2025, Jan 22 - Jan 28

Bitcoin crashed all the way down to $98,000, the first week of the Trump Administration. For many, this is a surprise. Although the US government is still pro-crypto, analysts pointed out that President Trump did not mention the usage of BTC for a Strategic Reserve, at inauguration last week. Not only did BTC dip down, but the entire crypto and stock market saw the red and panic sold. This is a significant let down especially because of the hype that was formed before January 20, and the $TRUMP shaking the market, completely sucking up the liquidity of alts and memes. As of this week, the Trump coins seem to be in a massive down trend, along with some recovering, then dipping back down. The White House official website shows an executive order sign by the new and former President on January 23, “STRENGTHENING AMERICAN LEADERSHIP IN DIGITAL  FINANCIAL TECHNOLOGY,” explaining the roles of stable coins to maintain USD positions, blockchain technologies’ increased publicity, and reducing the risks of central bank digital currencies. This may result in crypto to be finally accepted as a mainstream payment method, which is a step up for legitimacy and popularity in the investing world. However, the market does not seem to agree with, frankly, such a bullish move. Expectations of making BTC the official United States Reserve Currency did not, in fact, happen the first day in office, the Executive Order did not specifically call out for Bitcoin, and instead referred to as “digital assets,” there was no mention of buying/holding exactly how much digital currencies, and the stock market also responded back with a bearish dump. The historical “Christmas Rally” was canceled and the January pump we were all looking for does not look to be so great. However, perhaps the Executive Order, or “just a commission” stated by commenters, could have been purposely vague, in order to utilize not only Bitcoin, but other “digital assets” as well. In a CNBC’s Crypto World interview with Paul Grewal of Coinbase, he claims that 2025 is “the most pro-crypto Congress in history… we could not be more optimistic about the future for crypto.” This can be supported by another source by Yahoo Finance, that Eric Trump confirms US based crypto projects will benefit from zero capital gains tax. The president explained that the country can completely survive without the use of income taxes and instead operate off of tariffs alone. However, this doesn’t sound smooth with surrounding nations like Canada, threatening to cut off America's electricity. 

The crypto market saw a major sell off and Nvidia lost $600 million in a single day. Trump spoke at the GOP Event in Miami, Florida that “the release of DeepSeek AI from a Chinese company should be a wakeup call for our industries that we need to be laser focused on competing to win.” Compared to the world’s leading AI like Meta or OpenAI, which spent hundreds of millions, if not billions, Deepseek, a private Chinese company, releases an AI, so much more powerful, costing just $5.6 million and completed in just two months. Although China had semiconductor restrictions, DeepSeek found a way of maximizing the power out of Nvidia’s h800 GPU. According to CNBC, they used an efficient strategy called distillation where a big model used to help the small model “get smart at the thing you wanted to get smart.” The major difference between GPT4 and DeepSeek, is the secret coding process of OpenAI, while there a better performing program is posted publicly for people to copy. This is significant after the fact that GPT4 costs $4.40 for 1 million tokens while Deepseek costs only $0.10. [AI tokens are used to process the characters for an artificially generated chat] This means that businesses will start to use this cheaper option to operate the same tasks. The US may have overreacted just a bit with fear of “losing” the tech race, that they were ahead this whole time. However, as of January 28, the overall market saw good recovery in both crypto and stocks.

There is a surprising amount of uncertainty for crypto this month, after the hype of Trump’s Administration. But, tomorrow is a very big day: FED Chairman Powell meets the new President for the first time, this term, and it is up to this meeting where reactions will be made and eventually catch up to the price of BTC and crypto. There is about a 0% rate cut prediction as well as a 30% rate cut prediction at the next FOMC meeting. Inflation rates are lower than expected and for Powell, this only means he does not need to cut FED fund rates. This will be an interesting path for the immediate short term for Bitcoin. Despite the skepticism of rate cuts and Trump’s vague address, Arizona has now approved Bitcoin’s Nation Strategic Reserve, and many other states already have legislations and proposals for crypto spendings. For now, we wait until the US government fully understands the potential of crypto for this country.