January 21st, 2025
Market Overview:
Digital assets recovered strongly from last week’s macro-driven fall, with Bitcoin setting new records as the market switched to optimism ahead of the new Republican administration.
- Bitcoin hit another new record high this week, exceeding $109,000 during investor enthusiasm ahead of Donald Trump’s presidential inauguration and the anticipated pro-crypto Republican administration
- However, Bitcoin and the wider market then pulled back from these new highs after Trump didn’t mention the industry during his inaugural address, as traders and investors awaited more specifics and Trump’s anticipated executive order for the industry
- Bitcoin displayed volatility and traded across a broad range throughout the week, growing from a Tuesday low of $94,840 to a Monday high of $109,110
- Ether’s chart pattern differed from Bitcoin’s, as it peaked on Saturday at $3,521, before dropping sharply to a Sunday low of $3,144
- Overall industry market capitalisation increased by $230bn to $3.52tn
- Enthusiasm around the new administration (and volumes around the new Trump memecoins) led to record highs for some of the largest altcoins in the market
- In total, five of the top 20 projects by market capitalisation exceeded 20% weekly growth
- According to industry monitoring site DeFi Llama, total value locked in DeFi increased to $121.8bn
Digital assets had an historic week, in terms of both performance and developments. The anticipated pro-crypto attitude of the Trump administration was illustrated by the actions of the 47th president when he launched his own crypto project a few days before his inauguration. Digital asset ETFs displayed strong inflows, several banks globally increased their involvement with the asset class, VCs made major investments, several US states submitted Strategic Bitcoin Reserve bills, and much more.
What happened: Donald Trump launches personal crypto project ahead of inauguration
How is this significant?
- One of the major international news stories this week was the inauguration of Donald Trump as the 47th president of the United States on Monday—but Trump also ensured he was the first president to ever launch their own crypto project
- Late on Friday, he launched $TRUMP on the Solana blockchain, touting it as the “official” Trump memecoin
- Trump promoted the new coin as an “expression of support” rather than an investment, posting “It’s time to celebrate everything we stand for: WINNING! Join my very special Trump Community”
- Whilst we generally avoid coverage of memecoins in our newsrounds due to their largely ephemeral nature and lack of fundamentals, this is a significant outlier; endorsed by the president(-elect) of the United States of America
- Within 48 hours, TRUMP had surged to an overall market capitalisation of around $15bn, before pulling back to $10bn at inauguration on Monday
- However, in another unexpected twist, TRUMP soon experienced large declines, as first lady Melania Trump announced the launch of her own official memecoin, causing massive capital flow of TRUMP profits reinvesting in MELANIA
- Mrs Trump’s memecoin itself surged to a multi-billion marketcap, before dropping harder than TRUMP
- Reception within the industry itself was far from enthusiastic; tech billionaire Mark Cuban described memecoins as “a game of musical chairs”, and others cited ethical concerns amidst claims that “it distracts from the greater good” of the technology
- Cuban did later propose his own memecoin, but with actual utility involving the automated purchases of US treasuries to help the national debt
- SkyBridge Capital CEO (and former Trump press secretary) Anthony Scaramucci tweeted “The Trump memecoin stuff is bad for the industry. Don’t delude yourself. It’s Idi Amin level corruption”
- Pro-crypto congressman Ro Khanna commented “Elected officials must be barred from having memecoins by law. Memecoins are highly speculative and like gambling must be regulated by the SEC. They are neither neutral money (not controlled by insiders) nor platforms for innovation”
- Bloomberg’s chief ETF analyst Eric Balchunas opined “I get it’s probably being done to add to the enthusiasm for the dawn of a new era but it seems exploitative. Unforced error in the making in my opinion”
- However, Bernstein analysts described the launch as “a massive paradigm shift”, which “signifies a new regulatory era, where governments see crypto as a technology to reach out to the masses directly”
- The analysts added “Given the previous US regulatory regime was about crackdown on crypto builders and enforcement actions on token-related activities, a token launch by the President is a huge social signal to US builders”
- Whilst memecoins have less of a fundamental value proposition than other digital assets, and are far more volatile and prone to quick boom-bust cycles, the launch of TRUMP could be viewed as a signal of the president’s broader support for digital assets as a whole
- Additionally, some observers believe that TRUMP’s success could encourage other major public figures and entities to issue their own tokens in order to leverage support and cultural cachet—although ideally such projects would also integrate some utility
What happened: ETF News
How is this significant?
