Behind Bitcoin's new high of $112,000: Double push from weak dollar and institutional entry

Original: galaxy

Compiled by: Yuliya, PANews

Bitcoin reached $112,000 this morning, setting a new record. The reason behind this rise is the combined effect of multiple factors, including the continued weakening of the U.S. dollar, abundant global liquidity, and the accelerated entry of institutional capital. Galaxy reviewed the market dynamics since June, analyzed the impact of geopolitical conflicts and economic data on risky assets, and explored Bitcoin's unique performance in this round of rebound and its future direction. The following is the original article, which was compiled by PANews.

June Review

In June 2025, the market was shrouded in trade uncertainty, geopolitical conflicts and complex economic data. However, despite the grim macro backdrop, risk assets generally rebounded. US stocks closed higher across the board, with the Nasdaq 100 and S&P 500 both hitting record highs. Bitcoin fell below $100,000 in the middle of the month, but then rebounded strongly, rising 2.84% on the month. In contrast, the overall crypto market fell 2.03%, and Ethereum's volatility increased, underperforming other mainstream assets, recording a 2.41% drop.

The market was generally positive at the beginning of the month, with investors more optimistic about digesting macro data and geopolitical situations. U.S.-China trade tensions initially escalated again, but eased after a phone call between the two leaders. China's manufacturing purchasing managers' index fell to its lowest point since 2022, and the Organization for Economic Cooperation and Development once again lowered its global growth forecast. In the United States, economic data showed mixed results: non-farm payrolls exceeded expectations, the unemployment rate remained stable, the number of initial unemployment claims unexpectedly decreased, and retail sales fell. The June consumer price index (CPI) was again lower than expected, reinforcing the view that inflation is cooling. The Federal Reserve kept interest rates unchanged for the fourth consecutive time at the June FOMC meeting, saying it needed to wait for more clear signals on inflation and the labor market.

The crypto market experienced several short-term shocks in June, including a public conflict between Trump and Musk over tax policy and a brief escalation in geopolitical tensions. After the market came under pressure in the penultimate week of June, Bitcoin rebounded with improved market sentiment and increased institutional participation. Bitcoin ETFs had a total net inflow of more than $4 billion in June. Ethereum faced higher volatility and deeper pullbacks, and the specific triggers are still unclear. At the same time, the crypto treasury strategy has gained attention, and many companies have begun to expand their holdings to non-Bitcoin assets such as ETH, SOL, BNB and HYPE, showing that the market has highly recognized this strategy.

Geopolitics dominated the second half of June. On June 13, war broke out between Israel and Iran. Despite Israeli airstrikes on Iranian nuclear facilities and Iranian missile strikes, markets initially remained stable. Crypto asset prices fell sharply after the United States launched airstrikes on three Iranian nuclear facilities on June 21, while US stocks remained stable. Trump announced a ceasefire agreement mediated by Qatar on June 24, easing short-term panic in the market. Despite sporadic missile attacks, crypto markets gradually recovered after the ceasefire, while traditional safe-haven assets such as gold and crude oil fell, reflecting the market's reduced concerns about a long-term conflict.

Quick overview of June highlights:

• Crypto treasury boom: 53 companies are currently involved in crypto treasury configuration, covering 8 different crypto assets
• Demand for stablecoins accelerates: After the passage of the GENIUS Act, many companies are preparing to issue their own stablecoins
• "The 12 days that shook the world": The conflict between Israel and Iran attracted global attention, but had limited impact on risk assets

Diversified configuration after BTC

An unexpected trend in 2025 is the rapid adoption of crypto treasury strategies by companies, which accelerated significantly in June, with the number of related companies nearly doubling. In terms of trading volume, the scale of Bitcoin purchases by crypto treasury companies in June exceeded the total net inflow of US spot Bitcoin ETFs (US$4 billion 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 and HYPE, indicating a growing trend of diversification beyond mainstream currencies. According to Galaxy Research data, of the 53 confirmed crypto treasury companies, 36 focus on BTC, 5 allocate SOL, 3 allocate XRP, 2 allocate ETH, BNB and HYPE respectively, and another allocates TRX, FET, and a comprehensive altcoin portfolio .

There is a strong expectation that this trend will continue, with existing companies continuing to promote this strategy and the market also showing a strong willingness to provide sufficient funds to support multi-asset allocation.

