Bitcoin Surges 25.66% in Q2 Driven by Institutional Demand

The crypto market experienced significant growth in 2025, with the 99Bitcoins Q2 State of Crypto Market Report, authored by Manisha Mishra and sponsored by KCEX, providing a comprehensive overview. The quarter saw a surge in institutional demand, with Bitcoin ($BTC) reaching a then-all-time high of $111,980, and a 753% increase in crypto hiring.

Despite the rally, the total market cap remained 12% below its $3.7 trillion peak, indicating potential for further growth. The adoption of stablecoins and the accumulation of long-term holdings suggest that Q2 may have marked the beginning of a significant breakout in this cycle.

Bitcoin led the charge in Q2 with a 25.66% gain, surpassing gold’s 7.21% rise and most equity indices. This rally was driven by institutional inflows, ETF demand, and growing sovereign interest, with governments holding 2.5% of Bitcoin’s total supply. Spot ETF flows consistently outpaced miner issuance, tightening supply as demand surged.

Chris Wright of 21Shares noted that Bitcoin ETFs are expected to attract 50% more inflows this year compared to last year, resulting in net inflows of approximately $55 billion in 2025, an increase of around $20 billion year-over-year. A golden cross in late May confirmed the uptrend, following a clean breakout from months of consolidation, marking a textbook bullish structure.

This bull run is driven by institutional investors rather than retail traders. Nine out of ten experts interviewed in the Q2 report indicated that retail traders have shifted their focus to the best altcoins, chasing faster gains while institutions quietly accumulated Bitcoin. On-chain data shows that 30% of $BTC’s supply is now held by centralized entities, with large players dominating inflows. Retail interest in “Bitcoin” searches remained low throughout Q2, even as $BTC hit new highs.

Confidence among long-term holders also climbed, with UTXO activity dropping and the amount of BTC in long-term storage rising. This indicates that serious capital is not looking to sell anytime soon.

Stablecoins and DeFi also gained significant traction. The Circle IPO popped 168% on day one, marking the first stablecoin issuer to go public and signaling TradFi’s growing appetite for crypto exposure without the volatility. According to 99Bitcoins, 81% of crypto-aware SMBs now want to use stablecoins for daily operations, and the number of Fortune 500s planning to integrate them has tripled since last year.

On the DeFi side, Ethereum ($ETH) held L1 dominance, Chainlink ($LINK) led development activity, and $HYPE – the native token of Hyperliquid – saw serious traction, fueled by the DEX’s rise to 70%+ of all perpetual DEX volume. While others chased memes, HYPE rallied on actual utility.

After tanking in Q1, the memecoin market bounced back slightly in Q2, though volatility remained extreme and price action erratic. Q2 saw over 5.9 million new tokens launched, with most churned out via pump.fun. While most faded instantly, tokens like $FARTCOIN and $SPX kept riding the wave. However, the surge in token activity came with a dark side: phishing and wallet-targeted hacks climbed, especially among memecoin holders.

Q2 was marked by relief on both the policy and economic fronts. The U.S. pulled back on crypto enforcement, scrapped IRS reporting rules for DeFi, and signaled a more constructive stance overall. The Fed held rates steady for the fourth straight time, hinting at a possible cut in July. With unemployment flat and growth slowing, capital started flowing into safe-haven assets, and this time, Bitcoin was firmly on that list. The result was a surge in confidence, with Bitcoin ETF inflows accelerating, volatility dropping, and $BTC’s macro narrative strengthening. It’s no longer just a risk asset; it’s becoming part of the defensive playbook.

Elsewhere, $XRP finally closed its long-running legal battle with the SEC, potentially clearing the runway for a new all-time high later this year.

Looking ahead to Q3, 99Bitcoins forecasted that if BTC could flip $111K–$112K resistance, the path to $120K would open, with $135K as a stretch target. Fast forward to now, and that prediction is aging well: Bitcoin is already trading at above $118K, edging toward that psychological milestone. The report also noted $BTC was holding firm above $103K support, forming a bullish structure backed by rising miner wallet balances, shrinking exchange reserves, and growing illiquid supply – all signs of confidence from long-term holders.

However, Q3 isn’t without risk. ETF inflows could slow, and macro headwinds, from global conflict to sudden rate hikes, remain on the radar. But if institutional flows stay hot and the Fed delivers a rate cut, $135K no longer feels like a moonshot. It’s just part of the next leg up.

The 99Bitcoins Q2 report by Manisha Mishra paints a clear picture: this bull market isn’t built on retail hype. Institutions, regulatory tailwinds, and real product traction are powering it. From ETF inflows to stablecoin adoption and supply-side tightening, the signals all point toward a more mature, resilient crypto cycle. And with Bitcoin already pushing towards $120K, many of the Q2 projections are already playing out. If momentum holds, and macro conditions don’t throw a curveball, Q4 could be the real breakout.