HashKey Capital Monthly Insights Report: May 2025

Executive Summary
May 2025 marked a period of notable resurgence for the cryptocurrency market. The overall market capitalization demonstrated a robust recovery, rebounding significantly from April lows to reach $3.25 trillion by May 31, 2025, reflecting a 10.2% MoM growth. Market sentiments improved slightly as the Fear and Greed index climbed from 51 to 55 in May. This upward trajectory was largely propelled by the impressive performance of major assets like Bitcoin and Ethereum, both of which saw substantial price appreciation driven by accelerating institutional adoption and favorable regulatory shifts. Donald Trump rolling back on his aggressive trade tariffs rhetoric against major trading partners like China and EU has also been a key catalyst driving May market rally.
Bitcoin surged past previous all-time highs, touching over $107,000 and reaching a new peak of $111,814, primarily fueled by unprecedented inflows into spot Bitcoin Exchange-Traded Funds (ETFs) and significant corporate acquisitions. Optimism in Bitcoin is further validated by various onchain metrics. Based on Coinglass’s Crypto Bitcoin Bull Run Index, which leverages 9 key Bitcoin metrics to reflect overall performance, the index has increased from 70.70 to 78.1 in May. Ethereum also showcased exceptional strength, climbing over 40% in May, supported by institutional ETF interest and the successful deployment of its Pectra upgrade. However, towards the end of the month, both major assets retreated from their highs as the release of Fed minutes in May reflected the Fed’s hawkish stance driven by persistent inflation and economic uncertainty in the U.S.
The regulatory frameworks governing crypto assets in the United States became clearer, with the US GENIUS Act passing the Senate vote and now headed for a final floor vote. Additionally, the House Financial Services Committee Chair French Hill introduced the Clarity Act which aims to establish clear boundaries, governance and oversight of digital assets between the SEC and CFTC. In Hong Kong, the government has already passed the Stablecoin Bill which now mandates stablecoin issuers to operate with a license and adhere to the regulatory requirements for consumer safety.
Besides Bitcoin and Ethereum, sectors like privacy coins and AI tokens have performed well. Despite these positive developments, the month was not without its challenges, as significant security incidents, such as the hack on Cetus Protocol which drained more than $200M, reinforcing the persistent need for robust protective measures. Overall, May 2025 validated the historically positive price performance of crypto assets while onboarding more institutional participants.
Market Performance Overview
The cryptocurrency market experienced a significant growth in May 2025, demonstrating a strong recovery from earlier declines. Following a dip to $2.42 trillion on April 8, 2025, the total market capitalization rebounded impressively, reaching $3.44 trillion by May 21, 2025, although the market subsequently declined due to hawkish Fed minutes that signalled persistent inflation and economic uncertainty in the U.S. Despite this, the rolling back of aggressive, sweeping trade tariffs rhetoric against major partners like China and the EU have offered the markets a respite, with total crypto market capitalization increasing by 10.2% MoM. Market sentiment throughout May has been heavily influenced by macroeconomic developments. The Fear and Greed Index reached a peak of 76 on May 23, fueled by optimism surrounding a reduction in tariffs on China to 30% and growing institutional interest in Bitcoin and Ethereum. However, this bullish sentiment has since tempered, with the index closing the month at 55 as investors responded to the Federal Reserve’s hawkish meeting minutes, which highlighted persistent inflationary pressures and rising economic uncertainty.
Bitcoin (BTC) Performance
Bitcoin (BTC) played a pivotal role in the crypto market’s narrative during May 2025, consistently making headlines with its impressive price movements. Early in the month, Bitcoin surged past its previous all-time high, touching $111,814 before stabilizing within the $101,500-$106,800 range. The primary forces driving Bitcoin’s strong performance were multifaceted, with institutional demand standing out as a dominant factor. This was clearly evidenced by substantial inflows into Bitcoin Exchange-Traded Funds (ETFs), which accumulated an additional $3.29 billion in May led by significant inflows to BlackRock’s IBIT. Corporate acquisitions also contributed significantly to Bitcoin’s rally. According to Glassnode’s Bitcoin accumulation trend score, entities with more than 10K BTC have a score of 0.9, underscoring a trend of Bitcoin accumulation among whales. Strategy (formerly MicroStrategy) made a notable purchase of 7,390 BTC, valued at $765 million, while Japan’s Metaplanet added 1,004 BTC for $129 million on May 19, 2025. The recent surge in corporate acquisitions underscores Bitcoin’s growing acceptance as a viable, enduring asset within established financial structures. The futures market further reinforced this bullish sentiment, with open interest reaching an all-time high of $71.46 billion on May 31, suggesting bullish market expectations.
