Bitcoin’s price has recently dipped below the $100,000 mark, a level it had maintained since January 27. This decline is attributed to rising inflation concerns following the imposition of import tariffs by President Donald Trump on goods from China, Canada, and Mexico.
Ryan Lee, chief analyst at Bitget Research, suggests that this downturn might precede a more significant correction, potentially bringing Bitcoin’s value down to $95,000. He stated, “On the downside, the $95,000 range remains a critical support area. The interplay between labor market trends, Fed policy expectations, and market sentiment will be the main catalysts to monitor in the coming weeks.”
The upcoming U.S. labor market report, scheduled for release on February 7 by the Bureau of Labor Statistics, is anticipated to play a pivotal role in Bitcoin’s near-term trajectory. Lee noted that weakening labor market data could bolster the case for a Federal Reserve rate cut, potentially creating a “more supportive environment for Bitcoin.”
Despite the recent dip, Bitcoin achieved a historic milestone by closing January above $102,000, marking its first monthly close above the $100,000 threshold. This represents a more than 6% increase from its previous record monthly close of $96,441 in November 2024.
Some market analysts interpret the current downturn as a potential “bear trap,” a scenario where a temporary decline in an asset’s price during a long-term uptrend leads investors to mistakenly believe a bear market has begun. This perspective suggests that the recent correction could be a coordinated effort to induce selling before a subsequent price increase.
Looking ahead, Bitcoin’s prospects for 2025 remain optimistic. The recent surpassing of a $125 billion milestone by spot Bitcoin exchange-traded funds (ETFs) in the U.S., just over a year after their debut in January 2024, underscores growing institutional interest. Analyst forecasts for Bitcoin’s value by the end of 2025 range from $160,000 to over $180,000.
In summary, while Bitcoin faces short-term challenges influenced by macroeconomic factors and market dynamics, its long-term outlook remains positive, supported by increasing institutional adoption and favorable market sentiment.
Bitcoin (BTC) has achieved a historic milestone by closing January 31 at $102,400 on Binance, marking its first monthly close above the $100,000 threshold.
This significant close occurred despite a late-month price dip influenced by macroeconomic factors. On January 31, U.S. President Donald Trump announced impending tariffs on Canada, Mexico, and China, effective February 1. This announcement led to a downturn in U.S. stock markets and affected investor sentiment, as indicated by data from the Fear & Greed Index.
Analysts remain optimistic despite these developments. Aksel Kibar, a well-known market analyst, remarked, “At every 1% correction, panic and crash forecasts is not characteristics of a market top. IMO.” He emphasized that true market tops are typically accompanied by widespread euphoria and a disbelief in even short-term corrections.
Michaël van de Poppe, a crypto trader and analyst, shared a similar sentiment, stating, “I shouldn’t worry about this news, ultimately it will lead to higher crypto prices anyways.”
The pseudonymous analyst PlanB highlighted the current phase of Bitcoin’s price cycle by updating the Stock-to-Flow model, indicating that the most intense phase is underway.
Historically, February has been a strong month for Bitcoin, with average gains of 14.4%. If this pattern continues, Bitcoin could see its next monthly close around $117,000. Fedor Matviiv, founder and CEO of CryptoRank, noted, “This time, it’s a post-halving February as well, and every previous one saw major upside. If history is any indication, $BTC might be gearing up for a big move.”
Analyst Rekt Capital added that “8 out of the past 12 February’s dating back to 2013 have produced double-digit upside,” suggesting a favorable outlook for Bitcoin in the coming month.
In summary, Bitcoin’s unprecedented monthly close above $100,000, coupled with historical performance trends, indicates potential for continued growth in the near term.
Bitcoin retail investors have been sending large amounts of Bitcoin to Binance in 2025, with data showing that 6,000 BTC, worth about $625 million, was moved in January. This suggests that smaller-scale investors believe the bull market might be coming to an end, at least for the time being.
On the other hand, Bitcoin whales, who are typically seen as the “smart money” in the market and play a significant role in shaping short-term price movements, have largely refrained from selling. In January, whale inflows to Binance amounted to only 1,000 BTC, which is about $104 million, indicating that they are showing restraint in taking profits.
According to CryptoQuant’s contributor Darkfost, this contrast in behavior between retail investors and whales is notable. “We often hear about a contradiction in the behavior of investors categorized as whales and retail,” he wrote in a market update. “This is exactly what is happening now when analyzing data from Binance in the short term.” Retail investors, especially those who typically trade smaller amounts, appear more willing to sell their Bitcoin, while whales are taking a more cautious approach. This dynamic reflects a broader trend where retail traders seem to be reacting to short-term market movements, while whales are more strategic, keeping a long-term view.
