Weekly Digest: May 2025 | Week 3

Highlights

• Bitcoin surged past $105,000, driven by $2.68B in ETF inflows and renewed institutional interest.

• Ethereum’s Pectra upgrade boosted staking efficiency and Layer 2 interoperability, pushing ETH above $2,500.

• Coinbase revealed a data breach affecting <1% of users, with up to $400M in potential damages.

• The U.S., UK, Hong Kong, and South Korea advanced key crypto regulations, signaling global policy alignment.

Market Momentum: Bitcoin and Ethereum Surge

Crypto markets roared back into the spotlight last week as Bitcoin (BTC) surged past $105,000, recording its strongest weekly performance since November 2024. This rally was driven primarily by renewed institutional enthusiasm and robust capital inflows into U.S.-listed spot Bitcoin ETFs, which saw a combined $2.68 billion in net inflows. After weeks of sideways movement and geopolitical uncertainty, Bitcoin appears to have reclaimed its position as the leading hedge against macro volatility and central bank ambiguity.

ETF data shows BlackRock's IBIT led the inflow charge, with significant contributions from Fidelity and ARK, suggesting renewed confidence in Bitcoin from traditional finance giants. While retail sentiment remained cautious, institutional volumes surged, fueling upward momentum across centralized exchanges.

Meanwhile, Ethereum (ETH) also saw a meaningful rally, breaking above $2,500. The boost in price followed the successful implementation of the long-awaited Pectra upgrade, a hard fork aimed at optimizing Ethereum's staking mechanisms and enhancing interoperability with Layer 2 chains. Pectra introduces technical upgrades that make it easier for developers to build scalable applications while improving yield predictability for stakers.

The Ethereum community widely celebrated Pectra's launch, and early metrics indicate an uptick in validator participation and staking inflows. Still, the ETH/BTC ratio remains historically low, signaling that despite technical progress, Ethereum may continue to lag Bitcoin in the short term until further capital rotation occurs.

Our take: Bitcoin has decisively reasserted itself as the macro narrative leader, while Ethereum’s improved fundamentals set the stage for long-term upside. Expect L2 ecosystems and staking platforms to benefit most from Pectra’s rollout.

Security Concerns: Coinbase Data Breach

The week also brought unwelcome headlines as Coinbase, one of the largest crypto exchanges globally, disclosed a major data breach. The breach reportedly impacted less than 1% of its 9.7 million monthly users, but the fallout could be significant.

According to reports by WIRED, attackers used social engineering tactics to pressure overseas customer support contractors into divulging sensitive customer information. Stolen data included government-issued IDs, financial account details, and other PII (personally identifiable information). While no major wallet breaches were reported, the reputational damage is substantial.

Coinbase has committed to covering all damages and will reimburse affected users, with estimated costs ranging between $180 million and $400 million. The company also announced a review of its third-party operations and intends to bring certain support functions in-house to reduce future exposure.

Our take: This breach underscores the ongoing challenges of managing decentralized ecosystems with centralized infrastructure. As crypto continues to mature, exchanges must prioritize endpoint security and improve vetting of third-party contractors. For institutions, this may reinforce the appeal of non-custodial trading solutions, where asset ownership and user data remain in-house.

Regulatory Developments: U.S. and Global Perspectives

U.S. Stablecoin Legislation

In a major development on the policy front, the U.S. Senate advanced the long-awaited GENIUS Act, a comprehensive bill aimed at regulating stablecoin issuance and custody. The bill outlines:

• Capital reserve requirements for issuers

• Mandatory auditing and disclosures

• Ban on algorithmic stablecoins not backed 1:1 by fiat or short-term Treasuries

• Clear roles for the Federal Reserve and OCC in licensing issuers

The crypto industry largely welcomed the move, with analysts predicting that passage of the bill could unlock billions in new capital from U.S. banks and corporates looking to issue or use stablecoins in a compliant manner.

UK Crypto Framework

The UK government also unveiled a draft legislation package regulating crypto exchanges, dealers, custodians, and agents. The proposal emphasizes:

• Transparency in token listings and trade execution

• Operational resilience through mandatory business continuity plans

• Consumer protection via KYC/AML enforcement and fraud safeguards

Notably, the UK plans to exempt overseas stablecoin issuers from some of the more stringent requirements, reflecting a desire to remain competitive globally while securing domestic investor interests.

Global Moves: Hong Kong and South Korea

• Hong Kong's Monetary Authority (HKMA) issued new guidelines on staking services, directing authorized institutions to establish proper internal controls, conduct third-party due diligence, and disclose staking risks to clients. The move reflects Hong Kong’s commitment to regulated digital asset innovation.

• South Korea announced it will lift its ban on institutional crypto trading, beginning a phased rollout in 2025. This shift aligns the country with global regulatory norms and opens the door for Korean pension funds, banks, and asset managers to enter the space through licensed platforms.

Our take: Regulatory convergence is finally gaining momentum. As major jurisdictions clarify their stances on stablecoins, staking, and institutional access, we anticipate a second wave of institutional inflows, particularly from regulated banks and sovereign entities.

Emerging Trends: Crowdfunding & Memecoin Ecosystems

Beyond the blue-chip coins and institutional narratives, the past week also shined a light on new retail-driven trends reshaping the long tail of crypto.

Let’sBonk.fun and similar memecoin launchpads are quickly gaining traction, challenging Pump.fun's dominance. Pump.fun’s market share has dropped from 90% to 70%, as newer platforms introduce more gamified mechanics, creator incentives, and fee-sharing models. Daily token launches across these platforms now regularly surpass 50,000.

Meanwhile, the Believe platform, an internet-native crowdfunding tool, saw its daily trading volume spike to $700 million last week. Believe allows creators, startup founders, and influencers to issue tokens linked to project milestones or audience engagement. These tokens can then be traded on integrated DEXs or locked into incentive pools for community rewards.

The platform's viral success underscores the growing appetite for creator-economy tokens, blending Web3 finance with Web2 virality. Observers note that Believe may pioneer a new category of utility tokens tied to social capital rather than technical infrastructure.

Our take: While institutional money shapes Bitcoin and stablecoin narratives, the grassroots layer of Web3 is innovating at full speed. Launchpads and creator tokens may seem niche today but could evolve into a new model for project funding and user engagement, particularly in emerging markets and online communities.

Closing Thoughts

Last week encapsulated the full spectrum of crypto's evolution: mature asset classes gaining institutional credibility, new regulations forming across continents, and grassroots innovation continuing to bloom in unexpected corners of the market.

At FinchTrade, we are closely tracking these developments to provide our clients with actionable insights, deep liquidity, and secure trading infrastructure. Whether you're navigating macro shifts or exploring the next wave of retail-driven growth, we're here to help you execute with confidence.

Stay tuned for next week's digest — and if you haven’t already, subscribe to receive our institutional updates straight to your inbox.

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