However, the market has also begun to doubt this strategy, especially as some companies have allocated crypto assets through debt financing, raising concerns about potential leverage risks. Currently, zero-interest or low-interest convertible bonds are commonly used. If these bonds are "in the money" at maturity (that is, the company's stock price exceeds the conversion price, making conversion to equity economically advantageous), investors can choose to convert them into company equity. However, if they expire "out of the money", the company will need to repay the principal and interest in cash, raising concerns about liquidity and solvency. Some companies even lack sufficient cash to pay interest.

In this situation, companies generally have four options for responding:

1. Selling crypto assets to raise funds may put downward pressure on market prices, affecting other treasury companies holding the same assets;
2. Issuing new debt to repay old debt is equivalent to refinancing;
3. Issuing new shares to raise funds to repay debts or purchase additional assets. This method has less risk of default;
4. If the value of the assets is insufficient to pay the debts, there may be a default.

The path the company ultimately takes will depend on market conditions at maturity. Generally speaking, a company can only solve its problems through refinancing when the market allows.

In comparison, the method of purchasing additional crypto assets by issuing stocks is less risky because it does not involve debt and does not constitute a mandatory repayment obligation. Therefore, it is more easily accepted by the market in the overall risk structure.

According to a report released by Galaxy on June 4, the current market concerns about leverage structures may be amplified. Most debts issued by Bitcoin Treasury companies will mature between June 2027 and September 2028. Although the crypto industry has had systemic risks caused by high leverage in the past, at present, this type of debt structure does not pose an imminent threat. However, it is worth noting that if more companies adopt this strategy in the future and issue shorter-term debt, the potential risks will gradually accumulate.

Circle's IPO and the GENIUS Act catalyze industry turning points

June 2025 becomes a critical turning point for the stablecoin industry, driven mainly by two major events: Circle’s successful listing and the U.S. Senate’s passage of the GENIUS Act, the first comprehensive stablecoin legislation in U.S. history.

As the world's second largest stablecoin issuer, Circle became the first native stablecoin company to be publicly listed in the United States, and its stock price soared more than 6 times in June. Although such a sharp rise suggests that the IPO pricing may be low, more importantly, investors' recognition of the future infrastructure role of stablecoins has significantly increased.

On June 25, the GENIUS Act was passed by the Senate by a vote of 68 to 30, marking a breakthrough after months of procedural votes and political games. This included the failure of a key procedural vote on May 8 due to last-minute disagreements. The bill has now been transferred to the House of Representatives, where some members have suggested merging it into the broader CLARITY Act. However, the prospects for the merger remain unclear, especially with President Trump publicly opposing it.

Driven by regulation, companies' interest in stablecoins continues to grow. US retail giants such as Walmart and Target are considering issuing their own stablecoins; Mastercard is further expanding its ecosystem support by integrating the stablecoin products of Paxos, Fiserv and PayPal. These companies are not only competing to issue stablecoins, but also hope to take the lead in circulation scale and actual use. The industry's focus has shifted from "whether it can be issued" to "whether it can be implemented". The success of stablecoins will depend on their penetration in real payment scenarios and user coverage.

Internationally, this trend is also gradually spreading. For example, Ripple has obtained regulatory approval for its RLUSD stablecoin in Dubai, and the Bank of Korea is also exploring the issuance of a stablecoin anchored to the Korean won. However, the United States is currently leading the way.

Stablecoins are just the starting point. They mark the first stage of bringing traditional fiat currencies to the blockchain, enabling the deployment of a 24/7, fast interoperable infrastructure. The next stage will focus on the introduction of on-chain financial assets, starting with tokenized stocks.

Robinhood has recently launched the tokenized trading function of 200 listed stocks to users in Europe, becoming a pilot platform for testing user demand and execution quality. Coinbase is also seeking corresponding regulatory approval in the United States to promote the implementation of similar products. These early attempts pave the way for more traditional financial products to be put on the chain, and it is expected that the next step will cover asset classes such as private credit and structured funds.

Geopolitical conflicts have limited impact on the market

The Israel-Iran war, which broke out on June 13, 2025, lasted for 12 days. Although it attracted global attention, its long-term impact on risky assets was limited. In the early stages of the conflict, the crypto and stock markets reacted mildly; but after the US government launched Operation Hammer on June 22, which launched an airstrike on Iran's nuclear facilities, crypto asset prices fell sharply. With Trump's announcement of a ceasefire agreement with Qatar on June 24, prices rebounded quickly. Although there were still sporadic missile attacks at the end of the month and the war had not officially ended, the overall market has returned to stability.

