The global crypto market is responding to a shifting macro landscape. With geopolitical tensions cooling and inflationary pressures easing, investor sentiment is stabilizing—creating fertile ground for innovation in decentralized applications. At the center of this transformation are stablecoins, particularly USDC, which are quietly powering a surge in consumer-facing prediction markets like Polymarket. This analysis, originally authored by David Duong CFA and Colin Basco of Coinbase and compiled by BitpushNews, explores how macro trends, regulatory developments, and emerging use cases are reshaping the digital asset ecosystem.
Geopolitical Tensions Subside, Market Sentiment Stabilizes
Since the ceasefire agreement between Israel and Iran on June 23, financial markets have seen a notable rebound. The COIN 50 Index, a benchmark for crypto market performance, has moved in tandem with U.S. equities. This shift is reflected in options markets: the 30-day 25 delta put-call skew for Bitcoin has declined from recent highs, while 90-day and 180-day contracts remain in negative territory.
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This suggests reduced demand for short-term downside protection in Bitcoin. Meanwhile, the negative skew in longer-dated options indicates growing investor appetite for exposure—without the upfront cost of spot market purchases—revealing a slight preference for out-of-the-money call options. Additionally, implied volatility for 1-week and 1-month contracts has dropped significantly, reducing the appeal of volatility-selling strategies.
Despite this optimism, uncertainty remains. Two potential scenarios could unfold:
- Status Quo with Fragile Balance: Iran continues leveraging its nuclear program and regional proxies to exert influence without crossing clear red lines.
- Limited Military Escalation: Driven by Israel’s ongoing concerns about Iran’s nuclear capabilities.
A major escalation—such as the closure of the Strait of Hormuz, which handles about 20% of global oil consumption—would be a critical red line. However, such an outcome appears unlikely. The ceasefire has diminished immediate threats, and such a move would severely damage Iran’s own economy. Therefore, a “buy the dip” strategy during geopolitical shocks remains viable, aligning with recent market outlooks.
Trade Tensions and Inflation Outlook
As the July 9 deadline for reciprocal tariff suspensions approaches (August 12 for China), progress on trade agreements remains limited. While a rare earth transport deal with China has been reached and a proposal submitted to the EU, both traditional and crypto markets have largely shrugged off potential economic risks—partly because these risks haven’t yet materialized in economic data.
Federal Reserve Chair Jerome Powell noted during congressional testimony that tariffs could impact inflation later this summer. However, goods make up only 20–25% of the core CPI basket, and it’s unclear whether companies will fully pass on tariff costs to consumers. Moreover, service prices have been declining since mid-2024 and are more sensitive to long-term trends like AI adoption.
Interestingly, tariffs may have a deflationary net effect due to reduced aggregate demand. This dynamic supports the likelihood of Fed rate cuts in the second half of 2025—a scenario that could sustain current market complacency through upcoming deadlines. Overall, trade barriers are unlikely to derail a constructive outlook for Q3 2025.
Regulatory Momentum Builds for Stablecoins
The GENIUS Act (Guiding Establishment of National Innovation with Stablecoins) passed the U.S. Senate with a 68–30 vote and is now under review in the House. House Majority Whip Tom Emmer (R-IN) aims to merge it with the CLARITY Act, the House’s market structure bill, though complexity may delay passage. Notably, President Trump has urged Congress to pass the GENIUS Act “without delay or additions.”
Meanwhile, Senator Tim Scott (R-SC), Chair of the Senate Banking Committee, indicated that a comprehensive crypto market structure bill could be finalized by September 30. On another front, Senator Adam Schiff (D-CA) introduced the COIN Act (Combatting Officials’ Income and Non-Disclosure), which would restrict senior government officials and their immediate family from issuing, sponsoring, or endorsing digital assets.
Additionally, the Federal Reserve announced it will no longer treat reputational risk as part of its bank supervision framework—a move seen as a continuation of deregulation under “Operation Chokepoint 2.0.” This change is significant: previous guidance on reputational risk had led to systemic banking exclusion of crypto businesses.
