Bitcoin Hits $105K Amid U.S. Policy Shifts and Crypto Innovation

Macro

Bitcoin entered January on a cautious note, weighed down by diminished hopes for rate cuts in the wake of strong U.S. payroll data, hawkish Fed minutes, and concerns over a proposed $6.5bn government sell-off of BTC. Yet as the month progressed, BTC surged from around $93,000 to a record high above $105,000, following the inauguration of President Trump. Within three days, the new administration issued its “Strengthening American Leadership in Digital Financial Technology” directive, forming the Presidential Working Group on Digital Asset Markets. The order established the Presidential Working Group on Digital Asset Markets, tasked with crafting a federal crypto framework, assessing a national digital asset reserve, and halting federal CBDC work. While some industry participants wished for a fully formed reserve instead of a feasibility study, the move was widely welcomed as a step in the right direction, with clear objectives and timelines.

Other regulatory developments throughout January continued to signal constructive progress. The SEC announced the formation of a dedicated Crypto Task Force to develop “comprehensive and clear regulatory framework for crypto assets” and rescinded the unpopular SAB 121 accounting rule. Courts issued favorable rulings for industry participants as well: One found the SEC’s denial of Coinbase’s request for crypto rulemaking as “arbitrary and capricious”  and believes the SEC did not provide a sufficient reason for denying Coinbase’s request and another reversed sanctions on Tornado Cash. Additionally, the number of states considering a Bitcoin Strategic Reserve is now up to 15, nearly doubling from early January. Meanwhile, several crypto-friendly officials assumed influential roles, just as prominent skeptics announced or confirmed departures.

However, the crypto market encountered a sharp downturn during the first weekend of February amid newly announced U.S. tariffs and growing trade-war fears. High leverage levels exacerbated the sell-off, leading to approximately $10bn in forced liquidations. 

$Trump

On January 17th, during the inaugural Crypto Ball in Washington, DC, then-President-elect Donald Trump launched the Official Trump memecoin ($TRUMP). The token peaked at $73.43 two days later, giving it a roughly $15bn market cap (and $73bn fully diluted). Melania Trump launched her own memecoin ($MELANIA) soon after, causing a strong pull back in $TRUMP and has mostly trended downward since.

The decision to launch $TRUMP on Solana has resulted in notable gains for the network. Over $43mm in on-chain fees were generated over the launch weekend (average $21mm/day vs. average $5mm/day this past month). Usually these meme tokens launch as MEME/SOL pairs but $TRUMP launched on DEX, Meteora, as a USDC pair. As a result of the demand, stablecoin supply on the Solana has nearly doubled in the past two weeks since launch.

Exhibit 1: Total Solana Stablecoin Market Cap

$TRUMP was polarizing to say the least. Critics called it a brazen attempt by Trump to enrich himself, noting that entities tied to him control 80% of the supply. Others voiced concerns that it spotlights crypto’s speculative side, potentially alienating moderate policymakers who might otherwise support digital assets. Still, supporters welcomed Trump’s embrace of crypto, seeing the move as a likely sign of a more permissive U.S. regulatory environment. Despite the criticism, an estimated 400,000 new market entrants were onboarded through $TRUMP’s debut demonstrating the power of the crypto “community” and provided a glimpse of the potential wealth transfer across crypto rails for stocks, bonds, and payments once regulation clarity is established.

FTX

On Feb 4th, FTX_Official announced that the FTX Recovery Trust anticipates commencement of distributions to creditors in the Plan’s convenience class (claims under $50,000) on February 18, 2025. These creditors are anticipated to receive roughly 119% of their claim value, reflecting a full 100% recovery of the petition-date value plus 9% interest accruing from November 11, 2022.  The two distribution service providers, BitGo and Kraken, are currently available for certain FTX creditors. Distributions will be made in US dollars, and each provider offers different withdrawal methods and fee structures (e.g., wire, ACH, stablecoins, digital assets). Creditors must complete KYC, tax forms, and provider onboarding by specific cut-off dates to receive distributions.