May Milestones: New BTC Highs, ETH Surge, and Evolving Speculation
This post is part of Galaxy Lending’s Monthly Market Commentary, offering insights into trends shaping the crypto credit and lending landscape. Subscribe to receive this commentary and more directly to your inbox.
In this report:
US Regulators Shift Focus to Perp Markets and Structured Crypto Oversight
Corporate Treasuries Embrace Bitcoin and Ethereum for Strategic Reserves
Traditional Finance Moves into Crypto Lending, Trading, & On-Chain Credit
Market Update
The crypto market saw a significant resurgence in May, led by BTC breaking to a new all-time high of $111,970 on May 22. This milestone was driven by a combination of strong institutional flows, favorable macro conditions, and persistent demand for leveraged exposure. One of the most notable drivers was the influx of capital into U.S. spot Bitcoin ETFs, which attracted over $5.2 billion in net inflows during the month—marking a record high for the year and reinforcing BTC’s growing role as a macro asset. Two major industry events—Consensus Toronto and the Bitcoin Conference in Las Vegas—also fueled positive sentiment and increased visibility around digital assets.
Onchain BTC funding rates remained elevated, with Hyperliquid recording a peak annualized rate of 161.26% on May 21, underscoring intense long positioning ahead of the price breakout. Simultaneously, the 3-month futures annualized rolling basis hovered between 5% and 8.5%. Open interest in BTC futures expanded from $16.3 billion to $18.2 billion, with a monthly peak of $20.3 billion, reflecting increased conviction and leverage across the market.
ETH also posted a strong performance, rising approximately 41% in May—from ~$1,795 to ~$2,530—fueled by growing anticipation around the upcoming Pectra upgrade and a renewed investor focus on Layer 1 narratives.
Key Trends:
001
U.S. Regulators Shift Focus to Perp Markets and Structured Crypto Oversight
In May, U.S. regulators signaled a clear shift in their approach to crypto oversight. The SEC formally dropped its lawsuit against Binance and founder Changpeng Zhao (known as CZ) on May 29, marking a move away from aggressive enforcement. This was followed by SEC Chair Paul Atkins' announcement of plans to introduce tailored rules for crypto token issuance, custody, and trading—aiming for a more innovation-friendly regulatory environment.
Complementing this shift, the Digital Asset Market Clarity Act of 2025, known as the CLARITY Act, was introduced to define the roles of the SEC and CFTC, with the latter expected to gain more authority over derivatives and perpetual futures. These developments suggest perp markets are moving into regulatory crosshairs, potentially bringing new requirements for lending desks and liquidity providers. The focus is now turning from litigation to structural regulation, especially around leveraged trading infrastructure.
002
Corporate Treasuries Embrace Bitcoin and Ethereum for Strategic Reserves
In May, institutional adoption of Bitcoin and Ethereum as treasury assets surged, signaling growing confidence in digital reserves. Strike not only added BTC to its balance sheet but also launched a lending product based on a core thesis of never rehypothecating BTC, which founder Jack Mallers reinforced this stance in a June 4, 2025 X post, highlighting updates to Strike’s User Agreement that removed the notion of “re-hypothecation”. Jack Mallers also leads, Twenty One Capital, which acquired over 4,800 BTC, while GameStop revealed a purchase of 4,710 Bitcoin tokens. Other companies such as Mega Matrix, K33, and Trump Media also unveiled new BTC or ETH treasury strategies.
Concurrently, interest in Wrapped Crypto Treasuries rose as firms sought tokenized yield-generating assets to diversify reserves and enhance collateral frameworks. This trend underscores crypto’s transformation from a speculative instrument into a foundational element of corporate financial infrastructure. That said, crypto’s role in corporate treasuries remains subject to risks, including market volatility, regulatory scrutiny, and operational challenges related to custody, accounting, and liquidity. We highlight the importance of reviewing offering documents—such as convertible note terms—to better evaluate these risks.
003
Traditional Finance Moves into Crypto Lending, Trading, and On-Chain Credit
May saw a major step forward in traditional finance’s integration with crypto infrastructure. Cantor Fitzgerald became the one of the first notable Wall Street firms to execute crypto backed loan with Maple Finance and FalconX to expand into institutional crypto credit. At the same time, Morgan Stanley revealed plans to offer crypto trading to its electronic trading clients, and JPMorgan began providing crypto-backed loans, allowing clients to post crypto ETFs as collateral. These moves reflect a broader shift: traditional institutions are now embedding crypto products into core lending and trading operations.
Related Research:
The State of Crypto Leverage: Galaxy Research provides a comprehensive view of the leverage that has accumulated in the crypto economy. This report covers similar topics as our last report, The State of Crypto Lending, with additional CeFi and DeFi venues included in the tally of crypto-collateralized lending. This report widens the lens on leverage to include bitcoin treasury companies and futures markets.
Notable News:
Maple Finance, FalconX secure Bitcoin-backed loans from Cantor Fitzgerald
Morgan Stanley to Offer Crypto Trading to E*Trade Customers
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