During this period, Bitcoin rose in tandem with U.S. stocks, showing no safe-haven properties. Compared to April and mid-May, when Bitcoin was seen as a value reserve asset due to trade tariffs and tight global bond markets, this time it is more inclined to risk asset logic. Bitcoin outperformed gold and the overall crypto market, partly due to strong institutional support, including $4 billion in monthly ETF inflows, continued purchases by treasury companies, and signs of sovereign buying, indicating that the impact of geopolitical shocks on Bitcoin is relatively short-lived.

The conflict has also sparked renewed attention to Iran's local crypto infrastructure, especially Bitcoin mining. According to Elliptic's 2021 estimates, about 4.5% of the world's Bitcoin mining takes place in Iran, relying mainly on low-priced government-subsidized electricity settled in rials. This structure brings considerable profits during Bitcoin's rising cycle.

After the US-Israel airstrike, there were rumors that some Iranian mining farms were damaged, causing the network's computing power to decline. However, short-term computing power fluctuations are often more likely to be caused by block time differences or data noise. There is no clear evidence that the conflict has caused systematic damage to mining facilities. Another possible explanation is that the heat wave in the eastern and midwestern regions of the United States has forced miners to temporarily reduce production.

Beyond infrastructure, the conflict has also sparked a discussion about the role of cryptocurrencies in Iran’s financial system, where high inflation, international sanctions and an unstable exchange rate against the dollar have long prompted a surge in cryptocurrency adoption among the private and shadowy economies.

Chainalysis’ past data shows that during the assassination of Hezbollah’s leader in 2024 and multiple missile exchanges, there was a significant increase in the outflow of Iranian crypto assets.

Bitcoin and Tron have always been the main blockchain networks used by Iran, especially Tron for USDT stablecoin transfers. However, in this round of conflict, the on-chain stablecoin transactions and settlements did not increase significantly, indicating that the overall crypto usage pattern has not changed due to the war, and the on-chain activity of short-term holders has decreased.

Although no significant anomalies were found in the on-chain data, the crypto industry emerged symbolically in this conflict: Nobitex, Iran's largest crypto exchange, suffered a $90 million hack during the war. The attackers were the pro-Israel organization "Predatory Sparrow" and left anti-IRGC messages such as "F*ckiRGCTerrorists" through the wallet address. Nobitex has been associated with the flow of funds from IRGC-related entities in the past, and this attack is more like a cyber psychological warfare rather than an attack aimed at profit.

Iran is one of the countries with the most severe currency devaluation in the world and has been under sanctions for a long time. For such societies, crypto assets do play an important role in cross-border capital flows. The political and network dimensions of this round of conflict further show that crypto has become part of the financial system of some countries.

Key variables in July will influence macro and market trends

As we enter July 2025, the core focus of market attention will be on several key events and macro indicators, which may have a significant impact on asset pricing and the overall environment.

Trump signed the "Big and Beautiful" bill on July 4, which is likely to significantly expand the already higher-than-expected fiscal deficit. According to the latest economic data, US fiscal spending continues to exceed revenue levels.

Inflationary pressures remain a core concern, but recent data suggest that inflation has eased. The core personal consumption expenditures (PCE) index is on a downward trend, with only one monthly increase in February in 2025, and the increase is likely to be mainly due to tariff-related front-end pricing pressures. For now, inflation appears to be under control, but the real risk is that if the Fed cuts interest rates too early, it may reignite price increases.

The labor market remains tight, providing the Fed with more flexibility. Job creation exceeded expectations in June, and the unemployment rate fell to 4.1%, below the market's most optimistic forecast. The decline was partly due to the labor force participation rate falling from 62.4% to 62.3%. Market expectations for a July rate cut have now fallen to zero, with overall expectations for two rate cuts for the year, depending on the direction of tariffs and growth data.

Another trend to watch closely is the continued weakness of the U.S. dollar. Economic uncertainty, unclear fiscal policy, and expectations of possible future rate cuts have all contributed to the dollar's weakness. The U.S. dollar index (DXY) is heading for its worst first-half performance since 1973. Risk assets are denominated in U.S. dollars, and a weak dollar helps explain the current resilience of the stock market and the strong performance of Bitcoin, despite complex fundamental data. At the same time, the U.S. M2 money supply is close to historical highs, and market liquidity is abundant. If the Fed turns to easing in the second half of the year, the dollar may be further pressured.

Key time points to pay attention to in July:

• July 11: Consumer Price Index (CPI) released
• July 16: Producer Price Index (PPI) and Federal Reserve Beige Book released
• July 30: FOMC interest rate decision

Cryptocurrency Performance

Fluctuation data