Bitcoin’s fixed supply and transparent nature position it as an attractive hedge against fiat currency risks and sovereign debt fragility, especially after Moody downgraded US credit for the first time amid a concerning fiscal deficit. This reinforces Bitcoin’s narrative as a digital store of value and a potential hedge against broader economic uncertainties, solidifying its role beyond mere speculation.
From a network perspective, Bitcoin’s on-chain activity showed steady growth. Average daily active users increased by 5.8% MoM reaching 516K, driving network fees growth of 32.85% MoM to an average transaction fee of $1.71. On the DeFi front, Bitcoin-native protocols built on Stacks and Rootstock continued to grow slowly but steadily in total value locked (TVL). Stacks protocol saw a growth in sBTC adoption making it now the largest Bitcoin layer as sBTC TVL increased from 3.03K BTC to more than 5K BTC. This can be attributed to its successful phased launch with its most recent tranche sBTC Cap-3 tranche — offering an additional capacity of 2,000 BTC — being fully subscribed within hours from launch. This rapid adoption was driven by renewed optimism around Stacks’ updated roadmap and DeFi expansion strategy, which features incentivized liquidity programs and strengthened ecosystem support designed to promote long-term token value growth.
Bitcoin L2, Lightning Network, recorded an increase in BTC TVL and channel capacity in May, underscoring its growing importance as a payment layer amid rising institutional interest. Nasdaq-listed, enterprise blockchain service provider, ALT5 Sigma Corporation, has announced a partnership with Lightning Network provider, Voltage to drive the adoption of Lightning Network for its enterprise clients.
Bitcoin Performance Dashboard

Ethereum and L2s Performance
Ethereum emerged as a particularly strong performer in May 2025, demonstrating significant bullish momentum that positioned it as a standout asset. Throughout the month, Ethereum climbed over 40%, showcasing a robust recovery amid greater institutional adoption and a successful Pectra Upgrade. The ETH/BTC ratio also rose from 0.018 to 0.024, reflecting the stronger performance of Ethereum compared to Bitcoin in May.
Institutional adoption of Ethereum ETFs continues to gain momentum in May. Spot Ethereum ETFs, for instance, attracted $43.9 million in net inflows, marking the second consecutive month of net inflows. The derivatives market also painted a compelling bullish narrative, as call options significantly outweighed put options in ETH’s upcoming $2.4 billion options expiry on May 30. New entrant, SharpLink Gaming announced the launch of up to $1B in stock offering to develop their ETH treasury strategy. Furthermore, top ETH holders have been accumulating more Ethereum than at any point since early 2023, which suggests strong conviction in its long-term prospects and often precedes significant price movements.
Whale ETH accumulation accelerates in May
Fundamental developments, particularly the Pectra upgrade, played a crucial role in enhancing Ethereum’s network capabilities and market appeal. The Pectra upgrade, deployed on May 7, 2025, introduced several key Ethereum Improvement Proposals (EIPs). EIP-7702, for instance, introduced Account Abstraction, enabling Externally Owned Accounts (EOAs) to temporarily function like smart contract accounts during a transaction. This innovation is expected to greatly improve wallet user experience by allowing features like transaction batching and gas sponsorship without requiring users to migrate to full Smart Contract Accounts. EIP-7251 increased the validator stake limit from 32 ETH to 2048 ETH, a measure designed to reduce the overall validator count and enhance network efficiency, thereby improving overall network performance and sustainability at scale. EIP-7002 enabled execution layer triggerable exits, allowing validators to initiate their own exits from the network through the execution layer, which opens up possibilities for more programmable staking workflows. Lastly, EIP-6110 improved validator onboarding by moving validator deposits directly on-chain via the execution layer, making the process more transparent and predictable. These upgrades collectively contribute to Ethereum’s scalability, security, and decentralization, reinforcing its position as the leading smart contract platform. Developers have also been signalling to further increase block gas limits, which if implemented, could further enhance TPS on the network, driving ecosystem expansion.
