Listen to the Weekly Wrap on Spotify and Apple Podcasts. It is a summary with the help of AI-voices. 

      

This Week’s Top Stories

“DOJ says $9 Billion in bitcoin stolen in 2016 hack should be returned to Bitfinex.” – Wednesday, 15 January 2025

• Back in 2016, the infamous exchange Bitfinex was hacked for roughly 120’000 BTC. This week, the U.S. Department of Justice announced that all the recovered BTC from the hack should be returned to Bitfinex. Of the 120’000 BTC, a total of 94’643 were recovered and will now likely be returned to Bitfinex. At today’s prices, the total value of these BTC is over $9.5 billion.
• It’s important to note that Bitfinex publicly communicated in 2019 that they intended to sell 80 percent of the recovered BTC to buy and burn LEO over a period of approximately 1.5 years. This could create potential sell pressure of 75’000 BTC on the market. While it remains unclear when the BTC will be returned to Bitfinex, it’s worth keeping this in mind once they are.

“Trump plans to designate cryptocurrency as a national priority.” – Friday, 17 January 2025

• Donald Trump is expected to sign an executive order designating crypto as a national priority that could come as soon as he re-enters office this coming Monday, 20 January 2025.
• Bloomberg reported that the order would direct regulatory agencies to collaborate with the crypto industry. It may also establish a crypto council to advocate for the industry’s policy interests.
• Similarly, the New York Times reported on 16 January that several crypto executives had provided input to Trump’s crypto czar, David Sacks, regarding an executive order covering various areas of crypto policy.
• This week, the Washington Post revealed that Trump is expected to sign executive orders on Inauguration Day addressing crypto de-banking and repealing a bank accounting policy that mandates banks holding crypto to list digital assets as liabilities.
• Reuters wrote on Wednesday that Trump’s new SEC leadership will likely begin to reverse and change the agency’s cryptocurrency policies as early as next week, potentially freezing some enforcement actions.

“Treasury yields continue to slide as inflation fears ease.” – Thursday, 16 January 2025

• U.S. Treasury yields fell sharply on Wednesday, with the 10-year yield dropping 13 basis points and the 2-year yield declining by 10 basis points. The decline followed the release of December’s U.S. inflation data.
• While U.S. inflation increased in December, the year ended with some encouraging signs, particularly in the housing sector, as annual core CPI data came in lower than expected (3.2 percent vs. 3.3 percent).
• Christopher Waller of the Federal Reserve commented that he believes rate cuts could be possible in the coming months, as the December CPI data suggests PCE will be closer to the Fed’s target for the sixth time in the past eight months.

A Quick Crypto Overview: A Rough Start To A Wild Week

Last week, we emphasized the importance of the $3 trillion level for total crypto market capitalization. On Monday, the market bottomed out at exactly that level, retesting the 2021 cycle high during a sharp crypto dump. Bitcoin briefly traded below $90’000, while Ethereum dipped under $3’000.

This selloff was likely triggered by panic in the U.S. stock market over the weekend, which intensified during low liquidity conditions when futures opened on Sunday and culminated at Monday's cash open. Crypto mirrored the stock market's movements, experiencing major declines before finding a bottom and starting to recover.

Better-than-expected inflation data midweek provided much-needed positive momentum for both equities and crypto. The S&P 500 is up over 2.5 percent for the week, and Bitcoin is trading just below $102’000 at the time of writing.

Donald Trump’s Inauguration Day on Monday adds another layer of anticipation. High expectations surround the possibility of an executive order benefiting crypto markets.

As the chart below shows, Bitcoin made a new lower low this Monday, surpassing the December 30 low. The question now is whether it can achieve a higher high above the January 7 high of $102’735 – a positive signal for market structure – or if the Inauguration will disappoint, leading to a “sell the news” event.

In the case of a “sell the news”, it remains to be seen whether bitcoin is able to achieve a higher high before the Inauguration, to then potentially put in a higher low next week. Or whether bitcoin makes a lower high now and would then look for a lower low afterwards.

Chart of the Week: New All-Time High For XRP

Exactly 2’569 days after its last all-time high, XRP has done the unimaginable and reached a new record high yesterday, trading above $3.40 for the first time in history. Can you believe it? Every single XRP buyer of the last seven years is now in profit or at least breaking even. What a story!

What’s Happening On-Chain? DeFAI On The Rise

The newest trending term is #DeFAI. As you might have guessed, it’s a combination of DeFi and AI – two of the biggest trends today – now merging into a potential super trend. DeFAI leverages AI to simplify and automate DeFi operations. AI agents facilitate asset trading, streamline token creation, and optimize yield strategy management.

Leading projects in the DeFAI space currently include Griffain, Hey Anon, and Orbit. Griffain leads the pack with a market capitalization of approximately $500 million, followed by Hey Anon at $250 million and Orbit at $100 million.

In other news, the Solana DeFi exchange Jupiter launched a rewards checker ahead of the "Jupuary 2025" airdrop, which is estimated to be worth approximately $575 million. Users of the DEX can now check their eligibility for a share of this upcoming airdrop.

