The CoinEx Research Department's January 2025 report focused on the dramatic market volatility this month, influenced by political dynamics, institutional participation, and macroeconomic factors. Bitcoin broke through $100,000 to reach a new all-time high, while Altcoins languished due to the market liquidity being siphoned away by a Token related to former President Trump. The rise of the Chinese DeepSeekAI model further disrupted the global technology and Crypto markets, leading to a revaluation. Institutional investors' adoption of Bitcoin continued to heat up, but the market pullback at the end of the month raised concerns about potential consolidation.

A Turbulent Start to 2025
Bitcoin opened the new year at around $92,500 and closed near $102,000, demonstrating resilience in a volatile macroeconomic environment. The Federal Reserve maintained interest rates between 4.25%-4.50%, citing a still-strong labor market and persistent inflation, while the Bank of Japan raised its policy rate from 0.25% to 0.50%. The official TrumpMemecoin and the Ethereum-based WorldLibertyFinance (WLFI) project related to Trump attracted market attention, but their capital siphoning effect limited the growth of Altcoins. Given the current market conditions, Bitcoin may enter a short-term consolidation phase due to a lack of immediate positive catalysts.

Trump Effect: MEME Token Frenzy, Rapid Expansion of DeFi

With Donald Trump's impending inauguration, his influence in the Crypto market has significantly increased. His team issued the official TrumpMemecoin on the Solana-based Meteora platform, bypassing traditional Solana liquidity providers like Raydium. This drove Solana's stablecoin supply to surpass $9 billion, a 130% surge, and pushed Solana's decentralized exchange (DEX) trading volume to a record high of $258 billion, triple that of Ethereum. The MEME Token's fully diluted valuation (FDV) briefly exceeded $70 billion, surpassing leading MEME Tokens like SHIB, PEPE, and WIF.

The speculative frenzy continued to heat up, with First Lady Melania Trump unexpectedly launching the MelaniaToken, further boosting market trading activity. However, the successive Token issuances led to a depletion of market liquidity, ultimately triggering a correction. Meanwhile, the Ethereum-based DeFi project WorldLibertyFinance (WLFI) related to Trump successfully raised over $300 million in its presale, indicating that Trump's Crypto narrative has transcended MEME Tokens and penetrated institutional-grade DeFi products, combining speculative and financial attributes.

DeepSeekAI Disrupts the Global Market

The Chinese DeepSeekAI model was officially released just before the Lunar New Year, shocking the global AI and financial markets. The model's training cost is far lower than Western competitors, using a Mixture of Experts (MoE) architecture to optimize computational efficiency by selectively activating the most relevant sub-networks, significantly improving the cost-performance ratio.

The emergence of DeepSeek triggered a massive sell-off in US tech stocks, with Nvidia (NVDA) plunging 17% in a single day, as investors reassessed the AI competitive landscape. Crypto Tokens related to AI also experienced a severe downturn due to the risk-off sentiment in the market. However, the rise of DeepSeek is not a fundamental threat to the market, but rather marks a necessary market readjustment that may accelerate the adoption of AI technology and bring new development opportunities to the Crypto industry.

Institutions Widely Adopt Bitcoin and Policy Shifts

In January, institutional participation in Bitcoin remained strong, supported by various policy developments. The acting chair of the U.S. Securities and Exchange Commission (SEC), MarkUyeda, established a dedicated Cryptocurrency Working Group, while President Trump signed an executive order in his first week in office to promote crypto innovation, signaling a broader policy shift towards crypto adoption. Additionally, the Illinois state legislature is advancing a bill to establish a state-level Bitcoin reserve, continuing the steps taken by Arizona to incorporate cryptocurrencies into public finance.

Beyond the U.S., sovereign institutions have also increased their Bitcoin allocations. The Czech central bank has approved the inclusion of Bitcoin in its national reserves, while Norway's sovereign wealth fund reported a 150% year-over-year increase in its Bitcoin holdings, exceeding $350 million. These developments indicate growing confidence in Bitcoin as a store of value among government financial institutions and institutional investors.

Stablecoin Inflows and Cautious Market Sentiment

Stablecoin inflows remained strong, with around $9.9 billion flowing into the market in January, continuing the growth trend of the past three months and supporting the bullish market sentiment. Alongside Bitcoin reaching new all-time highs, these inflows further emphasize the importance of stablecoin liquidity for market momentum.

However, despite the overall optimistic market trend, the significant correction at the end of January indicates a cautious attitude among investors. If stablecoin inflows slow down or even turn into net outflows, the market may enter a consolidation phase, leading to increased volatility. Investors should closely monitor stablecoin capital flows as a key indicator of market sentiment.

Market Outlook for February 2025

Looking ahead to February, the market direction will be influenced by institutional dynamics, regulatory policies, and stablecoin capital flows. Traders and investors should remain vigilant, adjusting their strategies based on the macroeconomic environment and liquidity trends to navigate the market changes.