This difference in behavior suggests that whales may be better indicators of market trends. Darkfost pointed out that it is often considered a better choice to follow the actions of whales rather than retail investors. The contrasting data supports this theory, with significant retail inflows continuing to Binance while whale activity remains subdued.
Alongside these trends, broader data shows that mainstream interest in Bitcoin may have cooled off. Google Trends data, for example, indicates a “reset” in interest after Bitcoin’s price hit all-time highs in late 2024. Analyst CryptoCon applied the relative strength index (RSI) volatility indicator to Bitcoin’s historical data and observed a decrease in search activity related to Bitcoin. This reflects a decline in hype, with retail investors perhaps feeling that the price surge has already peaked.
The divergence between retail and whale behavior underscores the uncertainty in the market, with smaller investors looking to cash out while larger players remain on the sidelines for now.
Grayscale, one of the largest cryptocurrency asset managers, is expanding its investment offerings with the launch of the Grayscale Bitcoin Miners ETF (MNRS). This new exchange-traded fund (ETF) provides investors exposure to the Bitcoin mining industry, allowing them to benefit from the growth of mining companies without directly investing in Bitcoin (BTC).
The company announced the new investment product on Jan. 30, 2025, stating that MNRS will track the Indxx Bitcoin Miners Index. This index measures the performance of companies that derive most of their revenue from Bitcoin mining, mining-related hardware, software, and associated services.
Unlike Bitcoin spot ETFs, MNRS will not invest directly in Bitcoin or derivatives. Instead, it focuses on firms that play a crucial role in securing and maintaining the Bitcoin network.
Grayscale’s Expanding Role in Bitcoin Investment
Grayscale has long been a dominant player in the Bitcoin investment market, managing billions of dollars in cryptocurrency-related funds. The firm is best known for its Grayscale Bitcoin Trust (GBTC), which was converted into a spot Bitcoin ETF in January 2024 after years of legal battles with the U.S. Securities and Exchange Commission (SEC).
The approval of Bitcoin spot ETFs marked a major milestone for institutional Bitcoin adoption. Grayscale’s GBTC, alongside funds from BlackRock, Fidelity, and Ark Invest, opened up Bitcoin investment to a broader range of traditional investors.
With the launch of MNRS, Grayscale is now targeting the Bitcoin mining sector, which it sees as a key driver of Bitcoin’s long-term growth.
The Role of Bitcoin Miners in the Crypto Ecosystem
According to Grayscale, Bitcoin miners are essential to the network’s security, integrity, and functionality. Mining firms validate transactions and add new blocks to the blockchain, ensuring Bitcoin remains decentralized and secure.
“The work of Bitcoin miners is integral to the existence and continuation of the Bitcoin network,” Grayscale stated in its announcement.
Investing in Bitcoin miners offers an alternative for those who want exposure to Bitcoin’s growth without directly purchasing the asset. Grayscale noted that the performance of mining stocks is historically correlated with Bitcoin’s price movements.
David LaValle, Grayscale’s Global Head of ETFs, highlighted the growth potential of Bitcoin mining firms, stating:
“Bitcoin Miners, the backbone of the network, are well-positioned for significant growth as Bitcoin adoption and usage increases, making MNRS an appealing option for a diverse range of investors.”
The State of Bitcoin Mining Stocks in 2024
While Bitcoin experienced massive gains in 2024, with its price increasing by 113%, publicly listed Bitcoin miners struggled to keep pace.
According to data from the Hashrate Index and Google Finance, many Bitcoin mining stocks closed 2024 in the red, with some firms seeing declines of up to 84%.
This underperformance was exacerbated by a broader market downturn in late January 2025, partially triggered by DeepSeek’s AI breakthrough, which shook traditional tech and investment sectors.
Bitcoin ETFs and Their Impact on the Crypto Market
The launch of Bitcoin ETFs in early 2024 was a landmark event, ushering in a new era of institutional investment in the crypto market.
Before ETFs, investors had limited options to gain regulated exposure to Bitcoin, relying on trusts like GBTC or investing directly in BTC through exchanges. However, the approval of Bitcoin spot ETFs by the SEC allowed large financial institutions to integrate Bitcoin into traditional portfolios.
The impact of Bitcoin ETFs has been significant:
- Institutional demand surged, driving Bitcoin’s price above $100,000 for the first time.