Looking into its onchain health, Ethereum’s ecosystem saw a resurgence in activity in May. Number of daily active users increased by 6.6% to 412.2K driving a 13.2% growth in monthly transactions. The increased participation has consequently benefitted other metrics such as TVL and DEX volumes which both grew by 2.6% and 30.7% MoM respectively. Fees generated have also more than doubled, breaking 4 consecutive months of decline. While TVL growth seems to imply a growing adoption of Ethereum dApps, this actual adoption painted a slightly mixed picture given that the price of ETH has performed well this month, inflating the valuation of the ecosystem. Several staking and restaking protocols experienced slight declines or stayed relatively constant in ETH deposits. In contrast, platforms like Spark saw increased user interest, particularly in its stablecoin vault offering a relatively more attractive 4.5% APY — highlighting a shift toward more prudent, yield-optimizing capital allocation by investors. While the Pectra Upgrade evidently benefitted L2s more, developers and Founder, Vitalik Buterin, have laid plans to drive L1 scalability moving forward. This can be executed through either increasing the block gas limit, introducing partial stateless nodes via the implementation of EIP-4444 which would allow nodes to retain only the most recent ~36 days of history while leveraging on external solutions for distributed storage mechanisms.
Stablecoin supply on Ethereum subtly decreased from $124.6B to $122.7B, underscoring greater risk-taking appetite as users started to capitalize on onchain yield opportunities.
Since the Pectra Upgrade, usage of L2 has further accelerated with the ratio of active addresses on L2/Ethereum increasing from 5.12 in April to 6.4 in May. Usage of L2s has been unevenly distributed with chains like Base almost doubling its user base while Soneium and Optimism only recorded milder growth in active addresses.
Base’s increased adoption is further corroborated with a 42.7% MoM increase in monthly transactions. DeFi protocol, Uniswap, recorded a MoM DEX volume growth of 63.2%, reflecting the success of Base in attracting retail capital. TVL on the network has also risen by 28.4% MoM driven by inflows to protocols such as Uniswap, Morpho, Aerodrome, AAVE, and Spark. Besides DeFi activities, innovative social apps on the platform continue to attract new users. For example, Qrcoindotfun, allows users to bid on the link of the QR code, a new narrative that drives mindshare to the ecosystem. Additionally, Paragraph.xyz also introduced auto-crossposting that enables a post to be distributed across various publication mediums, underscoring an improvement in onchain social platform user experience. AI adoption on Base has also been ramping following initial success seen on platforms like Virtuals Protocol. Magic Labs’ verifiable crypto agent platform, which allows users to deploy agents for automated AI trading strategies, has experienced a strong launch since its debut on May 7th. The platform has garnered significant interest, with over 778K+ user sign ups and 176K+ agent requests submitted to date.
DeFi
DeFi experienced a strong resurgence in May led by improving risk appetite and broader market rallies. Total DeFi TVL increased by 18.3% MoM to $112.69B driven by heightened onchain participation in DEX, perpetuals, lending and cross chain activities. DEX volumes more than doubled in May reaching $323.7B with PancakeSwap emerging as the top DEX protocol with more than $127B in trading volume. This can be mainly attributed to the launch of Hooks on its DeFi pools enabling more customized pool pricing features coupled with an ongoing incentivized campaign for liquidity provision into whitelisted Hook pools. Significant USD1 volumes and transaction count have also contributed to success on the platform. Consequently, fees generated on the platform have more than doubled to $26.7M.
In the perps market, volume has grown by 25.5% MoM, crossing $300B in monthly trading volume. Gains were mainly contributed by renewed activity on Hyperliquid. Hyperbridge also went live on Hyperliquid, enabling any LayerZero-enabled chains to seamlessly bridge into Hyperliquid as long as their tokens are supported on the trading platform, expanding the ecosystem to support higher trading volumes. USDT0 and USDe deployments also further drove liquidity into the network. The platform’s ability to support significant trading volumes has also created a positive feedback cycle, gaining favour among retail traders as it continues to increase its market share against CEX competitors like Binance for the third consecutive month.
