#SuperEx #cryptocurrency #liquidity
The Cryptocurrency Market in 2024: A Battle Over Concepts and Hot Topics, Shifting to Liquidity Games in 2025If we were to sum up the cryptocurrency market of 2024 in one sentence, it would be: a battle for concepts and hot topics, with all growth and explosions revolving around concept narratives and the competition for market attention. By 2025, the crypto market has shifted to a battle over liquidity.
There are many reasons for this shift. As mentioned in my previous article, the successive crashes of celebrity Meme coins have caused the market sentiment in this industry to shift from FOMO to calmness, which is one of the main reasons for the liquidity shortage in the crypto market.
Another reason can be intuitively understood by looking at the market. Overall, from the institutional fund frenzy driven by Bitcoin ETFs to the short-term liquidity release through the U.S. Treasury General Account (TGA), from the technical narrative of Ethereum upgrades to the risk-hedging demand driven by global geopolitical risks, market participants have been swept into a complex “liquidity war.” At the core of this war lies the direction, speed, and scale of capital flows, how they reshape the value logic of crypto assets, and the risks and opportunities hidden behind this reshaping.
Liquidity Release: A Battle of Policy Tools and Market Reactions
In February 2025, the U.S. Treasury released about 150 billion to 250 billion USD in short-term liquidity through the TGA to address the debt ceiling issue. While this action is not a traditional quantitative easing (QE), its impact on risk assets has already become apparent. Historical data shows that during 2020–2021, the TGA liquidity release drove Bitcoin’s price up by about 600%. Although the current release in 2025 is on a smaller scale, it has become a key variable in a market with highly divided expectations. According to Goldman Sachs, this liquidity injection may continue until the summer, with the total scale possibly reaching 600 billion USD. While this short-term liquidity lacks the continuity of QE, its immediate stimulating effect on the crypto market is significant: Bitcoin’s price rebounded from 96,000 USD to 103,000 USD in the first two weeks of February, and Ethereum rose from 2,400 USD to 2,700 USD, with market trading volume increasing by 38% compared to the previous month.
February 2025, the U.S. Treasury released about 150 billion to 250 billion USD in short-term liquidity through the TGA to address the debt ceiling issue. While this action is not a traditional quantitative easing (QE), its impact on risk assets has already become apparent. Historical data shows that during 2020–2021, the TGA liquidity release drove Bitcoin’s price up by about 600%. Although the current release in 2025 is on a smaller scale, it has become a key variable in a market with highly divided expectations. According to Goldman Sachs, this liquidity injection may continue until the summer, with the total scale possibly reaching 600 billion USD. While this short-term liquidity lacks the continuity of QE, its immediate stimulating effect on the crypto market is significant: Bitcoin’s price rebounded from 96,000 USD to 103,000 USD in the first two weeks of February, and Ethereum rose from 2,400 USD to 2,700 USD, with market trading volume increasing by 38% compared to the previous month.
However, the side effects of liquidity release are also apparent. Market expectations of a shift in the Federal Reserve’s monetary policy have been repeatedly revised — despite January’s non-farm payrolls coming in below expectations (143,000 jobs added vs. the expected 169,000), and the unemployment rate dropping to 4%, the Federal Reserve still insists on a stance of “not rushing to cut interest rates.” This contradiction has made capital allocation in risk assets more cautious. Data shows that, in the first 20 days of February, Bitcoin ETF saw a net inflow of 5.4 billion USD, while altcoins saw a net outflow of 2.3 billion USD. The phenomenon of institutional funds being highly concentrated in Bitcoin exposes the market’s risk-averse tendencies. The tug-of-war between the short-term benefits of liquidity release and long-term policy uncertainty has become the main theme of the current market.
Institutional Entry: The Dual Effect of ETF Waves and Capital Diversification
The continued inflow of funds into Bitcoin spot ETFs is undoubtedly the most significant structural change in the crypto market of 2025. As of February 20, the total assets under management (AUM) in Bitcoin ETFs surpassed 78.8 billion USD, with BlackRock’s IBIT fund accounting for 45%, holding approximately 495,000 BTC. The concentrated entry of institutional funds has not only altered the supply-demand dynamics of Bitcoin — daily net purchases (about 1,000 BTC) far exceed the daily mining output (450 BTC) — but also profoundly impacted market volatility. Since the ETF’s launch, Bitcoin’s 30-day historical volatility has decreased from 65% to 50%, and the price spread has narrowed to under 0.3%, significantly enhancing market liquidity.