- Grayscale’s GBTC experienced massive outflows initially, as investors rotated into lower-fee ETFs from BlackRock and Fidelity.
- Bitcoin mining stocks saw mixed reactions, as some investors opted for direct Bitcoin exposure instead of mining equities.
Grayscale’s Position in the ETF Market
Despite intense competition from BlackRock’s iShares Bitcoin Trust (IBIT) and Fidelity’s Wise Origin Bitcoin Trust (FBTC), Grayscale remains a major player in the Bitcoin ETF space.
However, GBTC’s high fees led to outflows, prompting Grayscale to diversify its product offerings. By introducing MNRS, the company is catering to investors who believe in Bitcoin mining’s long-term potential.
The Future of Bitcoin Mining and ETF Growth
Bitcoin mining is set to undergo a major shift in 2024 and 2025, largely due to the Bitcoin halving that occurred in April 2024.
The Bitcoin halving, which happens approximately every four years, reduces mining rewards by 50%—from 6.25 BTC per block to 3.125 BTC. Historically, halvings have driven Bitcoin’s price higher due to the reduction in new supply, benefiting miners in the long term.
However, the short-term impact of the 2024 halving led to increased pressure on mining firms, forcing them to:
- Invest in more efficient mining equipment to remain profitable.
- Secure additional capital to cover operational costs.
- Navigate regulatory challenges, particularly in the U.S. and Europe.
With Grayscale’s MNRS ETF, investors now have a way to gain exposure to Bitcoin mining companies without the risks associated with direct Bitcoin ownership.
Final Thoughts
Grayscale’s Bitcoin Miners ETF marks another significant step in the evolution of crypto-based investment products. As institutional interest in Bitcoin continues to grow—fueled by spot ETFs, the 2024 halving, and increasing mainstream adoption—products like MNRS provide investors with alternative ways to capitalize on the Bitcoin ecosystem.
While Bitcoin mining stocks have struggled in 2024, the long-term outlook remains positive, especially as halving effects and institutional adoption drive demand higher.
Grayscale’s continued innovation in the ETF space ensures that it remains a key player in the cryptocurrency investment landscape, helping bridge the gap between traditional finance and the digital asset world.
Illinois has become the latest U.S. state to push forward legislation aimed at establishing a Bitcoin strategic reserve, signaling growing institutional interest in Bitcoin as a financial savings technology. House Bill 1844 (HB1844), introduced by Illinois State Representative John Cabello, proposes the creation of a state Bitcoin reserve, making Illinois one of the first states to explore Bitcoin as a treasury asset.
Illinois’ Bitcoin Reserve Bill: Key Details
HB1844 outlines the establishment of a special fund within the state treasury designated for holding Bitcoin as a financial asset. According to the bill, the state treasurer must retain all Bitcoin for at least five years before any transactions can take place.
The filing explicitly states:
“Provides that the State Treasurer shall hold all Bitcoin deposited into the Fund for a duration of at least 5 years from the date that the Bitcoin enters the State’s custody.”
Following this five-year period, Illinois’ treasury would have the authority to sell, transfer, appropriate, or convert Bitcoin into another cryptocurrency or financial asset.
On January 29, HB1844 was referred to the Rules Committee, where final regulatory details will be established before the bill moves forward for full legislative approval.
State-by-State Adoption of Bitcoin Reserves
Illinois’ move follows a similar legislative effort in Arizona, where the state senate advanced a Bitcoin reserve bill allowing public funds and pension programs to invest in Bitcoin.
Mouloukou Sanoh, co-founder and CEO of decentralized payment network MANSA, described Illinois’ Bitcoin Act as a “step in the right direction” for Bitcoin adoption across the U.S. He noted:
“The decision to accept Bitcoin as a reserve asset is a bold step toward integrating cryptocurrency into traditional finance, positioning the state as a leader in blockchain innovation.”
While Sanoh believes Illinois’ initiative could encourage other states to follow suit, he emphasized that a nationwide approval of Bitcoin reserves would take time, depending on regulatory clarity and market conditions.
“For now, a state-by-state approach seems probable, allowing for experimentation and risk management before any broader consensus is reached.”
Meanwhile, Texas is also positioning itself as a Bitcoin-friendly state. On January 29, Texas Lieutenant Governor Dan Patrick revealed that establishing a Bitcoin reserve is among the state’s top 2025 legislative priorities.