AI
Below we highlight some notable developments in AI across the 4 main verticals: infrastructure, model, application and platform.
Infrastructure
Aethir
With massive investments still going into data centers by large tech incumbents, the demand for compute does not seem to be abating anytime soon. Decentralized compute protocol, Aethir, continues making progress showcasing how decentralized compute can be effectively utilized. As of May, it already generates $141M in ARR and delivered more than 813M compute hours. Network revenue generated by the protocol grew 4.7% MoM, underpinned by increasing number of project partnerships utilizing its compute such as blockchain-based trading card game, Doctor Who: Worlds Apart.
Geodnet
While robotics have been gaining heated attention in the Web2 AI space, the web3 space is still mainly focused on delivering agentic solutions using crypto payment rails. Recently, however, Geodnet, the world’s largest Real-Time Kinematics (RTK) network, is making headways into the robotics market which is expected to reach $200B by 2030. In this aspect, the network is providing precise positioning data to train robots to operate autonomously and safely in complex environments with high levels of precision.
Hyperbolic
Compute provider and AI model service provider, Hyperbolic Labs, now provides hosting services for DeepSeek-R1–0528. The team has also launched the first MCP server that lets Claude by Anthropic AI rent GPUs and run workloads fully autonomously. With autonomous agent payments being the next phase of growth, Hyperbolic has integrated with Coinbase’s internet native payment protocol, x402, which will enable agents to seamlessly access Hyperbolic serverless inference with seamless per-call USDC payments.
Virtuals Protocol G.A.M.E
In terms of agent infrastructure, Virtuals Protocol’s GAME Framework has also announced several new updates. These include the new plugins that enable agents to check wallet details, request payments, run social campaigns and be empowered with enhanced memory.
Vana
During the Solana Accelerate conference, the team announced the trading support for VRC-20 tokens, a ERC-20 token standard with added features, to Solana. The team has also partnered with another AI startup, Flower, to train a new 7B model called Collective-1. This 7B model is trained on a distributed compute network leveraging private data contributed by Vana users.
Models
Nous Research
Nous Research announced the release of Psyche testnet which is a peer to peer networking stack that coordinates globally distributed GPUs running DisTrO. The team will be conducting a pre-training of a 40B model that is small enough to train on a single H/DGX and run on a 3090 while being a powerful foundational reasoning model. The team has also released v0.2.0 of Atropos, equipped with new environments, updated handling for api endpoints.
Flock.io
Flock.io which operates a federated learning platform for decentralized AI model training announced the launch of AI Arena v2 alongside gmFLOCK, the liquid token for staked FLOCK, being live on the platform. With gmFLOCK, stakers can participate by operating training nodes and becoming validators of model outputs as well as earn rewards in FLOCK. Within just a day of AI Arena V2 launch, the platform has already garnered more than 20% of the circulating supply of FLOCK staked on the platform. In May, the platform also completed a new model training task, AI KYC/KYB. The model, Argus, is trained on comprehensive financial and compliance data and is intended to leverage AI capabilities to assist in functions such as document analysis, risk assessment and due diligence. Model training task 10 created by Eden, will be focused on developing models to be equipped with emotions and senses.
Prime Intellect
Prime Intellect open sourced their 32B model, INTELLECT-2, built on base model QwQ-32B and trained using distributed reinforcement learning. By leveraging curated datasets for reinforcement learning and training the model using task-based and length-based rewards, early results indicate promising signs of success in decentralized model training. However, scaling the model beyond 32B parameters will require more advanced techniques to address communication overheads inherent in decentralized setups.
Platforms and Applications
AIXBT
Leading AI influencer, AIXBT, has now opened their terminal, allowing users to gain access to AI-powered analytics reports on various incumbent and emerging projects.
