Market Prepares For FOMC

This week, Bitcoin peaked at $106.5K after Trump signed his first crypto executive order. However, the news was quickly sold off, causing BTC to dip below $100K, with the sell off further amplified by the emergence of Deepseek, which dragged down US tech stocks. Bitcoin has since stabilised at $101K, despite heightened volatility across all markets.

The Fed’s monthly FOMC meeting is scheduled for tomorrow, which has added to recent market turbulence as investors typically reposition and de-risk ahead of key announcements. Prediction markets currently suggest a 98% probability of no change to interest rates. However, the real market mover will be the tone of Powell’s delivery, last meeting, his hawkish remarks scared investors. All eyes are on tomorrow’s announcement, with volatility likely.

Weekly Price Update

DeepSeek Market Shock

DeepSeek, a cutting-edge AI model launched in December, has shaken the crypto and equity markets with its disruptive efficiency and low costs. Since the event unfolded over the weekend, when traditional markets were closed, crypto being a 24/7, highly liquid market, was the first to react, leading to significant price declines.

Its debut triggered a major liquidity crunch, contributing to Bitcoin’s sudden drop to $98,000 and wiping out $820 million in leveraged positions. DeepSeek’s ability to operate with minimal computational demands slashed AI costs by 75%, unsettling investors across tech and crypto sectors.

The disturbance deepened as debates arose over DeepSeek’s actual GPU usage, with Elon Musk and analysts suspecting it operates on far more NVIDIA chips than claimed. Meanwhile, panic-driven portfolio rebalancing saw funds shift from crypto and tech giants into Chinese AI stocks. NVIDIA shares fell 17% over concerns about AI spending, though we still see this as bullish due to increased demand for high-performance GPUs.

Fake DeepSeek-related tokens also capitalised on the hype, with one reaching a $50 million market cap. As markets adjust, DeepSeek’s efficiency-driven AI model signals a new era, keeping Bitcoin and altcoins under close watch amongst the ongoing volatility.

Trump Executive Orders

Trump has wasted no time fulfilling his crypto adoption promises, signing his first crypto focused executive order this week. The key directives include:

1) Digital Stockpile of Crypto

The order proposes evaluating the creation and maintenance of a national digital asset stockpile. This stockpile could potentially be sourced from cryptocurrencies lawfully seized through past law enforcement efforts. This initiative is separate from the highly anticipated BTC Reserve but remains bullish for altcoins, as select ones are likely to be included.

2) Central Bank Digital Currencies Banned

Trump’s order bans the creation and use of a Central Bank Digital Currency (CBDC) in the U.S., citing the risks posed by centralised control. CBDCs are often criticised for undermining the decentralised nature of cryptocurrencies and enabling excessive government surveillance over financial transactions.

This is a significant move because CBDCs shift financial power back to government bodies, directly opposing the core principles of crypto decentralisation, financial sovereignty, and privacy. Crypto was designed to remove intermediaries, giving individuals full control over their assets, whereas CBDCs  reinforce state control over money, limiting financial freedom.

3) Crypto Banking Access

A pivotal change allows banks to provide custody for client crypto without it being treated as a liability on their balance sheets. This opens the door for traditional banks to actively enter the crypto space, potentially driving broader institutional adoption and trust.

Jupiter Spotlight

Jupiter (JUP) has been making waves in the DeFi space, and it’s no surprise it’s been a top performer this month. Over the weekend, the protocol completed a community approved supply burn, wiping out 30% of its total supply, equivalent to $3 billion. This massive reduction in supply not only adds scarcity but also reinforces the long term commitment to the project.

Jupiter Swaps

On top of that, JUP introduced token buybacks, where 50% of transaction fees are used to purchase JUP tokens, further reducing the circulating supply and driving market demand. To round it all off, the protocol made a major move by acquiring Moonshot, solidifying its position as a DeFi powerhouse on Solana. With bold moves like these, JUP is setting itself up as a leader in the Solana ecosystem.

Bitcoin wallets holding 100 to 1,000 BTC reach record high

The number of Bitcoin wallets holding 100 to 1,000 BTC has reached a record 15,777, according to Santiment. This surge in mid-sized holders, or "whales," is viewed as a strong indicator of a bullish market outlook for 2025.

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Santiment highlights that the trend reflects growing confidence among key stakeholders, potentially driving increased market activity. Supporting this, CryptoQuant data shows large Bitcoin holders have resumed accumulation, with holdings increasing 2% in mid-January following a period of profit-taking.

ETF Filings  

With pro crypto leadership now leading the SEC, there’s been a surge in crypto ETF filings, the latest being Dogecoin by Bitwise. The filing falls under the 40 Act, which enforces stricter compliance and investor protection standards. Dogecoin now joins the likes of XRP, SOL, and LTC in this wave of applications. Current market sentiment, as reflected on Polymarket, gives Dogecoin a 56% chance of approval in 2025, while SOL leads with 86%, followed by LTC at 85% and XRP at 74%.

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