Bitcoin as a Strategic Reserve Asset
Bitcoin has increasingly been viewed as a digital store of value and hedge against inflation, making it an attractive asset for state treasuries looking to diversify their reserves. Unlike traditional assets like gold or fiat currencies, Bitcoin is decentralized, finite in supply (capped at 21 million coins), and resistant to inflationary pressures.
The idea of governments holding Bitcoin as a strategic reserve asset is gaining traction worldwide. Recently, Czech National Bank Governor Aleš Michl proposed a $7 billion Bitcoin reserve plan, further highlighting institutional interest in the cryptocurrency.
The Role of the 2024 Bitcoin Halving
One of the key factors influencing the decision to establish Bitcoin reserves is the upcoming 2024 Bitcoin halving—a programmed event that reduces Bitcoin’s mining rewards by 50% every four years. The halving is designed to increase Bitcoin’s scarcity, historically leading to significant price appreciation in the months and years following the event.
Bitcoin’s previous halvings in 2012, 2016, and 2020 have all led to massive bull runs, attracting institutional investors and corporations looking to capitalize on its long-term growth potential. If history repeats itself, Bitcoin’s price could significantly increase post-halving, making it an even more attractive asset for state treasuries.
Why States Are Considering Bitcoin Reserves
There are several key reasons why U.S. states are exploring Bitcoin as a treasury asset:
- Inflation Hedge – With rising concerns over fiat currency devaluation, Bitcoin offers a decentralized alternative immune to monetary policy changes.
- Scarcity and Growth Potential – With only 21 million BTC ever to exist, Bitcoin’s limited supply makes it an attractive long-term investment.
- Geopolitical and Financial Stability – Bitcoin can serve as a sovereign reserve asset, reducing dependence on traditional banking systems and fiat reserves.
- State-Level Experimentation – As federal cryptocurrency regulations remain unclear, states like Illinois, Texas, and Arizona are leading the way in exploring Bitcoin integration into government finance.
Bitcoin Reserves: A Political and Economic Trend
Bitcoin’s integration into government finance is not just a financial decision—it’s becoming a political statement. Former President Donald Trump has previously hinted at the idea of creating a U.S. Bitcoin reserve, aligning with the growing trend of states adopting pro-Bitcoin policies.
With increasing institutional interest, more public officials and lawmakers are warming up to Bitcoin’s role in government treasuries, setting the stage for broader adoption across the U.S.
Conclusion
Illinois’ Bitcoin reserve bill is a bold step toward mainstream cryptocurrency adoption in state finances. As more states introduce similar legislation, the concept of Bitcoin as a strategic reserve asset is becoming more viable.
With the 2024 Bitcoin halving approaching, Bitcoin’s long-term value proposition is gaining traction among state governments, institutions, and policymakers. While regulatory uncertainties remain, Illinois’ move underscores a growing trend of U.S. states integrating Bitcoin into traditional finance, potentially reshaping government reserves for the future.
Bitcoin’s price could drop by nearly 26% in the first quarter of 2025, potentially falling to around $75,000, according to a recent market analysis. However, other crypto analysts remain skeptical about the likelihood of such a decline.
In a Jan. 28 market report, Dr. Sean Dawson, head of research at Derive, stated that the probability of Bitcoin (BTC) dropping below $75,000 by March has increased to 9.2%, up from 7.2% over the past 24 hours.
Bitcoin’s Volatility and Market Trends
Bitcoin’s price fluctuations have been closely tied to broader market trends. On Jan. 27, BTC fell by 6.5% to $97,906 amid a widespread downturn in the crypto and stock markets. The decline was triggered by the release of DeepSeek’s latest artificial intelligence model, which rattled investor sentiment. However, Bitcoin quickly rebounded above the $100,000 mark, trading at $102,100 at the time of publication, according to CoinMarketCap.
Dawson noted that Bitcoin’s at-the-money implied volatility—an indicator of demand for options—spiked from 52% to 76%. This suggests that traders are increasing their positions in put options to hedge against potential downside risks.
“The slight uptick in the probability of Bitcoin heading back toward $75,000 reflects a shift in market sentiment toward bearishness as traders adjust to rising uncertainty,” Dawson explained.
The last time Bitcoin was trading near $75,000 was on Nov. 8, just three days after Donald Trump won the U.S. presidential election. Following this dip, BTC entered a strong rally, crossing the $100,000 threshold for the first time on Dec. 5.
Bitcoin’s Correlation with Macroeconomic Trends
Bitfinex analysts noted in a Jan. 27 report that Bitcoin’s price movements continue to reflect its correlation with broader macroeconomic shifts.
