Insight
February 7, 2025
In Trump’s third week in office, events in Washington DC dominated the crypto news headlines this week. The events generally supported the digital asset industry with the caveat that specifics in key areas are still elusive, and change will take time to implement. The highlights of the week were:
White House AI and Crypto Czar David Sacks brought key legislators together for a joint press conference on digital assets. The briefing outlined the administration and lawmakers’ key initiatives, including a newly introduced stablecoin bill, market structure reform, a comprehensive regulatory framework for digital assets, as well as the evaluation of a bitcoin strategic reserve (BSR).
The newly introduced GENIUS Act and draft bill from the House Financial Services committee aim to regulate and license entities seeking to issue stablecoins. While this legislation, along with the previously introduced FIT21 bill on market structure, is expected to shape the foundation of future regulations, the versions are likely to evolve significantly as bills work their way through the legislature.
The conversation surrounding a potential BSR marked a significant shift from the original White House Executive Order, which initially stipulated a more general “digital asset stockpile” rather than a bitcoin-specific reserve, much to the ire of the Bitcoin community. The initial language left room for other digital assets to be included. However, during the press conference and in subsequent interviews, David Sacks strongly advocated for bitcoin and bitcoin only, praising it as an excellent store of value with a long and proven operating history.
This week also featured two key hearings - one addressing the debanking of certain businesses, including crypto companies, and another focused on broader regulatory and banking activities collectively referred to as “Operation Chokepoint 2.0.” The release of documents under FOIA requests, including 175 new communications this week, has shined a light on what has gone on behind closed doors over the past couple of years. While we expect a shift with the new administration, much of what was discussed and disclosed this week highlighted the role regulators played in stifling crypto activities at banks under the Biden administration.
On Tuesday, the head of the SEC’s new Crypto Task Force, Hester Peirce, outlined the group’s key focus areas, including clarifying crypto asset classifications, improving registration processes, addressing custody, lending, and staking rules, refining ETF approvals, and exploring cross-border regulatory frameworks to foster innovation while ensuring compliance. Peirce stressed that progress on the list, while non-exhaustive, would take some time.
It was also reported in the media that the SEC scaled back its enforcement efforts, particularly in the realm of cryptocurrencies, where 50 lawyers were reassigned to other divisions. Furthermore, it was reported that formal orders of investigation would need to be approved by the Commission, an authority historically delegated to lower staff.
Trump also signed an Executive Order to establish a sovereign wealth fund. While some state-level wealth funds exist, like Alaska, Texas, and New Mexico, the US has never had a national-level investment fund. However, key details such as timing, size, investment strategy, and funding sources remain unknown, though in interviews David Sacks suggested that bitcoin investment has not been ruled out entirely.
Looking at the largest sovereign wealth funds around the world, their source of funds comes from one of three places – oil and gas exports, foreign exchange reserves from trade surpluses, or state-owned enterprises. While the US is a net exporter of both oil and gas, those dynamics are relatively recent, emerging first in 2017, and the US, unlike China, runs a trade deficit. The jury is out on this one; we’ll have to wait to see more details before having a stronger view.
Bitcoin's dominance, or its share of the total cryptocurrency market cap, continues to climb, recently reaching 65.2%. This cycle has been much more bitcoin-focused with the ETFs and political standing being the driving forces. As a result, its dominance this cycle has taken a different trajectory. In previous cycles, bitcoin’s dominance declined during the altcoin-driven blowoff at the top of 2017 and 2021 before steadily increasing throughout the subsequent downturn. While bitcoin’s dominance showed a similar recovery in 2022, its trajectory since then has essentially been a 45-degree angle up and to the right.
What's the reason behind this trend? This cycle has lacked fresh narratives and innovative use cases and the second-largest digital asset, ether (Ethereum), has struggled. While memecoins have emerged as a notable development this cycle, their absence of utility, technical innovation, or economic fundamentals has made their impact short-lived.
Many alts got a significant bump in the wake of the election and not surprisingly so. The Republicans more broadly support the industry in key areas, such as regulation, enforcement, economic growth, and investment. This was all incrementally better for alts, as many of these areas were already well-defined for bitcoin. However, that bump was short-lived – many coins have entirely roundtripped the “Trump bump,” others appear that they are about to, and some are even lower than before the election. Unless new use cases take hold across the industry, bitcoin’s rise in dominance is likely to continue.
This week, news broke that Trump Media & Technology Group, the $6.8 billion company primarily owned by Donald Trump, is preparing to enter the bitcoin ETF market. A press release from the company indicates the company registered trademarks for “Truth.Fi Bitcoin Plus ETF” and “Truth.Fi Bitcoin Plus SMA.” No documents have been filed with the SEC yet, however.
Trump Media inked a relationship with Yorkville Advisors to act as the RIA for the new financial vehicles, the first such action since launching the Truth.Fi fintech brand a week and a half ago. The company also allocated $250 million to Charles Schwab to help develop the SMAs, which also include the “Truth.Fi Made in America SMA” and “Truth.Fi U.S. Energy Independence SMA” although details on either of these strategies are not presently known.
