KuCoin Ventures Weekly Report: Crossover Capital Flows: Analyzing the Crypto-Stock Linkage Frenzy, Market Capital Signals, and Predicting the Next Market Frontier
Powered by ChatGPT1. Weekly Market Highlights
Hong Kong's Pro-Crypto Push Sparks 'Crypto-Equity' Trend, Balancing Opportunity and Risk
A distinct trend is emerging in global capital markets: the convergence of crypto assets and equities. In the United States, landmark firms like Circle, Coinbase, and MicroStrategy have recently led a rally in crypto-related stocks, supported by legislative progress such as the Genius Act. MicroStrategy, in particular, pioneered a valuation rerating narrative by incorporating crypto assets onto its balance sheet. This model is evolving from an anomaly into a replicable trend, inspiring companies like SharpLink Gaming and DFDV to follow suit. However, this strategy is accompanied by significant financial risks stemming from the high volatility of crypto assets and ongoing regulatory uncertainty.
In contrast, Hong Kong is forging its own path with a clear and evolving regulatory blueprint. Through a series of coherent policy moves, the city is progressively enhancing its regulatory framework. From the earlier passage of the Stablecoin Ordinance to the recent "Hong Kong Digital Asset Development Policy Manifesto 2.0" and a draft licensing regime for digital asset services, Hong Kong is committed to establishing a unified, industry-wide regulatory framework that covers trading, custody, and asset management. Specifically, the implementation of the Stablecoin Ordinance has laid the institutional cornerstone for stablecoins to move beyond trading instruments into real-world use cases like cross-border payments. The news prompted a rally in related stocks such as JD.com and ZhongAn Online, fueling market expectations for Hong Kong to become an international stablecoin hub.
Concurrently, as Singapore tightens its crypto regulations, whether Hong Kong's stock market can absorb regional crypto capital flows has become a variable worth watching. More significantly, on June 25, Guotai Junan International became the first mainland Chinese brokerage to receive approval for virtual asset trading and advisory services in Hong Kong, causing its stock to surge over 190% intra-day. These developments, along with the entry of brokerages like Tiger and Futu via HashKey Exchange's omnibus model, send a clear signal that traditional finance is accelerating its embrace of Web3.
These favorable policy tailwinds have rippled through to the secondary market, increasing both the "crypto exposure" of Hong Kong stocks and market attention. Boyaa Interactive, which has been consistently purchasing crypto assets since 2023, held approximately 3,351 $BTC and 297 ETH as of March this year. Its stock has risen significantly since April, serving as a case study in value discovery for the "crypto accumulation" strategy on the Hong Kong stock market. Other companies with crypto holdings, such as Goufu Innovation and Blueport Interactive, along with crypto service providers like OKG Technology and New Huo Technology, have also become focal points for capital, forming a nascent "crypto-equity" sector.
Nevertheless, a cautious perspective on this trend is warranted. While Hong Kong's policy progress is commendable, its crypto ecosystem has clear shortcomings in overall activity, the scale of leading companies, and industry cluster effects. The market's capacity is limited, and compliance, in some respects, acts as a double-edged sword. Therefore, the current "crypto-equity" wave in Hong Kong may be driven more by sentiment and narrative than fundamentals, and its sustainability remains questionable. For this trend to evolve into a sustainable, independent market trajectory, the key will be whether these companies can translate the crypto narrative into tangible business adoption and user growth, thereby justifying a fundamental rerating of their valuations.
2. Weekly Selected Market Signals
Bitcoin Continues to Rally as Powell Highlights Robust U.S. Economy and Corporate Buying Bolsters Support
Tensions in the Middle East have had minimal impact on U.S. stock markets, with risk appetite rising, driving a significant $BTC rebound. Federal Reserve Chair Jerome Powell, in his congressional testimony, described U.S. economic activity as robust but offered no clear indication on whether a July rate cut is forthcoming.
Data from Bitcoin Treasuries shows that 250 companies or entities globally now hold 3.47 million $BTC, with 140 being publicly listed firms. Over the past 30 days, 22 companies or entities announced their first $BTC purchases or holdings. Notable transactions last week include Anthony Pompliano’s Bitcoin vault company, ProCap, which acquired 3,724 $BTC at an average price of $103,785 (approximately $387 million) and plans to hold $1 billion worth of BTC. Sustained corporate buying continues to provide strong support for $BTC prices.
Data Source: Trading View
Bitcoin ETFs recorded net inflows of $2.22 billion last week, marking the third time this year that weekly net inflows surpassed $2 billion. This sustained three-week inflow streak underscores the robust institutional backing bolstering $BTC prices. Meanwhile, Ethereum ETFs achieved a historic milestone with seven consecutive weeks of net inflows. Moving forward, opportunities in Ethereum’s blue-chip DeFi ecosystem warrant close attention.