“Bitcoin’s price is less a standalone reflection of its market fundamentals and more tied to broader macroeconomic shifts, particularly in risk sentiment,” the analysts stated.
They further emphasized that Bitcoin is no longer operating as an isolated digital asset but is now more aligned with global risk assets.
“In our view, Bitcoin is no longer just a digital asset playing by its own rules — but is now firmly tethered to the broader risk asset landscape,” they added.
Arthur Hayes, co-founder of BitMEX, echoed similar concerns, predicting that Bitcoin could retreat to the $70,000-$75,000 range. He suggested that such a drop might trigger a “mini financial crisis,” leading to increased liquidity injections from central banks. Hayes believes this would ultimately drive Bitcoin’s price to $250,000 by the end of 2025.
Bitcoin Halving and Its Market Impact
Bitcoin’s price movements in 2024 are closely linked to the highly anticipated Bitcoin halving event scheduled for April 2024. Bitcoin halving occurs approximately every four years, reducing the block rewards for miners by 50%. This mechanism decreases the rate at which new BTC enters circulation, historically leading to significant price increases due to reduced supply.
Past halvings have often preceded bullish price trends. For example, after the 2020 halving, Bitcoin’s price surged from around $8,000 to an all-time high of nearly $69,000 by late 2021. Similarly, after the 2016 halving, BTC rose from approximately $650 to $20,000 by December 2017.
The upcoming 2024 halving is expected to lower Bitcoin’s block reward from 6.25 BTC to 3.125 BTC per block. This supply shock could contribute to long-term price appreciation, though short-term volatility remains a concern.
Market Sentiment and Institutional Adoption
The recent surge in Bitcoin’s price to over $100,000 has been fueled by growing institutional adoption and increasing interest in Bitcoin exchange-traded funds (ETFs). Major financial firms, including BlackRock and Fidelity, have launched Bitcoin ETFs, providing traditional investors with easier access to the cryptocurrency market.
Additionally, growing acceptance of Bitcoin as a store of value amid inflation concerns has reinforced its role as digital gold. Institutional investors and hedge funds are increasingly incorporating Bitcoin into their portfolios as a hedge against economic uncertainty.
Potential Risks for Bitcoin in 2025
Despite the optimism surrounding Bitcoin’s future, certain risks could contribute to short-term price declines:
- Macroeconomic Uncertainty: Bitcoin’s correlation with traditional markets means it remains susceptible to economic downturns, interest rate hikes, and shifts in investor sentiment.
- Regulatory Pressures: Governments worldwide continue to scrutinize cryptocurrency markets, with potential regulations that could impact institutional participation and trading activity.
- Market Corrections: Bitcoin has historically experienced sharp price corrections even during bull runs. A temporary pullback to $75,000 would not be unprecedented.
While some analysts foresee a potential dip in Q1 2025, others remain bullish on Bitcoin’s long-term trajectory. With the upcoming halving, continued institutional adoption, and macroeconomic factors at play, Bitcoin’s price is likely to remain highly dynamic in the coming months.
Bitfarms, a leading multinational Bitcoin mining company, has announced the sale of its 200 MW Bitcoin mining facility in Yguazu, Paraguay, to Hive Digital Technologies for approximately $85 million. Hive, a competitor in the Bitcoin mining and AI sectors, intends to finalize the transaction by the end of Q1 2025. Bitfarms plans to reinvest the capital from the sale to enhance its mining and computational capacity in the United States.
Details of the Sale and Yguazu’s Role
The Yguazu facility, Bitfarms’ largest Bitcoin mining site in Paraguay, played a key role in the company’s operations in South America. With a capacity of 200 MW, the farm significantly contributed to Bitfarms’ overall hash rate and operational efficiency.
In addition to the Yguazu site, Bitfarms operates two other mining facilities in Paraguay: Villarrica and Paso Pe. These facilities have a combined capacity of 80 MW, with Villarrica contributing 10 MW and Paso Pe accounting for 70 MW.
Hive’s acquisition of Yguazu reflects the growing trend of Bitcoin miners diversifying into high-performance computing (HPC) and artificial intelligence (AI) infrastructure.
Rebalancing Toward North America
Bitfarms CEO Ben Gagnon emphasized that the sale is part of the company’s strategy to streamline operations and focus on North America. Gagnon stated:
“Bitfarms will be reinvesting the capital from this sale toward its 1 GW growth pipeline in the US for BTC and HPC/AI infrastructure, which marks a significant milestone in our transition from an international Bitcoin miner to a North American energy and compute infrastructure company.”
