory framework for the local market and facilitate the compliance development of stablecoins.

We expect the global stablecoin market capitalization to expand from the current $250 billion to a trillion dollars in the coming years. More importantly, the compliance of stablecoins will attract more "quasi-dollar" funds to enter the market, giving core assets such as Bitcoin and Ethereum stronger hedging and store of value attributes. Bitcoin and Ethereum are expected to see a 20%–50% valuation increase over the next 6–12 months as these funds flow in. At the same time, the maturity of the compliance channel will provide a bridge for long-term capital such as pension funds and mutual funds to enter the crypto market, greatly enhance the stability of market demand, and effectively reduce structural risks. The interaction between policy dividends and market consensus is opening up a new growth space for Bitcoin and crypto assets.

In addition to the policy push at the macro level, the market itself is also reinforcing the scarcity logic of Bitcoin. According to Glassnode data, the open interest of long-term Bitcoin holders has increased to 13.76 million, accounting for 65.6% of the total circulation, a new high. However, the number of bitcoins in exchange reserves continued to decline, and as of May 20, only 2.437 million were left, the lowest level since 2018. This means that the amount of Bitcoin available for trading in the market is rapidly decreasing, and the mismatch between supply and demand further strengthens the basis for price increases.

At the same time, the strong influx of institutional funds has become a strong catalyst for the market. MicroStrategy added another 7,390 BTC holdings in the past week, bringing its total holdings to 576,230, valuing it at about $6.1 billion at current prices. The Grayscale Bitcoin Trust (GBTC) and a number of Bitcoin ETFs have attracted more than $633 million in net inflows over the past few weeks. The continuous deployment of institutional investors through compliance channels not only strengthens the market's consensus on the scarcity and attributes of digital gold, but also lays a solid demand-side support for the long-term upward trend of prices. This is a triumph of "long-term thinking", and when institutions see Bitcoin as part of their core asset allocation, its value cap is completely reshaped.

The macroeconomic situation also provides a good ground for the growth of bitcoin. Trump's remark in early May that he would "negotiate historic cooperation with major powers" ignited optimistic expectations for a trade easing between China and the United States. On May 12, China and the United States signed a tariff agreement to reduce reciprocal tariffs from a maximum of 84% to 10%. This unexpected policy breakthrough not only alleviated the uncertainty of the global economy, but also injected new upward momentum into risk assets such as bitcoin.

From policy easing to supply tightening, from institutional increase to the construction of liquidity channels, this round of Bitcoin rise is the result of multiple logical resonances. Behind the record high, it is not only the carnival of market funds, but also the global capital has ushered in a new round of value consensus reshaping of decentralized assets.