Data Source: SosoValue
Data Source: CoinMarketCap
The supply of USDT has maintained its upward trend, increasing by approximately $1.77 billion over the past seven days, while USDC saw a rise of about $556 million. Notably, last week, Circle’s stock market capitalization temporarily exceeded the market value of USDC’s circulating supply, reflecting a wave of irrational exuberance.
Data Source: FED Watch Tool
In the short term, markets assign an 81.4% probability to the Federal Reserve maintaining the current 4.25%-4.50% interest rate range at the July 30 meeting, with an 18.6% chance of a cut to 4.00%-4.25%. This aligns with Federal Reserve Chair Jerome Powell’s reticence on rate cuts during his congressional testimony. Looking ahead, the likelihood of rate reductions increases for the three remaining FOMC meetings this year. By December, markets project a 47.3% probability of rates falling to 3.50%-3.75%, reflecting growing expectations for further cuts.
Key Macro Events to Watch This Week:
June 30–July 2: ECB Central Banking Forum in Sintra
July 1, 22:00: U.S. June ISM Manufacturing PMI
July 2, 20:15: U.S. June ADP Employment Report
July 3, 19:30: ECB June Monetary Policy Meeting Minutes 20:30: U.S. June Unemployment Rate and Nonfarm Payrolls
July 4: Deadline for Trump’s Tax and Spending Bill
Primary Market Financing Observations
Data Source: cryptorank
Last week, the primary market recorded a total financing amount of $1.85 billion, marking the fourth-largest weekly financing haul of 2025. The leading sector was prediction markets, with Polymarket raising $200 million at a valuation exceeding $1 billion and Kalshi securing $185 million, led by Paradigm, at a $2 billion valuation.
Prediction markets allow participants to bet on the outcomes of future events, typically centered around whether a specific event will occur, such as a candidate winning an election or a sports match outcome. Structurally, prediction markets are nearly identical to binary options, both relying on predicting future outcomes with binary results (yes/no, up/down, win/lose) and featuring fixed risk and reward profiles, where participants know potential gains and losses upfront. The primary differences lie in their application and intent: prediction markets focus on aggregating information and forecasting probabilities, while binary options are more explicitly financial instruments. However, regulatory frameworks for prediction markets and binary options vary significantly across jurisdictions.
In the U.S., the CFTC classifies prediction markets as derivatives, akin to binary options, requiring trading on regulated Designated Contract Markets (DCMs). Binary options are legal only on regulated U.S. platforms. Currently, 16 DCMs in the U.S. offer binary options trading to residents, with Kalshi being one. Applying for DCM status involves extensive documentation and a review process that can take up to 180 days. Applicants must operate as exchanges for futures, futures options, or commodity options, submit applications via the CFTC’s Part 38 Appendix A, and demonstrate compliance with 23 core principles, including governance, risk management, and customer protection. For securities-based futures, joint oversight by the CFTC and SEC is required. Even after obtaining DCM status, platforms face ongoing CFTC supervision, including regular rule enforcement reviews. Regulatory complexities persist, as seen with Kalshi’s sports prediction markets, which sparked disputes with state regulators in Nevada and New Jersey, who argued for state-level gambling oversight, while Kalshi maintained its CFTC license applies nationwide.
In the European Union, prediction markets face less defined regulations and may be classified as gambling, subject to member states’ gaming laws. Binary options, due to their high risk and potential for fraud, are banned for retail investors, with only professional investors meeting strict criteria allowed to trade on regulated platforms.
In mainland China, binary options are strictly prohibited as illegal financial activities. Unauthorized platforms are deemed illegal, and investors face legal risks. In Hong Kong, binary options are tightly regulated, requiring approval from the SFC and primarily serving institutional investors.
In Japan, binary options are heavily regulated, requiring approval from the Financial Services Agency (FSA), with platforms adhering to transparency and investor protection standards, primarily catering to institutional investors. Retail participation is restricted, and trading cycles are typically set longer, such as over seven days, to mitigate risk. Prediction markets, if tied to financial assets, may fall under FSA derivatives regulations, while non-financial markets could be treated as gambling under Japan’s gambling laws.
Structurally, Kalshi and Polymarket are nearly identical, with the key distinction being compliance. As a U.S. DCM, Kalshi can directly serve U.S. residents, while Polymarket explicitly excludes them. Kalshi supports crypto deposits but requires email-based logins, whereas Polymarket offers seamless wallet integration, aligning with its Web3-native investor base, including Polychain and Founders Fund, compared to Kalshi’s Web2-leaning backers like Y Combinator and Sequoia. Polymarket has gained stronger market reputation, particularly during Trump’s campaign, dominating news cycles and securing an official partnership with Twitter. Despite Polymarket’s higher market influence, Kalshi’s U.S. license and compliance give it a competitive edge. The most direct clash for market share will likely occur during the U.S. midterm elections in November and the 2026 World Cup.