The company aims to rebalance its portfolio to achieve an 80% North American and 20% international presence by the end of 2025.
Bitfarms currently operates in Canada, the United States, Argentina, and Paraguay, with capacities of 158.5 MW, 17.5 MW, 54 MW, and 280 MW (including Yguazu), respectively.
Bitcoin Mining and Its Link to Hash Rate
Bitcoin mining involves solving complex cryptographic puzzles to validate transactions on the blockchain, a process that requires substantial computational power. The efficiency of Bitcoin mining operations is often measured by their hash rate—the total computational power dedicated to mining Bitcoin globally.
A higher hash rate indicates a more secure network and generally correlates with increased mining difficulty. Facilities like Bitfarms’ Yguazu site contribute significantly to the global hash rate, leveraging Paraguay’s abundant hydropower resources to operate efficiently.
The recent sale of the Yguazu facility comes at a time when the hash rate continues to grow, driven by increased investment in mining infrastructure. However, the energy-intensive nature of mining has prompted companies to diversify into sustainable and high-performance computing, such as AI.
Hive’s Transition to AI and HPC
Hive Digital has been expanding its focus from traditional Bitcoin mining to AI and HPC data centers. This strategic pivot aligns with industry trends, as mining companies explore alternative uses for their computational resources.
The transaction with Bitfarms will see Hive making an initial payment of $25 million, with an additional $31 million spread over the next six months. This move is expected to bolster Hive’s capacity in both Bitcoin mining and AI infrastructure.
The Trump Administration and U.S. Mining Growth
The Trump administration’s policies on crypto and energy have influenced the growth of Bitcoin mining in the United States. Trump’s pro-business stance, coupled with his push for energy independence, has created a favorable environment for mining companies to expand their operations domestically.
Bitfarms’ renewed focus on the U.S. aligns with this broader trend, as the company seeks to capitalize on the supportive regulatory environment and access to affordable energy.
Future Prospects
The sale of the Yguazu facility marks a significant milestone in Bitfarms’ transition from an international Bitcoin miner to a North American-focused energy and compute infrastructure provider.
As the global hash rate continues to rise, the industry is poised for further consolidation and innovation, with companies like Bitfarms and Hive leading the charge. The growing integration of AI and HPC into mining operations signals a shift toward more diversified and sustainable business models.
With its strategic focus on the U.S. and investment in advanced infrastructure, Bitfarms is positioning itself for long-term growth in the evolving digital asset landscape.
Bitcoin’s price witnessed a sharp 7.13% drop between January 26 and the early hours of January 27, marking the first time the flagship cryptocurrency dipped below $100,000 since Donald Trump was inaugurated as the 47th U.S. president.
Despite the plunge, Bitcoin has managed to hover near the $100,000 mark, leaving the market divided over the asset’s next move.
Bitcoin’s Price Struggles Amid Uncertainty
The decline comes amid a period of mixed market sentiment. While some analysts view the recent price drop as a signal of a market top, others believe Bitcoin is poised for another bullish leg.
Adding to the uncertainty, President Donald Trump’s silence on crypto-related policies during his inauguration speech left the Bitcoin community on edge. Trump’s previous actions and statements have often been linked to significant movements in the crypto market, with many viewing his administration as generally supportive of blockchain innovation.
Market Analysis: Limited Panic Selling
Despite the price dip, short-term holders appeared to stay calm, with minimal panic selling. Bitcoin researcher Axel Adler Jr. highlighted that short-term holder profit losses to exchanges remained under 2,000 BTC during the sell-off.
“The recent shake-off did not indicate any ‘major panic selling in the market,’” Adler noted in an X post.
This trend contrasts with previous instances of Bitcoin price drops exceeding 5%, during which over 5,000 BTC were typically moved at a loss on exchanges.
Meanwhile, Joao Wedson, founder of Alphractal, observed that buying pressure returned swiftly after Bitcoin dropped below $100,000. However, the sharp price movement caused significant long liquidations.
According to data analytics platform Glassnode, over $68 million worth of long positions were liquidated in 24 hours. Glassnode added:
“The 24-hour SMA of Bitcoin long liquidations reached $2.9 million, marking the third-largest long liquidation event in the last three months.”
Trump’s Impact on Crypto Markets
Donald Trump’s previous presidency played a pivotal role in influencing the cryptocurrency market. His administration’s embrace of blockchain innovation, combined with his vocal support for deregulation, often boosted investor confidence in crypto assets.