Polymarket: A Rising Star in Decentralized Prediction Markets
This week marked a milestone for Polymarket, a decentralized prediction market platform reportedly seeking a $1 billion valuation led by Founders Fund—potentially making it crypto’s newest unicorn.
Just one day later, its regulated competitor Kalshi announced a $185 million raise at a $2 billion valuation.
These developments signal a shift in venture capital focus—from liquidity-centric models (like DEXs and token chains) to consumer-facing applications with strong distribution moats. Real-time event markets are now leading the charge.
Polymarket’s traction is impressive despite regulatory restrictions preventing U.S. users from trading. Total trading volume exceeds $14 billion, with $1 billion traded in May alone. The platform sees 20,000–30,000 daily traders—surpassing many mid-cap decentralized exchanges—and successfully attracts non-crypto-native users.
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A new content partnership with X (formerly Twitter) positions prediction markets as viral social content rather than just financial tools—accelerating growth potential.
Stablecoins: The Hidden Engine Behind Prediction Markets
Behind Polymarket’s success lies a silent enabler: stablecoins, particularly USDC.
All Polymarket transactions on Polygon are settled in USDC. This activity is visible in on-chain metrics. For example, during November 2024—when headline events drove user interest—monthly volume surged to $2.5 billion, triggering spikes in USDC transfers and cross-chain bridge activity.
Unlike lending protocols that lock up large TVL (Total Value Locked), prediction markets involve rapid capital turnover. High-frequency settlements generate substantial on-chain payment volume—making stablecoins essential infrastructure.
This trend underscores a broader shift: stablecoins are evolving from simple store-of-value tools into core rails for real-time digital economies.
Coinbase Exchange & CES Market Insights
Bitcoin continues to hold near the $100,000 level, while broader markets remain range-bound. On the regulatory front, U.S. mortgage regulators have directed Fannie Mae and Freddie Mac to consider cryptocurrency holdings as assets when evaluating loan risk—a significant step toward mainstream financial integration.
Spot BTC and ETH ETFs continue seeing inflows, and Invesco has filed for a spot SOL ETF—the ninth such application to date.
These developments, combined with ongoing Middle East tensions and Powell’s dovish comments, keep traders optimistic. Perpetual contract funding rates remain in low single digits, and positions appear neutral—leaving room for further upside.
FAQ: Common Questions About Stablecoins and Prediction Markets
Q: Why are stablecoins like USDC crucial for prediction markets?
A: They enable fast, low-cost settlements without price volatility—essential for high-frequency trading environments like prediction platforms.
Q: Can prediction markets be used outside politics or elections?
A: Absolutely. Markets now cover sports outcomes, tech releases, economic data, celebrity events, and more—expanding their utility beyond traditional finance.
Q: How do regulatory changes affect platforms like Polymarket?
A: While U.S. users face restrictions today, clearer frameworks like the GENIUS Act could open compliant pathways for broader access.
Q: Are stablecoins safe during geopolitical crises?
A: Generally yes—especially regulated ones like USDC with transparent reserves and audited backing.
Q: What drives investor interest in platforms like Kalshi and Polymarket?
A: Real-time engagement, ease of use, and the ability to monetize information—similar to social trading but with event-based outcomes.
Q: Will Coinbase benefit from rising stablecoin usage?
A: Yes—through increased trading volume, USDC issuance revenue, and expanded financial product offerings like staking and lending.
👉 Explore how leading platforms are integrating stablecoins into next-gen financial services.
Final Thoughts
As geopolitical risks ease and macro conditions favor rate cuts, attention is shifting toward innovation in consumer crypto applications. Stablecoins—especially USDC—are emerging not just as payment tools but as foundational infrastructure for dynamic digital economies. With regulatory clarity on the horizon and platforms like Polymarket gaining traction, the stage is set for a new wave of adoption driven by real-world utility—not speculation.
Keywords: stablecoins, USDC, prediction markets, Polymarket, Coinbase, GENIUS Act, Federal Reserve, decentralized applications