3. Project Spotlight
Recently, while the crypto-native market has been relatively calm, a frenzy sparked by "financial crossover" is intensifying in the traditional secondary stock market. A notable trend is that traditional finance (TradeFi) and the crypto world are no longer parallel lines but have begun an active, two-way integration. Whether it's traditional brokerages entering the virtual asset space or crypto giants strategically positioning themselves in tokenized securities, these moves have captured significant attention from the capital markets.
Hong Kong Brokerages Accelerate Virtual Asset Expansion, with Market Enthusiasm Driving Up Stock Prices
The upgrading of licenses for crypto-asset (referred to as "virtual assets" by Hong Kong regulators) businesses is becoming a catalyst for Hong Kong's brokerage sector. On June 24, 2025, Guotai Junan International (01788.hk) announced that its Hong Kong subsidiary had received an upgraded license to provide virtual asset trading services to its clients. The news quickly ignited the market, causing the company's stock price to soar by 167.26% within a week. Its holdings through the Hong Kong Stock Connect doubled month-over-month, and its trading volume hit a new historical high. Subsequently, the market enthusiasm spread to other brokerages, with similar concept stocks like Tianfeng Securities also experiencing a temporary surge, even though its Hong Kong subsidiary had already obtained the relevant qualifications in mid-2024.
In fact, Hong Kong has already made deep inroads into the virtual asset trading space. As of now, 41 institutions (the vast majority being brokerages) have been approved to offer such services, in addition to 11 licensed virtual asset trading platforms. Against this backdrop of a crowded supply side, the approval of a single license can still trigger such dramatic stock price volatility, which, to some extent, reflects that current market sentiment may have outpaced fundamentals.
Obtaining a license is just the starting point. For brokerages to convert this qualification into sustainable revenue and profit, they still face numerous challenges. These include intense industry competition, the costs of customer education and market development, and the inherent high-volatility risks of the virtual asset market itself. It is worth noting that brokerages currently act primarily as trading intermediaries or brokers. Their business model is relatively simple, and their actual contribution to overall company revenue is likely to be very limited in the short term.
Undoubtedly, the active embrace of virtual assets by traditional brokerages is a significant step in line with the development of fintech, and its long-term strategic importance is commendable. However, the current stock price surge is driven more by market sentiment and optimistic expectations. In this initial phase, where business models are not yet mature and profit contributions remain unclear, there may be a temporary disconnect between market valuation and corporate fundamentals.
Crypto Giants Counter-Infiltrate, with Tokenized Stocks Becoming the New Battlefield
While traditional finance explores the crypto domain, an equally strong reverse trend is forming: native giants from the crypto world are using "tokenized stocks" as their core weapon to strategically penetrate the traditional securities market.
Crypto exchange Gemini announced on June 28 that it has begun offering tokenized stock trading services to users in the European Union, with Strategy (MSTR) as the first available asset. This move not only grants users the same economic rights as holding the actual stock within a compliant framework but, more importantly, allows the assets to be freely transferred on-chain, greatly enhancing transparency and global liquidity.
Similarly, following a successful pilot of its deposit token, Coinbase's Chief Legal Officer recently disclosed that the company is actively seeking a "no-action letter" from the U.S. SEC, with the clear goal of compliantly launching tokenized stock trading for its broad U.S. user base. Meanwhile, Robinhood, which previously acquired Bitstamp, is also poised for action. Its executives have announced a major crypto-related release for June 30, with widespread speculation that it may involve developing a Layer 2 blockchain and enabling European users to trade U.S. assets.
From products already launched to clear regulatory filings and upcoming market releases, the roadmaps of these crypto giants point to a single strategic objective: to introduce traditional financial assets into their familiar crypto trading environments. This serves to enrich their product matrix and enhance user stickiness, functioning more as a product line extension aimed at serving and retaining their existing user base.
About KuCoin Ventures
KuCoin Ventures, is the leading investment arm of KuCoin Exchange, which is a top 5 crypto exchange globally. Aiming to invest in the most disruptive crypto and blockchain projects of the Web 3.0 era, KuCoin Ventures supports crypto and Web 3.0 builders both financially and strategically with deep insights and global resources.
As a community-friendly and research-driven investor, KuCoin Ventures works closely with portfolio projects throughout the entire life cycle, with a focus on Web3.0 infrastructures, AI, Consumer App, DeFi and PayFi.
Disclaimer: This content is provided for general informational purposes only, without any representation or warranty of any kind, nor shall it be construed as financial or investment advice. KuCoin Ventures shall not be liable for any errors or omissions, or for any outcomes resulting from the use of this information. Investments in digital assets can be risky.