In 2023, for instance, Trump issued an executive order creating a regulatory framework for blockchain technology, which was widely seen as a step toward legitimizing the crypto industry. These moves contributed to a surge in Bitcoin prices, with the asset breaking multiple all-time highs.
However, Trump’s latest tight-lipped approach to crypto policy has created uncertainty. Many investors had hoped for explicit statements or executive orders addressing the future of digital assets under his administration.
Will Bitcoin See a Reversal?
One notable trend observed in recent months is Bitcoin’s tendency for volatile price action on Mondays, which often sets the tone for the rest of the week. Over the past eight weeks, Bitcoin has consistently established its weekly high or low on a Monday before reversing in the opposite direction.
Low-liquidity sessions often result in sharp price movements, which are later corrected once U.S. markets open. Analysts warn that while this pattern suggests the potential for a price recovery, compounded losses could also occur later in the week.
On January 27, the U.S. Senate confirmed Donald Trump’s nominee for Treasury Secretary, billionaire hedge fund manager Scott Bessent, in a 68-29 vote. The confirmation saw bipartisan support, with 16 Democrats joining Republicans to back the nomination.
Bessent’s confirmation is particularly notable given his pro-crypto stance and opposition to central bank digital currencies (CBDCs), aligning closely with President Trump’s economic vision.
The Role of the Treasury Secretary
As Treasury Secretary, Bessent assumes significant responsibility over critical aspects of the U.S. economy. His purview includes managing the nation’s tax collection system, overseeing the $28 trillion Treasury debt market, and influencing fiscal policy and financial regulations. He will also play a key role in shaping international sanctions and overseeing foreign investments.
Ripple CEO Brad Garlinghouse congratulated Bessent on X (formerly Twitter), expressing optimism about his approach to fostering tech and crypto innovation:
“Confident he’ll enact common-sense economic policies, working with the Administration and Congress to grow U.S. tech and crypto innovation.”
Bessent’s Economic and Crypto Views
A Tennessee native and longtime supporter of Trump’s economic agenda, Bessent has championed policies such as the renewal of $4 trillion in expiring tax cuts, increased oil production, and the implementation of tariffs. During his confirmation hearing, he voiced concerns about federal spending, stating:
“Government spending is out of control.”
However, what sets Bessent apart is his vocal advocacy for cryptocurrencies. He opposes the idea of a U.S. central bank digital currency, describing it as unnecessary and more suited for countries with limited investment alternatives. In a January 16 Senate Finance Committee hearing, he remarked:
“I see no reason for the U.S. to have a central bank digital currency.”
His sentiment aligns with that of President Trump, who has consistently expressed skepticism about CBDCs. Bessent elaborated on his stance in a July interview with Fox Business:
“I’ve been excited about the president’s embrace of crypto, and I think it fits very well with the Republican Party. Crypto is about freedom, and the crypto economy is here to stay.”
SEC and Crypto Regulation Under Trump
Bessent’s confirmation comes as the crypto industry faces heightened regulatory scrutiny, particularly from the U.S. Securities and Exchange Commission (SEC). Under the leadership of Gary Gensler, the SEC has aggressively pursued enforcement actions against crypto companies, accusing many of offering unregistered securities.
Notable cases include lawsuits against Coinbase, Binance, and Ripple, with each company arguing that the SEC lacks clear regulatory authority over digital assets. These cases have brought attention to the need for more explicit crypto legislation in the U.S.
In response to these regulatory challenges, President Trump issued a crypto-focused executive order on January 23. The order established a governmental working group tasked with formulating a cohesive U.S. crypto strategy. This group includes Scott Bessent, SEC Chair Gary Gensler, Commodity Futures Trading Commission (CFTC) Chair Rostin Behnam, and Trump’s AI and crypto czar, David Sacks.
The executive order marks a significant step toward creating a regulatory framework that balances innovation with investor protection.
Background on SEC Enforcement Actions
The SEC has ramped up its efforts to regulate the crypto industry in recent years, often citing the Howey Test—a legal standard for determining whether a transaction qualifies as an investment contract. This approach has drawn criticism from industry leaders, who argue that the lack of clear guidelines stifles innovation and drives businesses offshore.
High-profile enforcement actions include Ripple Labs, where the SEC alleged that XRP is an unregistered security, and Coinbase, accused of offering crypto staking products without proper registration. These lawsuits highlight the ongoing tug-of-war between regulators and the crypto industry over how digital assets should be classified and governed.
What Bessent’s Confirmation Means for Crypto
Scott Bessent’s pro-crypto stance could signal a shift in how the U.S. approaches digital assets. His emphasis on fostering innovation and rejecting a U.S. CBDC aligns with a broader vision of crypto as a tool for financial freedom.
