Bitcoin reacts negatively to Economic Data

Bitcoin faced a sharp decline from its weekly high of $102,200, dropping 5.7% to trade at $96,200, following the release of unexpectedly strong U.S. economic data. November’s JOLTS job openings rose to 8.1 million, surpassing forecasts and signalling a strong labor market, while December’s ISM Services PMI came in at 54.1, indicating robust growth in the services sector and economic expansion.

U.S. 10 Year Treasury

Both reports suggest the U.S. economy remains strong, which could sustain inflationary pressures and reduce the likelihood of Federal Reserve rate cuts. The 10-year U.S. Treasury yield rose by five basis points to 4.687%, nearing multi-year highs, as markets adjusted to the prospect of higher rates for longer. The likelihood of a March rate cut by the Fed fell to 37% from nearly 50% the prior week, while some investors now anticipate just one 25-basis-point rate cut for the entire year.

The bond market volatility spilled over into equities, with the Nasdaq falling more than 1% and the S&P 500 declining by 0.4%. Crypto markets also reacted sharply, with Bitcoin’s drop triggering over $540 million in liquidations across derivatives markets, primarily from long positions. Major altcoins, including Ethereum and Solana, experienced even steeper losses of 8%-9%.

Weekly Price Update

The Rise of Ai Agents

The rise of AI agent tokens is reshaping the token landscape, signaling a shift from speculative assets like memecoins to utility-driven innovations. Over the past 24 hours, trading volume among the top AI and data tokens surged by 7.95%, while memecoin trading volume dropped by 21.5%, according to CoinMarketCap. The AI agent sector now boasts a market cap of $15.59 billion and 24-hour trading volume of $2.61 billion, highlighting its growing mindshare.

What are AI Agents?

At its core, an AI agent is an intelligent software system capable of performing tasks, making decisions, and adapting with minimal human intervention. These agents analyse data, improve over time, and often act autonomously. In the crypto space, they are being likened to digital entrepreneurs each having unique and different utilities.

The crypto AI agent phenomenon began in mid-2024 with Truth Terminal, an early AI agent that gained attention for autonomously posting on the social media app X. The craze escalated when Truth Terminal began promoting the meme coin Goatseus Maximus ($GOAT), propelling its market cap to over $1.2 billion within days. This viral success spurred the development of more sophisticated platforms, such as Virtuals and ai16z, which were already building an agentic ecosystem to support next-generation AI agents.

One standout example is aiXBT, the largest AI agent on the Virtuals platform by market cap. Operating autonomously on X, aiXBT focuses on social engagement, on-chain data and market analyse and then posts about its findings and opinions on trends and different digital assets. This agent is helping investors by providing them with top insights and opportunities to look out for.

Ai Agents Potential

While memecoins captured mainstream interest in 2024, the focus is gradually shifting toward AI agents due to their ability to interact and deliver real value. This growing preference is underscored by Nvidia CEO Jensen Huang’s bold statement that "AI agents are a multi-trillion dollar opportunity." As this trend gains momentum, AI agents are not just reshaping the narrative - they are creating a new paradigm in the digital asset space, blending technology, finance, and autonomy.

Institutional Bitcoin Investments

MicroStrategy continued its aggressive Bitcoin accumulation, purchasing an additional 1,070 BTC for $101 million, marking its ninth consecutive week of acquisitions. The purchase was funded through share sales under the company’s at-the-market (ATM) program. With this latest addition, MicroStrategy’s total Bitcoin holdings have reached 447,470 BTC.

Meanwhile, Japan-based venture capital firm Metaplanet has set an ambitious target to expand its Bitcoin holdings to 10,000 BTC in 2025 (top 5 public company in BTC holdings), up from its current 1,762 BTC, worth $173.4 million. CEO Simon Gerovich emphasised the firm’s commitment to boosting Bitcoin adoption globally, particularly in Japan, with analysts predicting a potential bull run pushing Bitcoin prices above $200,000. Metaplanet’s largest purchase to date occurred on December 23, when it acquired 619.7 BTC. Since beginning its accumulation in April 2024, the firm’s shares have risen by 27.5%, reflecting investor confidence in its Bitcoin-focused strategy.

ETF Flows

U.S. spot Bitcoin and Ethereum ETFs experienced a surge of inflows on Monday, totalling over $1.1 billion. Bitcoin ETFs alone accounted for $978.6 million of this amount, as Bitcoin's price broke past $100,000 for the first time since December 19. Leading the inflows was Fidelity's FBTC fund, which attracted $370.2 million, followed by BlackRock’s IBIT with $209.1 million and Ark Invest’s ARKB with $152.9 million. This marked the second consecutive day of over $900 million in net inflows for Bitcoin ETFs, reversing nearly $2 billion in outflows recorded in the prior two weeks. Since their inception nearly a year ago, cumulative net inflows into U.S. spot Bitcoin ETFs have now reached $37.1 billion.

Ethereum ETFs also showed strong performance, with $128.7 million in inflows on Monday, primarily driven by BlackRock’s ETHA fund. Since launching in July, spot Ethereum ETFs have accumulated $2.8 billion in total inflows. December was a significant month for both Bitcoin and Ethereum ETFs, with Bitcoin ETFs recording $4.5 billion in net inflows, ending the year with $35.24 billion in cumulative net inflows and $105.4 billion in total net assets -equivalent to 5.7% of Bitcoin's market cap. Meanwhile, Ethereum ETFs saw record inflows of over $2 billion in December, nearly doubling November's $1 billion.

Despite these positive trends, BlackRock’s iShares Bitcoin Trust (IBIT) experienced a record outflow of $330.8 million on January 2, marking the largest single-day outflow since its launch. This outflow surpassed the previous record of $188.7 million on December 24. However, IBIT remained one of the top-performing ETFs in 2024, ranking third among all U.S. ETFs for inflows, with $37.2 billion, trailing only Vanguard’s VOO and iShares Core S&P 500 ETF (IVV).

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