Author: Revc, Jinse Finance

The Gamble and Fission of the Crypto Market in February 2025

The crypto market after Trump's re-election is both a carnival of policy dividends and a testing ground for endogenous risks. With the release of key economic data in February 2025, the adjustment of the regulatory framework, and the acceleration of technological iterations, the market continues to fluctuate between the tension of "optimists advancing" and "pessimists warning". This article analyzes the current market dynamics from multiple perspectives and explores their underlying logic.

I. Policy Shift: The Struggle between Liberalization Promises and Implementation Risks

Optimistic Narrative: The Trump administration's "Crypto Utopia" policy is advancing rapidly, SEC Chairman Gary Gensler has resigned, the cumulative assets under management of Bitcoin ETFs have exceeded 1.1 million BTC (BlackRock's IBIT accounts for 45%), and the U.S. Bitcoin Reserve Program is progressing in legislation in Texas and Pennsylvania, with Bitcoin price breaking through $100,000.

Pessimistic Doubts: The national Bitcoin reserve program faces high volatility risks, and the coordination between Congress and the Federal Reserve may lead to policy implementation gaps against the backdrop of a $18 trillion federal deficit.

February Updates:

- SEC Shifts to "Guiding Regulation": New Chairman Paul Atkins is pushing the Crypto Working Group's top 10 priorities, clarifying the token's securities attributes and exploring compliance paths, but emphasizing cracking down on fraudulent activities.

- FIT21 Act Advances: If passed by the Senate, it will delineate the regulatory boundaries between the SEC and CFTC, but Republican Senator Cynthia Lummis warns that "the bill needs to balance innovation and investor protection".

II. Meme Coin Frenzy: Political Tokenization and Bubble Risks

Optimistic Logic: The market cap of Trump's Meme Coin TRUMP once exceeded $15 billion, the transaction volume on the Solana chain has surged (with 100 million active addresses), attracting retail investors and expanding the user base.

Pessimistic Perspective: TRUMP Coin plummeted 60% after launch, the Melania Coin diverted funds, former Coinbase CTO calls it a "zero-sum lottery", and industry leaders warn of a trust collapse like FTX if the bubble bursts.

February Data Verification:

- Meme Coin Trading Ratio Rises: Accounting for 11% of the trading volume of the top 300 cryptocurrencies (excluding stablecoins), but the speculative nature has led to increased market volatility, with $346 million in 24-hour liquidations.

- WLFI Asset Allocation Controversy: WLFI transferred $307 million in assets to Coinbase Prime, increased holdings of ETH and WBTC to hedge volatility, but the token swap protocol is accused of leveraging political influence to lock liquidity.

III. Macroeconomic Linkage: The Dual Shocks of Non-Farm Data and Debt Crisis

Optimistic Expectations: In January 2025, U.S. non-farm payrolls increased by 143,000, lower than the expected 169,000, and the unemployment rate fell from 4.1% to 4%. An hour after the non-farm employment data was released, Bitcoin tested around $100,000, but due to inflation concerns and tariff threats, the three major U.S. stock indexes fell overnight, and Bitcoin retreated to around $96,000.

When meeting with Japanese Prime Minister Shigeru Ishihara, Trump said he would announce "reciprocal tariffs" measures next week, potentially escalating the trade war. Nationwide Chief Strategist Mark Hackett pointed out that the market initially focused on non-farm employment data, but Trump's tariff statement became the new focus. Although job growth has slowed, the low unemployment rate may keep the Fed from changing interest rates, and the market expects only one rate cut this year.

Pessimistic Warning: U.S. national debt has exceeded $36 trillion, facing the risk of a credit rating downgrade. If the U.S. debt crisis triggers a global liquidity crunch, the crypto market may collapse in sync with risk assets.

February Market Resilience Test:

- U.S. Dollar Hegemony Gamble: The U.S. dollar index rose to 108, strengthening the "digital gold" narrative of Bitcoin, but WLFI's partial ETH sell-off to lock in profits exposed its short-term speculative nature.

- Fed Policy Contradictions: The Trump administration is trying to stimulate the economy by managing the 10-year Treasury yield, conflicting with the Fed's independence, exacerbating market uncertainty.

IV. Technical Drivers and Bubble Concerns: Ethereum Upgrade vs. VC Valuation Overheating

Optimistic Cheers: The Ethereum Pectra Upgrade (expected in Q1-Q2 2025) aims to comprehensively improve Ethereum's performance and user experience. This upgrade will focus on improving account abstraction, simplifying private key management, and enabling more diverse transaction functions; enhancing L2 compatibility, reducing transaction costs, and improving efficiency; optimizing the staking mechanism, lowering the participation threshold, and increasing ETH liquidity; improving EVM performance and enhancing the security of smart contracts; as well as improving light client support to increase the network's decentralization. The goal of the Pectra Upgrade is to make Ethereum more user-friendly, cheaper, and more secure, thereby accelerating its mass adoption and consolidating its leading position in the smart contract platform.

Pessimistic Review: Valuations of new public chains like TON and SUI are overheated (SUI FDV reaches $54 billion), the homogenization competition of altcoins exposes the lack of innovation, and the RWA project Plume Network promised $4.5 billion in assets before launch but only has $64 million in TVL.

February Technical Milestones:

- Frax L2 Launch: Fraxtal supports frxETH and FRAX as gas tokens, with top protocols like Curve Finance onboarding, but whether it can attract hundreds of millions in TVL in the first month is questionable.

- EigenLayer Re-Staking Fever: TVL surpassed $12.1 billion, but the 33% staking cap raises centralization concerns, and airdrop incentives may exacerbate short-term speculation.

V. Regulation and International Gamble: Decentralization Ideals vs. Political Manipulation Realities

Optimistic Vision: The EU's MiCA framework takes effect, driving regulatory convergence globally to promote compliance.

Pessimistic Exposure: The WLFI project incurs losses of tens of millions, the Trump family is accused of "using political influence to exploit the masses", and decentralization becomes a vassal of power.

February Geopolitical Risks:

- Trump's Territorial Disputes: Proposing radical agendas like the "American Bay", heightening international tensions, leading to $282 million in 24-hour long position liquidations in the crypto market.

- CBDC Confrontation Escalates: Trump firmly resists the digital dollar, while China accelerates the promotion of the digital renminbi, increasing the risk of fragmentation in the global payment system.

Conclusion: Reshaping the Industry's Value between Frenzy and Sobriety

The "Trump Era" of the crypto market is a prism that reflects the complex entanglement of political power, capital games, and technological innovation. Pessimists see the pitfalls of policy volatility, Meme coin bubbles, and debt crises; Optimists embrace the dividends of institutional participation, Ethereum upgrades, and global capital expansion.

Historical experience warns: The true winners in the market need to dynamically balance between the two perspectives.

1. Break free from the "Trump Dependence Syndrome": Policy sustainability is significantly low (the presidential promise fulfillment rate is only 31%), and the industry needs to shift from "regulatory arbitrage" to building intrinsic technological value.

2. Resist the "Crypto Infantilism": The losses of WLFI and VC bubbles reveal that over-reliance on external dividends will weaken anti-cyclical capabilities, and only innovations in infrastructure and application layers can weather the bull and bear cycles.

If the crypto industry can seize this opportunity to solidify its technological foundation during the policy relaxation period and maintain sobriety amidst the frenzy of speculation, it may nurture the true crypto civilization miracle in the turbulence.