With his leadership at the Treasury, coupled with Trump’s crypto executive order, the U.S. may begin charting a clearer path for crypto regulation—one that supports growth while addressing security and compliance concerns.
As the regulatory landscape evolves, the focus will remain on balancing innovation with oversight to ensure the U.S. remains competitive in the rapidly growing crypto economy.
Nasdaq has filed a proposal on behalf of BlackRock, aiming to modify rules to permit in-kind creation and redemption for its spot Bitcoin exchange-traded fund (ETF). This filing marks a significant step in the evolution of cryptocurrency investment in the U.S. and highlights the growing adoption of Bitcoin ETFs.
Background on Spot Bitcoin ETFs in the U.S.
Spot Bitcoin ETFs represent direct ownership of Bitcoin, providing investors with a regulated way to gain exposure to the cryptocurrency without holding it directly. Unlike futures-based Bitcoin ETFs, which track contracts rather than the asset itself, spot ETFs directly hold Bitcoin, offering a closer reflection of the asset’s market value. The U.S. Securities and Exchange Commission (SEC) approved the first wave of spot Bitcoin ETFs in January 2024 after years of deliberation, ushering in a new era for institutional and retail investors.
BlackRock’s iShares Bitcoin Trust (IBIT), launched in January 2024 alongside ten other U.S. spot Bitcoin ETFs, has quickly emerged as the largest by inflows, boasting $39.57 billion in investments as of January 2024, according to Farside data. The move to allow in-kind transactions could further cement its market-leading position.
In-Kind Creation and Redemption Explained
Nasdaq’s filing with the SEC on Jan. 24 seeks to enable “in-kind transfers of the Trust’s Bitcoin,” according to the proposal. This mechanism would allow Authorized Participants—institutions responsible for the creation and redemption of ETF shares—to use Bitcoin or cash to create shares and to receive Bitcoin or cash upon redeeming shares.
James Seyffart, a Bloomberg ETF analyst, commented on the development in a Jan. 24 post on X (formerly Twitter), stating that BlackRock “should have been allowed to do this from the get-go.” Seyffart emphasized that the in-kind model streamlines the process, avoiding the bid/ask spreads and broker commissions typically associated with cash-based transactions.
Pseudonymous crypto analyst MartyParty echoed these sentiments, highlighting that the model enhances transparency and creates an on-chain record of fund flows. However, individual investors will not have access to the in-kind creation and redemption model, as Seyffart clarified: “Individuals won’t be able to do ‘in-kind’ creations and redemptions.”
Advantages of In-Kind Transactions
In-kind creation and redemption benefit ETFs by reducing transaction costs and improving efficiency. “What it means is that ETFs should trade even more efficiently than they already do theoretically because things can be streamlined,” said Seyffart. By eliminating intermediaries and reducing the number of steps in the process, this model enhances liquidity and minimizes disruptions in ETF pricing.
Chris J. Terry, chief architect at Bitseeker Consulting, emphasized the tax efficiency of the in-kind model. “By allowing the exchange of shares for underlying assets, ETFs can minimize capital gains distributions, which can be a benefit for investors holding shares in the fund,” he explained.
Competitive Landscape of Crypto ETFs
The Nasdaq filing coincided with a flurry of activity in the crypto ETF space. On the same day, European investment firm CoinShares filed for Litecoin (LTC) and XRP (XRP) ETFs. Grayscale also made headlines by submitting applications to convert its Solana (SOL) and Litecoin (LTC) Trusts into ETFs, alongside filings for a Bitcoin Adopters ETF and an Ethereum Premium Income ETF.
The race among asset managers to capture market share in the crypto ETF sector underscores the growing demand for regulated, institutional-grade investment products. BlackRock’s IBIT, with its massive inflows and focus on efficiency, has set a high bar for competitors.
Implications for the Future
As the largest spot Bitcoin ETF in the U.S., IBIT’s adoption of in-kind transactions could serve as a benchmark for the industry. Enhanced efficiency, transparency, and tax advantages position this model as a potential standard for future ETFs.
This development also highlights the broader acceptance of cryptocurrencies in traditional finance. With increasing competition and innovation, spot Bitcoin ETFs are poised to play a pivotal role in bridging the gap between traditional and digital asset markets.
For now, all eyes are on the SEC’s decision regarding Nasdaq’s proposed rule change, which could redefine the operational landscape for Bitcoin ETFs in the United States.