New Trends in Global Finance: Crypto Assets Become a New Choice for Hedging Uncertainty

In early May, the China-US trade talks made positive progress, alleviating market concerns about the disruption of the global supply chain. This good news drove the US stock and Crypto Assets markets to rise rapidly, exceeding market expectations. However, at the end of the month, the ruling of the US International Trade Court cast a shadow over the legitimacy of the tariff war, triggering a new round of policy games. The reconstruction of global trade rules has entered a phase of struggle between judicial and administrative departments, with long-term concerns about the impact of tariffs still lingering.

In this complex situation, the decentralization and cross-sovereign characteristics of Crypto Assets, as well as their resistance to policy intervention, are increasingly favored by investors.

US Economy: Mixed Blessings

In May, the economic data from the United States was a mixed bag. The non-farm payroll data for April increased by 177,000, which was better than expected, indicating that the labor market remains robust. After the China-U.S. trade talks reached an agreement on a "tariff suspension period," consumers' inflation expectations for imported goods decreased, boosting retail consumption willingness. The consumer confidence index in May rebounded significantly to 98, marking the largest monthly increase in four years.

However, the U.S. Treasury market is facing challenges. The yield on the 30-year U.S. Treasury bond has soared to over 5.1%, nearing its highest level in 20 years. The new bill passed by the House of Representatives proposes a significant increase in the U.S. debt ceiling, which could drive the U.S. debt-to-GDP ratio from the current approximately 98% to 125%, raising market concerns about the U.S. fiscal outlook.

In addition, the minutes from the Federal Reserve's May meeting show that almost all officials in attendance believe that "inflation may be more persistent than expected," thus maintaining a pause on interest rate cuts. These factors together create a situation in the U.S. economy that is "stable yet risky."

The Stock Market and Crypto Assets Perform Brightly

Despite the Wall Street adage of "sell in May," the easing of reciprocal tariffs in early April broke this spell. The US stock and crypto markets quickly absorbed the negative impact of the "reciprocal tariff war," with a remarkable surge in gains. In May, the S&P 500 index rose approximately 6.15%, the Nasdaq climbed around 9.56%, and the Dow Jones increased about 3.94%. The S&P 500 and Nasdaq posted their strongest May performances since 1990 and 1997, respectively.

The Crypto Assets market has also performed remarkably. Bitcoin has risen from a fluctuation range of $95,000 at the beginning of the month to $105,000 by the end of the month, with a monthly increase of 12%. During this period, it once touched a new high of $112,000. This resonance effect with the U.S. stock market indicates that investors are repositioning their assets amid policy uncertainty.

Crypto Assets Attractiveness Enhanced

The fundamental aspects of Bitcoin are facing a key catalyst, and the "siphoning effect" on the capital side is particularly significant. Over the past five weeks, U.S. Bitcoin ETFs have attracted over $9 billion in capital inflows, while gold funds have experienced outflows of over $2.8 billion during the same period. This trend indicates that some investors are shifting from traditional gold to "digital gold" Bitcoin, viewing it as a new store of value and hedging tool.

The improvement of the regulatory environment has also brought benefits to the crypto market. The new chairman of the U.S. Securities and Exchange Commission has proposed the goal of building a "global crypto assets capital" and announced a shift in regulatory models. The U.S. Senate has passed a procedural vote on the "GENIUS Act," and the Hong Kong Legislative Council has approved the "Stablecoin Regulation Draft." These initiatives collectively promote the normalization of the global stablecoin market, opening new funding channels for the digital currency market while providing institutional support for the development of the Web3 ecosystem.

Future Outlook

With the dual entry of traditional financial institutions and regulatory systems, the narrative of real assets on the blockchain (RWA) is accelerating. The market's consensus on Bitcoin as a "store of value base" is further strengthening, and its unique position in global asset allocation is becoming increasingly prominent.

In the future, the fluctuations of traditional financial markets may, at certain stages, become a catalyst for the rise of Crypto Assets. In the short term, concerns in the market triggered by rising U.S. Treasury yields may prompt safe-haven funds to flow into the crypto market. In the long term, the deterioration of the U.S. fiscal situation may enhance the safe-haven appeal of Crypto Assets, as this fiscal pressure could undermine confidence in the U.S. dollar and Treasury bonds, prompting investors to turn to decentralized assets like Bitcoin to hedge against credit risk.

Overall, the performance of the cryptocurrency market in May reflects that Bitcoin is becoming a new choice for capital hedging against the "uncertainties of the old order" as the traditional financial system faces tariff frictions, debt crises, and monetary policy dilemmas. As regulatory easing moves from expectation to reality, this reconstruction process may accelerate. Although the mid-term suppression of U.S. Treasury yields and the fluctuations in regulatory policies may pose challenges to the market, the narrative of Bitcoin as "digital gold" has entered the mainstream discourse.