Bitcoin hit a new all-time high of $112,000 in May, driven by institutional demand and ETF inflows, though volatility and weakening stablecoin inflows signal caution. Ethereum completed its significant Pectra upgrade, advancing network scalability and usability. Meanwhile, the AI Agent sector is quietly gathering strength, with innovations like Model Context Protocols (MCP) pointing to a new phase of intelligent on-chain applications. In Solana, the Believe launchpad saw explosive growth followed by rapid consolidation. Overall, while Bitcoin dominance remains strong, underlying data signals call for a balanced outlook going into June.

Market Overview: Bitcoin Printed a New ATH

Bitcoin delivered a robust performance in May 2025, starting the month at $94,000 and surging to a new all-time high of $112,000 on May 22. This rally was fueled by growing institutional ownership, corporate adoption, and positive momentum. However, volatility remained a hallmark of the market. After hitting $112,000, Bitcoin faced profit-taking, dipping to $104,500 by the end of month. Trump Media & Technology Group announced plans to build one of the largest bitcoin treasuries among public companies, raising $2.5 billion through equity and convertible bond sales to fund the strategy. In the meantime, the U.S. Senate advanced the first crypto legislation targeting stablecoins, signaling a shift toward regulatory clarity. The appetite for Bitcoin exposure via exchange-traded funds (ETFs) also soared in May. Major Bitcoin ETFs recorded $5.2 billion in net inflows during the month, pushing the total net inflows to $44.3 billion.

Technical Analysis: Charts You May Concern

Bitcoin successfully broke above its downtrend line in May and has strongly returned to a high-level oscillation range (indicated by the red line area), attempting to break its previous high. It is currently in a retest and confirmation phase and may attempt a second breakthrough in June.

BTC Dominance continues its strong upward trend. After breaking out of its symmetrical triangle convergence (a pattern indicating consolidation before a potential breakout), it has surged all the way to 65%. We believe there are currently no reversal signals indicating that altcoins are gaining strength, and Bitcoin remains the primary focus of the market.

Ethereum Pectra Upgrade

On May 7th, the Ethereum mainnet successfully activated the Pectra upgrade, completing it at Epoch 364032. As another significant hard fork following the 2022 Merge and the 2024 Dencun upgrade, Pectra combines improvements from the execution layer (Prague) and the consensus layer (Electra), aiming to enhance the Ethereum network's scalability, security, efficiency, and user experience. Its main objectives include: simplifying wallet operations through account abstraction, optimizing the validator mechanism to increase staking flexibility and reduce network burden, enhancing L2 scalability and lowering transaction costs, and strengthening security by introducing new cryptographic tools and communication frameworks.

The Second-half of AI Agents: The Force Awakens

The cryptocurrency market has entered a quieter phase following the speculative frenzy surrounding Trump tokens and liquidity exhaustion in early 2025. However, beneath this calm, we think the force of the AI Agent sector is awakening, driven by rapid advancements in artificial intelligence and the growing integration of AI with blockchain technology.

Earlier this month, we published the research report “The Second-Half of AI Agent: The Force Awakens” in an effort to examine the burgeoning developments within this space, focusing on key infrastructure initiatives such as the Virtuals Protocol, the ai16z-backed ElizaOS ecosystem, as well as the pivotal role of Model Context Protocol (MCP) infrastructure in enabling sophisticated AI agent functionalities within the decentralized landscape.

In our view, innovation at the data layer, specifically through the implementation MCP, presents a more pragmatic and potentially transformative avenue for blockchain projects seeking to leverage the power of AI. MCPs, by design, facilitate the direct and contextual connection of diverse blockchain-related data sources to LLMs, enabling a new generation of intelligent applications.

Believe Ecosystem: Post-Explosion Consolidation

Believe, an emerging launchpad in the Solana ecosystem, distinguishes itself with two main features:

Developer-oriented: It offers independent app developers and growth hackers a new avenue for project monetization through tokens.

Project screening: The platform incorporates an additional filtering mechanism to ensure project quality, meeting user demand for high-caliber projects.

After igniting the market on May 13th, a large number of well-known Web2 developers launched tokens on Believe. At its peak, approximately 5,00 tokens were issued daily, generating around $700 million in trading volume. However, Believe's launch model subsequently faced scrutiny, leading to a decline in business data. The platform is currently undergoing improvements and iterations, and its future remains promising.

The Weakening of Stablecoin Inflows Warrants Market Observation

Monthly Outlook (May 2025)