The second half of 2025 is shaping up to be a positive period for the crypto market, according to a new report from Coinbase Institutional. The firm expects rising adoption by companies, improving economic indicators, and advancing crypto regulations in the U.S. to push digital assets like Bitcoin to new highs. However, it also warns that increasing use of debt by public companies to buy crypto could create risks in the long run.

Bullish Outlook for Bitcoin and Crypto Markets

David Duong, Head of Research at Coinbase Institutional, shared a positive forecast for the rest of the year. He expects the crypto market to rise over the next three to six months, potentially reaching new record highs. His optimism is supported by signs of stronger U.S. economic growth, possible interest rate cuts by the Federal Reserve, and a clear push toward more regulation in the crypto industry.

Coinbase believes that recent fears about a recession in the U.S. are fading. New economic data shows stronger-than-expected growth, and the impact of early 2025 trade issues appears to be easing. The report points to the Atlanta Fed’s GDPNow estimate of 3.8% growth as a key indicator of a stable economy. In this environment, crypto assets like Bitcoin and Ethereum could benefit, especially if traditional financial markets face challenges.

Corporate Bitcoin Buying Raises Concerns

While more companies are adding Bitcoin to their balance sheets, Coinbase warns this trend may carry hidden risks. According to data from Galaxy Digital, 228 public firms now hold over 820,000 BTC. Many of these firms are following a model introduced by MicroStrategy, using borrowed funds—often through convertible debt—to accumulate crypto.

This leveraged strategy has become more popular since new accounting rules took effect in late 2024. These changes allow companies to report crypto holdings at fair market value instead of only showing losses, making it more attractive to hold digital assets.

However, Duong warns that this model could cause trouble if crypto prices drop sharply. Firms using leverage might be forced to sell assets quickly to meet debt obligations. While such risks are limited in the short term, they could become a problem if market conditions worsen or if more companies adopt this strategy without proper safeguards.

“Systemic risks are rising with these debt-backed crypto buying strategies,” Duong wrote. “The good news is that most of the outstanding debt isn’t due until 2029 or 2030, and large firms can likely refinance. But we still need to watch how this trend develops.”

Bitcoin Wallet Growth and Ownership Risks

Coinbase also noted a sharp increase in the number of Bitcoin wallets holding more than $1 million worth of BTC. This suggests growing interest from wealthy individuals and institutions. However, some experts warn that the concentration of large Bitcoin holdings could hurt the asset’s image as a decentralized and stable store of value.

For instance, Sygnum, a regulated digital asset bank, recently expressed concern that the growing number of large holders might weaken Bitcoin’s credibility as a potential reserve currency for central banks.

U.S. Regulation Gains Momentum

On the regulatory front, Coinbase sees meaningful progress. After years of unclear rules and “regulation by enforcement,” 2025 is shaping up to be a turning point for U.S. crypto policy. Lawmakers are working on several bills, including the GENIUS and STABLE Acts, which could create a clearer legal framework for stablecoins and crypto market structures.

Another proposed law, the CLARITY Act, aims to define the roles of the SEC and CFTC in overseeing the crypto industry. Coinbase expects that if these bills pass, they will bring much-needed stability and confidence to the market.

Meanwhile, the SEC is reviewing around 80 crypto ETF applications, including funds linked to major altcoins like Solana, XRP, Litecoin, and Dogecoin. Decisions on these ETFs are expected between July and October and could have a significant impact on market sentiment.

Looking Ahead to Late 2025

Coinbase concludes that the second half of 2025 could be a breakout period for crypto. The combination of economic growth, company adoption, and regulatory clarity is creating a strong foundation for further gains. Still, the risks from leveraged strategies and market concentration need to be managed carefully.

For now, Coinbase remains bullish on Bitcoin and the broader crypto market, while keeping a close eye on the evolving financial strategies of public companies in the space.