May 2025: Bitcoin Exceeds $100,000, Influx of Institutional Funds and Policy Changes Drive the Market to New Heights

In May 2025, the price of Bitcoin surpassed $100,000, and market sentiment was optimistic, with analysts predicting the next target would be $160,000. Institutional investors entered the market via ETFs, and some U.S. state governments changed their policies to support Bitcoin. On the technical side, core developers proposed removing the OP_Return limit, which sparked a debate on decentralization. The Ordinals craze continued, boosting miners' revenue, but it challenged Bitcoin's role as a financial platform.

Bitcoin Surpasses $100,000: Market Sentiment and Capital Momentum in Sync

Since April 2025, Bitcoin has decoupled from U.S. stock market trends, demonstrating an independent trend, and stabilized above $100,000 in early May. According to CoinGecko data, as of May 9, Bitcoin's price reached $102,873, with a 24-hour trading volume of nearly $3 billion, and the highest price touching $104,361. Analyst Matthew Hyland pointed out that if the Relative Strength Index (RSI) continues to support upward momentum, Bitcoin is expected to challenge the psychological threshold of $160,000.

The shift in market sentiment is also reflected in the leverage and futures markets. According to Skew, Bitcoin is currently in a high time frame resistance zone between $103,000 and $104,000, with some large holders starting to take profits, but the overall market still maintains strong buying momentum.

Institutional Funds Lead Capital Rotation, ETFs Become Key Channels

The core driving force behind this Bitcoin rally comes from the steady inflow of institutional funds. According to Jeffrey Ding, chief analyst at HashKey Group, BlackRock's Bitcoin spot ETF (IBIT) has reached an asset size of $34.3 billion, surpassing its gold trust fund IAU's $33 billion, indicating that traditional financial institutions' long-term confidence in Bitcoin is strengthening.

MicroStrategy founder Michael Saylor noted that the market is undergoing a "capital rotation," with short-term holders taking profits and institutional investors steadily entering through ETFs and corporate reserves. According to Farside data, over the past five trading days, Bitcoin spot ETFs have seen a net inflow of $920 million, indicating that funds are shifting from retail investors and early miners to long-term institutional holders.

Policy Shift: U.S. State and Federal Levels Turn More Positive

Policy factors also provide support for Bitcoin prices. On May 6, New Hampshire signed the HB 302 bill, allowing the state government to invest up to 5% of public funds in assets like Bitcoin with a market cap exceeding $500 billion. Arizona also passed the SB1373 bill, opening up 10% of public funds to digital assets. Although no substantial funds have been invested yet, the policy signals have significantly boosted market confidence.

Additionally, the Trump administration's stance on cryptocurrencies has clearly shifted to support. According to White & Case, Trump nominated crypto-friendly Paul Atkins as SEC chairman and promised to end regulatory crackdowns on the crypto industry. This policy shift is seen as a key backdrop for Bitcoin's price breakthrough.

Stablecoins and Liquidity: USDT Issuance and Legislative Progress

Market liquidity has also seen significant changes. CoinGecko statistics show that in April 2025, USDT issuance reached $5 billion, providing ample funds for Bitcoin and the overall crypto market. This issuance is closely related to the upcoming U.S. stablecoin legislation, and USDT supply is expected to continue expanding, further enhancing market liquidity.

Notably, this Bitcoin surge did not exhibit the previous "vampire altcoin" phenomenon but instead led to a broad rise in the overall crypto market, indicating an increase in both the breadth and depth of capital entry.

Technical Controversy Intensifies: OP_Return Limit and Ordinals Craze

As Bitcoin prices hit new highs, technical controversies have also erupted. Recently, a proposal emerged within the Bitcoin core development community suggesting the removal of the OP_Return output size relay limit. OP_Return allows users to embed arbitrary data in Bitcoin transactions, currently limited to 80 bytes. Although this limit is not a consensus rule, its removal could change node relay behavior, affecting overall network efficiency and the degree of decentralization.

Supporters argue that removing the limit could enhance Bitcoin's flexibility and competitiveness and reduce users' motivation to hide data in witness fields. Opponents worry that this could lead to a flood of spam transactions, increased node operating costs, and even disrupt key technologies like Compact blocks.

This controversy is closely related to the Ordinals craze that has emerged since 2023. Ordinals allow users to embed images and text inscriptions into the Bitcoin blockchain, achieving more efficient data storage through Taproot technology. According to Dune Analytics data, Ordinals have accumulated over 88 million inscriptions, paying over 7,000 Bitcoins in transaction fees, equivalent to over $660 million. This phenomenon has attracted significant capital and entrepreneurs, becoming a new revenue source for miners.

However, the existence of Ordinals also challenges Bitcoin's positioning as a "pure financial transaction platform." Some developers and node operators worry that if Bitcoin block space is occupied by non-financial data, it will affect its efficiency and sustainability as a global payment and store of value system.

May 2025: Bitcoin Exceeds $100,000, Influx of Institutional Funds and Policy Changes Drive the Market to New Heights

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