- Digital asset ETFs moved back into inflow mode, as investors eagerly anticipated a new Republican administration
- According to CoinShares data published on Monday, digital asset investment products experienced $2.2bn inflows in the week ending Friday the 17th
- This represented the highest inflows of the year thus far (and the most in five weeks), bringing total AUM to a new record high of $171bn
- Bitcoin represented the majority of these inflows with $1.9bn, followed by Ether ($246m) and Ripple’s XRP ($31m)
- Spot Bitcoin ETFs logged consecutive major inflows, bouncing back from $210m outflows last Tuesday with four trading days above $600m
- Wednesday added $755m, followed by $626m, and $975m
- The leading funds continued to build on a strong first year, as BlackRock’s IBIT, Fidelity’s FBTC, and ARK Investments’ ARKB all experienced multiple nine-figure inflow days
- IBIT led with days adding $578m and $326m, FBTC featured $463m and $326m inflows, and ARKB accrued $139m and $155m
- Bitwise’s BITB also logged nine-figure flows ($208m on Friday), whilst Grayscale’s converted GBTC fund ended the last five trading days with a net positive flow; a rarity since launch
- This concluded another truncated trading week, as US markets closed on Monday for the Martin Luther King Jr Day public holiday
- Spot Ether ETFs also featured consistent inflows, albeit at more modest levels
- Tuesday inflows were essentially at breakeven levels with $1.2m net across all funds, followed by daily flows of $60m, $167m, and $24m
- BlackRock’s ETHA and Fidelity’s FETH accounted for the most of these flows, as they added $111m and $70m respectively on Thursday
- In other ETF news, Bloomberg ETF analysts predicted that there could be over 50 separate crypto ETFs launched in 2025, calling it “the year of crypto ETFs”
- The firm’s chief ETF analyst Eric Balchunas noted that a “massive crypto filing frenzy” came in on the 17th of January, adversarial SEC chair Gary Gensler’s last day in charge of the SEC
- One key aspect of crypto ETF growth was a prediction that Vanguard could open up access to such products, after gating them thus far
- This included coins across the digital asset spectrum, although they believe that “Bitcoin will still bring in the big boy flows”
- A 19b-4 filing from Canary Capital signalled that a Litecoin ETF could be imminent, potentially opening one of the oldest digital assets (sometimes described as the “digital silver” to Bitcoin’s “digital gold”) to more investors
- Bloomberg ETF analyst James Seyffart noted “If or when the SEC acknowledges this filing we will have more definitive idea of timelines for a potential denial or approval”
- JP Morgan analysts predicted that new altcoin ETFs could potentially attract as much as $14m in capital flows, based on the relative adoption rate of existing spot crypto ETFs
- Specifically, they believe that Solana ETFs could gain between $3bn and $6bn within a year of launch, whilst XRP ETFs could add $4bn to $8bn
- Analysts led by Kenneth Worthington however cautioned that “The key question here remains the uncertainty of investor demand for additional products and whether new crypto ETP launches will matter”
- Beyond the US, Thailand is reportedly “considering allowing individuals and institutions to invest in local Bitcoin ETFs”, according to local SEC Secretary-General Pornanong Budsaratragoon
- Budsaratragoon told Bloomberg “Like it or not, we have to move along with more adoption of crypto assets worldwide. We have to adapt and ensure that our investors have more options in crypto assets with proper protection”
What happened: BlackRock details more wealth advisors entering digital assets
How is this significant?
- In a Bloomberg interview this week, BlackRock’s digital asset head Robert Mitchnick spoke at length about the evolution of the digital asset market, and the changing profile of investors
- Speaking in relation to the firm’s record-setting IBIT spot Bitcoin ETF, Mitchnick said “It’s important to remember that a vehicle for IBIT is a vehicle for lots of investors”
- Heading into year two, BlackRock will continue acting “as a resource and education partner”, as it remains “quite early days in terms of the adoption of the wealth advisory and institutional segment”
- Mitchnick highlighted wealth advisory as a key growth area, noting initial due diligence hurdles have given way to “momentum as they work through expedited approval processes”
- He revealed that there were 682 unique filers in the Q4 2024 13-f reporting period; “a pretty broad investor base”
- Mitchnick also eschewed any comparisons between BlackRock and Bitcoin-centric MicroStrategy, stating “We’re not buying and selling Bitcoin for ourselves. This is for our investors”
What happened: Banks increase crypto involvement internationally
How is this significant?