Virtuals Protocol
Since the launch of Genesis platform on Virtuals protocol, agent token launches have been quite successful. The burgeoning interest in agent-powered Web3 solutions is clearly demonstrated by the recent successful launches of several innovative projects. These include nAIncy, an AI market analyst offering crucial macro insights; Bizzy, the AI engine driving Buzzing, a social media platform built on permissionless, AI-powered prediction markets; and Arbus, an AI-driven market intelligence layer designed to equip agents with robust data infrastructure. Solace is an emotionally intelligent AI companion that delivers real-time, voice driven mental health support, providing readily available help. Each of these launches experienced oversubscription rates beyond 1000% with Solace seeing oversubscription in excess of 2500%, highlighting robust market confidence in their potential and the growing influence of Virtuals Protocol. Virtuals Protocol also implemented $VIRTUAL staking in May, enabling only stakers to have a 20% in Virgen points supply, promoting long term alignment and deeper ecosystem engagement. Additionally, the team has also changed the rules of points engagement, allowing only staked agent tokens to be eligible for virgen points instead of just holding agent tokens from 22 May, in an effort to mitigate selling pressure and promote long term alignment.
AIOZ Network
AIOZ Network launched AIOZ AI V1, a web3 marketplace for building, sharing and monetizing models and datasets. Creators upload their models and datasets which will be verified and tracked, allowing model owners to be compensated for every task that uses their models for training and inference.
Tether QVAC
The largest stablecoin provider has also ventured into the AI scene with the release of QVAC: its development platform for developers to to easily build and deploy AI agents and applications across any smartphones, laptops, mainframes, embedded systems, and a range of other hardware without being dependent on centralized cloud servers. Apps that Tether will launch soon:
QVAC/Translate: fast, on-device transcription and translation of text, documents, images, and audio, without any reliance on the cloud.
QVAC/Health: private wellness tracker that keeps sensitive health data entirely local.
Magic Labs — Newton
Magic Labs launched Newton, which allows autonomous financial transactions to be performed on behalf of users. Live on Base, users can set up recurring buy requests for cbBTC, ETH and Kaito tokens at a specified time interval. Newton also provides a seamless experience for users by supporting onramps through credit and debit cards. Users are also able to receive USDC on Base, Optimism and Arbitrum, the top 3 largest L2s on Ethereum, and set up their purchase. Although still in beta, early traction has reflected notable interest with more than 778K+ user sign ups and 176K+ agent requests sent.
MyShell AI
MyShell AI has announced the ShellAgent MCP widget that brings access to OpenAI, Gemini, Figma, Github, expanding the capabilities of what an onchain agent can do.
Stablecoins
Stablecoin market supply grew by 2.3% MoM led by gains in Ethena and the latest stablecoin entrant, USD1. Ethena’s USDe market capitalization increased by 14.8% MoM, following the bullish price performance of Ethereum which drove yields on its USDe stablecoin higher. In May, the yield on USDe consistently rose from 2.79% to 6.89% APY, supported by positive funding rates on 30 out of 31 days. This sustained performance has contributed to renewed capital inflows into the protocol. Additionally, the team has also expanded the utility of USDe into the TON ecosystem, leveraging the network effects of Telegram to drive greater adoption of USDe. USD1, the stablecoin behind the Trump-backed project, World Liberty Financial, has also witnessed a strong increase in its circulating supply, mainly contributed by MGX’s $2B investment into Binance which was done using USD1. Binance’s listing of USD1 also further boosted the stablecoin visibility and adoption, with USD1 now becoming the 7th largest stablecoin with a market capitalization of $2.18B. BNB chain and Abitrum have benefitted from significant stablecoin inflows in May as they recorded a MoM supply growth of 10.4% and 14% respectively. Stablecoin volumes market share on BNB have more than doubled with the network now occupying close to 25% share, although values may have been inflated by GMX $2B investment via USD1. Hyperliquid has been the main driver for inflows into the Arbitrum ecosystem, as the renewed interest in the perpetuals platform ushered in a notable increase in trading volume and transaction count.
Stablecoin issuer Circle which has recently announced its IPO has lifted its initial IPO price to $31 per share ahead of NYSE listing, bringing the firm valuation to $6.8B. Pricing at $31 instead of the expected range of $24-$26 further highlighted strong demand in the sector as stablecoins are now deeply embedded in payment systems.
Stablecoin Performance Dashboard