Meanwhile, Abstract, the long-awaited Layer 2 network set to launch this month, has announced “Abstract Incentives”. This program, which will be live on the mainnet, will likely allow users to earn XP through on-chain activity. On the Abstract mainnet, users and creators utilizing Abstract apps and streaming via the Abstract Global Wallet will earn XP. Additionally, builders will receive rewards based on the success of their apps.

Digital Asset Fund Flows: Modest Inflows Last Week & A Rebound This Week

Last week, digital asset investment products saw modest inflows of $48 million. Ethereum experienced $256 million in net outflows, while XRP saw net inflows of $41 million. Bitcoin investment products led the pack with $214 million in net inflows.

Interestingly, almost $1 billion flowed in during the first half of the week, but this reversed after the release of new macroeconomic data and the FOMC minutes, which pointed to a more hawkish Federal Reserve. This led to outflows of $940 million in the second half of the week.

This week showed the exact opposite pattern: large outflows occurred on Monday and Tuesday, followed by a rebound with net inflows on Wednesday and Thursday. The Bitcoin spot ETFs are currently sitting at $888 million in net inflows this week, while Ethereum spot ETFs have brought in $187 million in net flows so far this week.

Market Sentiment: Crypto In Greed, AAII Members Bearish on Stocks

The crypto fear and greed index is sitting at 75 in greed territory, while the index for the stock market remains in fear territory at 29. This is an interesting divergence between the two markets, likely attributed to Trump’s positive stance towards crypto and the market's anticipation of some positive changes early next week.

The AAII investor sentiment survey shows that its members are rather bearish now, with 40 percent saying they feel bearish about the stock market over the next six months, while only 25 percent feel bullish. The last time the number of bullish members was this low was at the beginning of November 2023, when the S&P 500 started to recover from a downward correction of more than 10 percent over a period of four months. It then trended upward for half a year, as the chart below shows. Will history repeat itself, or are the AAII members onto something this time?

Other Relevant News

BitMEX Fined Additional $100 Million For Violating Bank Secrecy Act. – Link

MicroStrategy has acquired 2’530 BTC for $243 million at $95’972 per bitcoin. – Link

Chainalysis acquires AI agent security startup Alterya for $150 million. – Link

Italy's largest banking group, Intesa Sanpaolo, purchased 11 bitcoins with a total value of approximately 1 million euros. – Link

The Inaugural Crypto Ball is scheduled for January 17 in Washington, DC. David Sacks will host the VIP reception. Sponsors include Coinbase, Sui, MetaMask, Galaxy Digital, Solana. – Link

Cannes, France, will host the 8th Ethereum Community Conference (EthCC) from June 30 to July 3, 2025. – Link

Canary Funds has submitted an amended S-1 filing for its Litecoin ETF application, and the U.S. Securities and Exchange Commission (SEC) appears to have responded. – Link

Bitwise CEO tweeted that they provided information for a nation state asking about Bitcoin ETFs. The nation state is considering moving exposure from foreign currency govt bonds into BTC. – Link

Phantom Technologies Inc. has announced the completion of a $150 million funding round led by Sequoia Capital and Paradigm, valuing the company at $3 billion. – Link

eToro files for US IPO and chases $5bn valuation. – Link

Looking Ahead: Trump’s Inauguration, Buy The News? Sell The News? Or A Nothingburger?

The big question is whether Trump follows through on his promises to make crypto one of his top priorities. Market participants will be following Inauguration Day closely and looking out for news regarding cryptocurrencies.

The last few weeks have been quite the rollercoaster, so it’s difficult to predict what will happen. However, there are practically three different scenarios: Either the Inauguration is a “buy the news” event, as market participants are unsure whether Trump will follow through and what his announcements on his first day will be – there is certainly some room for positive news in this regard. The Inauguration could also turn out to be a “sell the news” event, as the market is currently trading to the upside in anticipation of the big day on Monday. If Trump and his team don’t deliver on the market's high expectations, the day could also become a turning point to the downside. The last possibility is that Trump delivers exactly as anticipated, with no good or bad surprises, meaning the market has accurately priced in his actions on the first day.

Market participants will likely take some risk off the table going into Inauguration Day, so crypto could start trading slightly to the downside over the weekend. It’s also important to consider that the U.S. stock market will be closed on Monday due to Martin Luther King Jr. Day.

Exciting times ahead!

Below, you can find some of the key data releases and events to watch out for next week.

Monday, 20 January 2025

• Trump’s Inauguration Day
• U.S. stock markets are closed for Martin Luther King Jr. Day
• Switzerland – PPI

Tuesday, 21 January 2025

• Switzerland – WEF meetings

Wednesday, 22 January 2025

• Switzerland – WEF meetings

Thursday, 23 January 2025

• Switzerland – WEF meetings
• U.S. – Initial Jobless Claims
• Japan – CPI, Core CPI
• Japan – BoJ Interest Rate Decision

Friday, 24 January 2025

• Switzerland – WEF meetings
• Japan – BoJ Press Conference