- Digital assets and banking have traditionally had a fraught relationship; no great surprise, since crypto was developed partly in response to numerous failures within the banking industry leading to the 2008 Global Financial Crisis
- However, as the asset class has grown, it has also grown too big for traditional financial infrastructure to ignore, leading more and more banks to offer crypto asset services for clients
- In Switzerland, the state-owned PostFinance bank added to existing digital asset custody services by opening Ether staking to customers (with staking for other coins and tokens to follow)
- Elsewhere in the alpine nation, crypto-focused Sygnum Bank (a partner in PostFinance's digital asset provisions), achieved a unicorn valuation following its latest funding round
- The oversubscribed “strategic growth round” was led by Fulgur Ventures, and will fund expanded Bitcoin offerings and potential acquisitions
- This valuation came after 1,000% year-on-year trading growth, as CEO Mathias Imbach explained "Last year was a watershed moment in terms of the convergence of traditional finance and decentralized infrastructure, in particular with Bitcoin with the ETF approval"
- A new petition in Switzerland aims to compel the conservative Swiss National Bank (SNB) to invest in Bitcoin
- Local crypto advocate Rino Borini claims “People here certainly show more interest and openness for Bitcoin as a store of value than in neighboring countries. It’s like with cash. The Swiss like it for its security and privacy”
- Just north of the Alps, Intesa Sanpaolo (Italy's largest bank) confirmed a first-ever $1m spot purchase of Bitcoin via an email from digital asset trading and investments head Niccolò Bardoscia. CEO Carlo Messina told reporters "It’s very small amounts... It’s an experiment, a test"
- He added that customer interest was driving these efforts; “We won’t become a Bitcoin provider but we need to know how to do so if our bigger clients ask us to”
- Boerse Stuttgart later confirmed that it executed the trade for Intesa through its institutional crypto platform (which now accounts for a quarter of its revenue)
- It is perhaps no coincidence that the timing of this purchase came soon after the adoption of EU-wide crypto rules via the new MiCA regulations which provide clarity for institutions across the continent
- Meanwhile in the US, a majority of SEC commissioners (acting chair Mark Uyeda, Hester Peirce, and incoming chair Paul Atkins) all favour the withdrawal of SAB121, which massively complicated crypto custody for banks
- Banking in the US was viewed as particularly adversarial during the Biden regime, leading to industry allegations of a deliberate “Operation Chokepoint 2.0” debanking effort
- TD Cowen analyst Jared Seiberg wrote that “We expect [interim FDIC chair Travis] Hill will advance a proposal that both clarifies that banks can engage in crypto activities and specifies when regulators must first approve an activity. It also likely will include strict deadlines for the FDIC to act”
- Hill recently claimed that the banking regulator “stifled innovation and contributed to a public perception that the FDIC is closed for business if institutions are interested in anything related to blockchain or distributed ledger technology”
What happened: Solana wallet project achieves $3bn valuation
How is this significant?
- Phantom Technologies, developers of the leading wallet software for smart contract blockchain Solana, closed a nine-figure investment round this week that saw the company valued at $3bn
- The $150m Series C funding round was led by Sequoia Capital and Paradigm
- This represents a significant increase on the $1.2bn valuation of the developer’s 2022 funding round, also led by Paradigm
- Phantom has benefited greatly from Solana’s rise over the last few year’s, as the blockchain’s low transaction fees have made it a hotbed for the launch and trading of highly-speculative memecoins
- CEO and co-founder Brandon Millman commented that “I feel like we are in the perfect spot to actually use crypto to act as a weapon to supplant [payment app] incumbents like PayPal, Cash App, Revolut, Venmo”
- Although digital asset VC funding is now growing for the first time since 2021, Paradigm co-founder Matt Huang believes money is spent in a much more considered way; “We went through a period of relative winter where there was less fundraising activity in general. The bar is much higher today to make a growth-stage crypto investment than it may have been three years ago”
- In other wallet VC news, a VC backed by Abu Dhabi’s sovereign wealth fund this week invested $16m in wallet tech developers Dfns
- CEO Clarisse Hagège commented “In 2025, more large financial institutions will enter the space, so the timing is right for us to accelerate”
What happened: Nomura-backed firm Komainu raises funds in Bitcoin
How is this significant?
- Crypto custody company Komanu completed a $75m raise this week—but one with a twist
- The firm—backed by Japanese finance giant Nomura’s digital asset arm—received the funding from investors Blockstream, but the amount was denominated entirely in Bitcoin
- Komainu said it will use the Bitcoin funds to “expedite the custody firm's strategic growth plans and for the adoption and integration of Blockstream technologies”
- Co-CEO Paul Frost-Smith commented that the scale of the raise was “testament to our determination to become the go-to provider of digital asset services for Bitcoin and the institutional market”
- Blockstream is one of the first Bitcoin infrastructure companies, founded over a decade ago, and will provide collateral management and tokenisation services under the terms of the deal
- Additionally, Blockstream founder and CEO Adam Back will join the Komainu board of directors, alongside two other Blockstream executives
- In other Bitcoin treasury news, Tether-backed video sharing platform Rumble executed its first Bitcoin purchase as part of a $20m treasury allocation plan
What happened: Political news
How is this significant?