However, the “siphon effect” of ETFs has also intensified capital diversification. Although Ethereum ETFs attracted an institutional holding increase from 4.8% to 14.5% in Q4 of 2024, their size (about 13.98 billion USD) is still only 18% of Bitcoin ETF’s size. More concerningly, the altcoin market is facing a liquidity drought: Meme coins account for 11% of the top 300 crypto assets (excluding stablecoins), but speculative trading has led to 24-hour liquidations of 346 million USD, demonstrating extremely low capital efficiency. This division exposes the conservatism of institutional funds — they are more likely to allocate mainstream assets through compliant tools rather than take risks with high-volatility small-cap projects.
Celebrity Tokens Harvesting: A Catalyst for Cooling Market Sentiment
In February 2025, the wave of harvesting celebrity tokens became an important catalyst for the cooling of market sentiment. Since the second half of 2024, many celebrities have quickly monetized by issuing tokens. For example, a well-known singer’s “MusicCoin” surged 300% on its first listing day but subsequently collapsed by 90% due to a lack of real utility. Similar cases exploded in early 2025, causing retail investors to lose confidence in altcoins. Data shows that in the first two weeks of February, trading volume for celebrity token-related projects decreased by 62%, with capital outflows of 870 million USD.
The celebrity token harvesting wave not only exposed the market’s speculative excess but also prompted investors to reassess the value logic of crypto assets. More and more funds are flowing from high-risk small-cap projects into mainstream assets such as Bitcoin and Ethereum, further intensifying liquidity diversification in the market. This trend resonates with the conservative allocations of institutional funds, causing the overall market sentiment to become more rational.
Technological Upgrades: Ethereum’s Pectra Upgrade as a Liquidity Reshaping Attempt
Faced with the pressure of liquidity diversification, the Ethereum ecosystem is attempting to attract funds back through technological upgrades. The upcoming Pectra upgrade, set to be implemented in April 2025, is seen as a key battle for Ethereum to solidify its position as a “smart contract platform.” The core goals of this upgrade include: simplifying account abstraction to lower the user entry threshold, enhancing Layer 2 compatibility to reduce transaction costs, and optimizing staking mechanisms to improve ETH liquidity. If successful, Ethereum may attract more institutional funds — especially if stakable ETH ETFs are approved, which would further push ETH into traditional financial collateral pools.
However, the short-term effectiveness of the upgrade remains uncertain. Although Ethereum’s Total Value Locked (TVL) rebounded to 48 billion USD in February, its market share has been eroded by emerging public chains such as Solana. For instance, Solana’s active addresses surpassed 100 million in February, with trading volume increasing by 62%, and its low fees and high speed are more attractive to high-frequency traders. The mismatch between technological iterations and market preferences makes Ethereum’s liquidity battle highly uncertain.
Geopolitical Risks: De-dollarization Narrative and Bitcoin’s Hedging Properties
In February 2025, the escalation of global geopolitical risks provided another layer of liquidity logic for the crypto market. The Trump administration’s “reciprocal tariffs” policy exacerbated trade war risks, while the dollar index rose to a year-high of 108, strengthening Bitcoin’s “digital gold” narrative. Data shows that in the first two weeks of February, Bitcoin trading volume in Argentine pesos and Turkish lira increased by 27% and 15%, respectively, as residents in high-inflation countries accelerated their use of crypto assets as a store of value.
At the same time, sovereign nations’ demand for Bitcoin reserves has quietly increased. Texas and Pennsylvania in the U.S. are advancing Bitcoin reserve plans, and rumors suggest that some emerging market central banks have secretly increased Bitcoin holdings to hedge against U.S. Treasury risks. If this trend continues, it could bring a long-term stable source of liquidity to the crypto market. However, regulatory uncertainty remains the biggest obstacle.
The current liquidity war is far from over, but its outcome may be determined by three key factors:
Federal Reserve Policy Path: If the Fed starts cutting interest rates in the second half of 2025, global risk assets may see a new wave of growth, and the crypto market will benefit from lower capital costs and a rebound in leverage demand.
Sustainability of ETF Funds: Bitcoin ETF’s daily net inflow needs to remain above 500 BTC to offset the supply gap post-halving, or the market may face a risk of accumulated selling pressure.
Technological Application Deployment: The progress of Ethereum’s Pectra upgrade and Real World Asset (RWA) tokenization will determine whether small and mid-cap projects can attract incremental funds.
Conclusion: Finding Certainty Amid Uncertainty
The February 2025 crypto market is a liquidity war driven by policies, technology, and geopolitical risks. In the short term, TGA releases and ETF funds provide upward momentum for the market; in the long term, the industry needs to build endogenous liquidity through technological innovation and regulatory compliance processes. As OKG Research put it: “The true winners of the market will need to dynamically balance between fervor and clarity.” When the liquidity tide recedes, only projects with practical value and ecological resilience will be able to lead the next cycle.