Across the digital asset ETF landscape, changes continue, with the advancement of several potential offerings and changes to existing products. The SEC acknowledged the receipt of the Nasdaq request to add “in-kind” redemptions to the IBIT ETF, an effort that Hester Peirce mentioned explicitly in her statement this week. She wrote that “before these changes can be operationalized, however, the Commission may have to make progress on custody and other issues.” The SEC also acknowledged the receipt of requests to list and trade Grayscale SOL and LTC ETFs, while Cboe BZX published 19b-4s change of rule requests forms for 4 XRP ETFs.
Finally, the media reported that BlackRock was planning to launch a bitcoin ETF in Europe, with marketing beginning as soon as this month. Europe is already home to a dozen and a half bitcoin ETFs with AUM totaling over $9B, but perhaps BlackRock’s marketing muscle can expand that addressable market.
Bitcoin dropped 7.6% this week, largely due to tariff-induced volatility over the previous weekend. While the broader risk markets also reacted negatively to the tariff news, bitcoin and the wider crypto sector experienced a sharper decline, primarily driven by liquidations of perpetual swaps trading on offshore exchanges. Between Friday and Monday, bitcoin alone saw $572 million in liquidations, as both long and short positions were forced to close.
The broader digital asset market suffered nearly $3.0 billion in total liquidations, with ether (Ethereum) being the hardest hit. Ether liquidations totaled $739 million over the period, surpassing bitcoin’s despite ether’s market cap being just one-sixth the size of bitcoin’s. With bitcoin bouncing between $90K and $110K since the initial Trump bump, it may take a new catalyst for bitcoin to break out of the range.
Turning to traditional markets, equities bounced back from the tariff news while gold continues to shine, up 1.2% on the week. Gold appears to be benefitting from its long-standing position as a non-correlated asset and a hedge against market instability, while bitcoin continues to have heightened correlations to market factors.
Investing:
The Ultra-Rich Are Bullish on Bitcoin, Says Tiger21's Michael Sonnenfeldt - CNBC
U.S. Bitcoin Reserve May Be Coming, But States Are Winning the Race - CoinDesk
Bitcoin College Savings Plan: Parents Ditch 529 Funds for Crypto - Bloomberg
TRUMP Memecoin News: Token Drops 75% as U.S. Tariffs Pull Dogecoin, Memes Lower - CoinDesk
Trump-Backed World Liberty Financial Moves its Sizable ETH And WBTC Holdings to Coinbase - The Block
Trump Media Registers Trademarks for Truth.Fi Investment Vehicles (PDF) - Trump Media
Hearings:
Hearing: Operation Choke Point 2.0 - House Committee on Financial Services
FDIC Releases Documents Related to Supervision of Crypto-Related Activities - FDIC
Correspondence Related to Crypto-Related Activities (PDF) - FDIC
Hearing: Investigating the Real Impacts of Debanking in America - Senate Banking Committee
Digital Assets Press Conference and Legislation:
Press Conference: White House, Senate, House Leaders on Digital Assets - Senate Banking Committee
AI and Crypto Czar David Sacks Interview - CNBC
Scott, Hagerty, Lummis, Gillibrand Introduce Legislation to Establish a Stablecoin Regulatory Framework - Senate Banking Committee
Hill and Steil Release Discussion Draft for Stablecoins - House Committee on Financial Services
SEC:
The Journey Begins - Commissioner Hester Peirce
SEC's Republican-Led Commission Tightens Oversight of Probes, Sources Say - Reuters
S.E.C. Moves to Scale Back Its Crypto Enforcement Efforts - NYT
SEC Ousts Top Litigator Who Battled with Crypto Giants - WSJ
Other:
US Marshals Won’t Meet Senator’s Deadline to List Cryptoassets - Bloomberg
Howard Lutnick Softens Stance on Tether Stability, Investment Ties During Senate Hearing - CoinDesk
Banks Want to Crash the Bitcoin Party. Trump Is Opening the Door - Barron's
Crypto Ransomware 2025: 35.82% YoY Decrease in Ransomware Payments - Chainalysis
Companies:
Semler Scientific Announces Updated BTC Activity; Monetizes Minority Investment to Purchase BTC - Semler Scientific
MicroStrategy is Now Strategy - Strategy
Bitcoin OP_CAT Proposal Gets Boost from Taproot Wizards' $30M Fundraise - CoinDesk
Fold Expands Relationship with Visa to Accelerate Bitcoin Rewards Card Programs - Fold
Tether Revs Up Deal Machine After Its Embrace by ‘Establishment’ - Bloomberg
Feb 12 - CPI release
Mar 4 - FTX creditor payment deadline
Jul 2 - Final SEC deadline for decision on GDLC ETF conversion
Jul 22 - EO Working Group report deadline
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