- The digital asset industry eagerly awaited the inauguration of Donald Trump as president this week, anticipating an immediate prioritisation of the crypto industry—but was left slightly deflated after going unmentioned in his address
- Reports from various sources earlier in the week suggested that Trump would designate digital assets as a national priority; but it appears they aren’t an immediate priority
- On Friday night, industry bigwigs and executives sponsored and attended the first-ever Washington “Crypto Ball”, celebrating the imminent arrival of a pro-Bitcoin president
- The event featured performances from major artistes including Snoop Dogg, but also more pertinently from a political standpoint attendees like House Speaker Mike Johnson
- The industry expects greater regulatory clarity (and support) under a Republican administration
- What appears certain is that the SEC will be less aggressively antagonistic towards the asset class, under the stewardship of digital asset supporters Paul Atkins, Hester Peirce, and Mark Uyeda
- The outgoing SEC leadership left a “parting gift” of sorts for the industry, filing and settling several enforcement actions on the last business days of Gary Gensler’s tenure as chair of the agency
- Digital asset lawyer Sahel Assar stated that settlements were a positive sign for the industry, as “Rather than linger, better to close out and repurpose under an administration that’s going to be much, much more friendly to this technology. It’s a way of dusting the past and getting ready for the future”
- Binance.US CEO Norman Reed won’t lament the departure of Gensler from the SEC, as he told industry publication Coindesk “We’ll never get recompense for the damage the SEC did to us… It's ironic that a U.S. financial regulator would essentially create a bank run at a company, which is what they did”
- He added “The DOJ looked at us, the U.S. Attorney's Office for the Southern District looked at us. The CFTC looked at us. OFAC and FinCEN looked at us—and when I say they ‘looked,’ I mean they did a thorough examination of us—but they all left us alone. We were outside of what happened to Binance Global and [CEO Changpeng] CZ [Zhao]. The only entity that went after us was the SEC”
What happened: US States move to establish strategic Bitcoin reserves
How is this significant?
- Although Donald Trump’s exact plans and potential policies for a strategic Bitcoin reserve remain unclear at this precise moment in time on a federal level, numerous state legislators moved this week to propose digital asset stockpiles on a state level
- Wyoming representative Jacob Wasserburger submitted a bill to create a strategic Bitcoin reserve, allocating up to 3% of eligible state funds towards the stockpile
- Senator Cynthia Lummis, one of the most vocal crypto supporters in Congress, supported the move
- California lawmaker Phillip Chen is consulting with the Proof-of-Workforce nonprofit to develop a strategic reserve policy for the nation’s wealthiest state to potentially implement
- Chen told Bitcoin Magazine “As to where and how Bitcoin and digital assets get into the trajectory of California, much is undetermined. What is certain is that this industry is growing in adoption every day, with Bitcoin serving as a global network and asset, representing 2 trillion dollars in value. Therefore, it’s important we take a meaningful look into its role in our great state of California”
- Massachusetts senator Peter Durant introduced Senate Docket 422 (SD422); “An Act Relative to a Bitcoin Strategic Reserve”
- The Act proposes an upper limit of 10% of the state’s Commonwealth Stabilization Fund allocated towards Bitcoin, equivalent to roughly $800m annually
- Oklahoma representative Cody Maynard proposed a “Strategic Bitcoin Reserve Act”, allowing state pension and savings funds to invest in the asset
- Maynard stated “Bitcoin represents freedom from bureaucrats printing away our purchasing power. As a decentralised form of money, Bitcoin cannot be manipulated or created by government entities. It is the ultimate store of value for those who believe in financial freedom and sound money principles”
- New Hampshire representative Keith Ammon recently submitted a similar bill, alongside existing efforts currently underway from Ohio, Pennsylvania, and Texas
- In total, Bitcoin educator and lobbyist Dennis Porter claims that 15 states will introduce or propose strategic Bitcoin reserve legislation in 2025
What happened: World Liberty Financial DeFi project increases activity ahead of Trump term
How is this significant?
- World Liberty Financial (WLF), a DeFi project backed by Donald Trump and several of his sons, increased its activity ahead of his inauguration this week, after its token sales sped up
- Digital asset entrepreneur Justin Sun, founder of the Tron (TRX) blockchain increased his total WLF exposure to $75m before the second round of token sales at an increased price
- This led to reports that WLF will allocate some of its treasury funds towards Tron’s native TRX token
- The Ethereum-based DeFi project announced the strategic purchase of numerous coins and tokens on Monday to commemorate Trump’s inauguration
- As Trump is now the 47th president, WLF allocated $47m each towards both Ether and (wrapped) Bitcoin, whilst it bought $4.7m each of blockchain oracle Chainlink (LINK), DeFi protocols AAVE and Ethena (ENA), and Tron (TRX)