Market Update February 2025: Market momentum: Bitcoin exceeds January expectations

The start of 2025 has been marked by significant developments across both the cryptocurrency and traditional financial markets. Bitcoin has demonstrated remarkable strength with an 8% appreciation in January, while Ethereum maintains its strategic position in the market. The regulatory landscape continues to evolve, with the SEC implementing new accounting standards that promise to enhance institutional cryptocurrency adoption. Meanwhile, the stablecoin market has reached a notable milestone, surpassing $200 billion in total market capitalisation.

In the broader technology sector, we've witnessed groundbreaking developments in artificial intelligence with DeepSeek's introduction of their R1 model, showcasing China's growing technological capabilities. The global economic landscape is adapting to new political realities with the commencement of Trump's second presidential term, bringing shifts in trade policies and international relations that could impact both traditional and cryptocurrency markets.

📈 Market Update

A brief analysis on Bitcoin, Ethereum and Blockrise Fundamentals:

Bitcoin Analysis

Historical analysis indicates January typically yields a 4% average return, with February and March traditionally showing stronger bullish tendencies. This January has exceeded expectations, delivering an 8% price appreciation. Following December's price correction, the market has demonstrated resilience. We observe stabilisation in the decline of long-term (6-month) Bitcoin holders, while the supply in profit continues to expand, suggesting favourable conditions for accumulation. Despite potential market uncertainty surrounding new regulatory frameworks, our analysis indicates positive Bitcoin price momentum for 2025.

Ethereum Analysis

Ethereum demonstrated relative stability this period, maintaining its price level with minimal fluctuation. While the asset continues to trade below its historical peak and Bitcoin maintains market dominance, Ethereum's role in portfolio diversification remains strategically valuable. Current market dynamics suggest Bitcoin will likely continue to command primary market attention in the immediate term, though Ethereum's contribution to risk-adjusted returns remains favourable.

Fundamentals

Fundamentals has demonstrated strong performance this period, achieving a monthly return of 8,4%. This robust start to the year positions us favourably for continued portfolio optimisation. In response to these market conditions, we have executed a strategic increase of 2,5% in our Bitcoin position to maintain prudent risk management parameters.

Based on our comprehensive monthly portfolio assessment and detailed analysis of current market conditions and volatility indicators, we have implemented a refined asset allocation strategy consisting of 72,5% Bitcoin, 12,5% Ethereum, and 15% euros. This calibrated portfolio composition enables us to maintain strategic cryptocurrency exposure while ensuring adherence to our established risk management framework in the present market environment.

Blockrise offers comprehensive care with its asset management strategy called "Fundamentals." This strategy involves managing assets in Bitcoin and Ethereum versus a euro position, reassessing and adjusting these positions monthly.

🗞 Crypto Highlights

An overview of the most notable events in crypto:

SEC sets new accounting standards

The Securities and Exchange Commission (SEC) has enacted significant regulatory reforms to enhance the integration of cryptocurrency services within traditional banking frameworks. These reforms include a notable revision of SAB 121 guidance, eliminating the requirement for institutions to record customer cryptocurrency holdings as balance sheet liabilities.

This strategic regulatory modification empowers established financial institutions to offer comprehensive cryptocurrency custody services under a more refined regulatory framework. The updated guidelines extend custodial authorization to both broker-dealers and financial intermediaries. This development is anticipated to cultivate a more diverse ecosystem of cryptocurrency custody providers, fostering heightened market competition. Industry experts project that this competitive environment will lead to optimised fee structures, with custody costs potentially aligning with conventional banking service rates.

Total stablecoin supply over $200bn

The stablecoin market capitalisation has surpassed a significant milestone of $200 billion, demonstrating robust growth of 25% since November 2024. This substantial increase in stablecoin supply serves as a key indicator of heightened economic activity and potential market momentum within the cryptocurrency sector. Tether (USDT) maintains its market leadership position with a capitalisation of $139 billion, representing a 15% increase. Notable growth has been observed in Circle's USDC, which experienced a remarkable 48% expansion to reach $53 billion. However, it is worth noting that USDC has faced operational challenges following the Silicon Valley Bank situation, which impacted a portion of their reserve holdings.

🏦 Macro Economy

An overview of relevant global economic events:

Meet the new competition

DeepSeek, an emerging Chinese technology firm, has introduced a groundbreaking open-source AI model designated as R1, which demonstrates advanced cognitive reasoning capabilities. The company reports that R1's performance metrics surpass or match those of established U.S. industry leaders across multiple evaluation criteria, including mathematical computation and general knowledge assessments, while achieving this with notably efficient resource utilisation. Industry analysts suggest that semiconductor trade restrictions may have inadvertently fostered innovative cost-optimisation strategies within the Chinese technology sector.

The technological community, particularly AI industry leaders, are conducting thorough analyses of DeepSeek's innovation. OpenAI's research teams are particularly focused on understanding the technological framework that enabled this development. The model's open-source nature presents substantial potential for advancing existing AI systems.

The venture originated under the leadership of Liang Wenfeng, who established DeepSeek in 2023 as an extension of the artificial intelligence division within Zhejiang High-Flyer Asset Management. High-Flyer, established in 2015, has distinguished itself as a quantitative trading institution managing assets exceeding $10 billion as of 2019, implementing sophisticated mathematical and deep-learning methodologies. The firm maintains exceptional intellectual capital through selective recruitment of mathematics, physics, and informatics olympiad medalists.

DeepSeek's commitment to open-source development represents a commendable strategic direction. The dissemination of premium open-source technology has the potential to catalyse transformative industry developments, facilitating global innovation across diverse technological ecosystems.

His second term

On January 20th, Donald Trump commenced his second presidential term following his inauguration. While the U.S. election period had previously catalysed unprecedented highs in both Bitcoin and S&P 500 valuations, the inauguration period demonstrated contrasting market behaviour characterised by increased volatility. The initial day of the administration was marked by the implementation of multiple executive orders addressing various policy domains, from immigration policy to regulatory reform.

The administration's stance on trade policy, particularly regarding tariffs, has been notably assertive, with projections indicating an even more robust approach compared to the previous term. The administration's policy framework encompasses several key initiatives, including enhanced tariff measures, increased European Union defence contributions, strengthened border policies, and proposals for a new North American state. These measures align with a distinctly nationalist economic perspective amid an increasingly interconnected global economy. The administration maintains its commitment to domestic prioritisation, reiterating its established policy framework. While this approach may present advantages for cryptocurrency market participants relative to the previous administration, it potentially poses challenges for European stakeholders.

The information provided in our articles is intended solely for general informational purposes and does not constitute (financial) advice.