The main trends in the current cryptocurrency market are as follows:
Policy and regulation
- US policy changes: The SEC shifts to "guided regulation", and the new chairman promotes the cryptocurrency working group to clarify the attributes of token securities and explore compliance paths, while cracking down on fraud; if the FIT21 bill is passed, it will divide the regulatory boundaries between the SEC and the CFTC.
- International regulatory convergence: The EU MiCA framework takes effect, and global regulation has a trend of convergence, promoting the compliance of the crypto market.
Market conditions and investment
- Mainstream currency fluctuations: Bitcoin prices fluctuate around $100,000, and mainstream cryptocurrencies such as Ethereum fluctuate violently. On February 3, Ethereum once plummeted 25%, and Bitcoin's maximum drop in 24 hours exceeded 6%.
- Meme coin popularity and risks: Meme coin transactions account for 11% of the trading volume of the top 300 crypto assets. TRUMP coins and other coins attract retail investors to enter the market, but plummeted after going online. Speculation has led to increased market volatility, and the amount of liquidation in 24 hours reached $346 million.
- Institutional participation increased: The cumulative assets under management of US Bitcoin ETF exceeded 1.1 million BTC, with BlackRock IBIT accounting for 45%; institutions continued to buy mainstream cryptocurrencies such as Bitcoin to promote market development.
Technology development
- Ethereum upgrade: Ethereum Pectra upgrade is expected to be carried out in Q1-Q2 2025, focusing on improving account abstraction, enhancing L2 compatibility, optimizing pledge mechanism, etc., aiming to comprehensively improve performance and user experience.
- New public chains and projects emerge: Frax L2 is launched, supporting frxETH and FRAX as Gas tokens, and Curve Finance and other head protocols are settled; EigenLayer is in the staking boom again, and TVL exceeds 12.1 billion US dollars.
Macroeconomic correlation
- Game with the US dollar: When the US dollar index rose to 108, the narrative of Bitcoin as "digital gold" was strengthened, but some institutions sold some ETH to lock in profits.
- Affected by policies: Macroeconomic factors such as US non-farm payroll data, Federal Reserve interest rate decisions, and Trump's tariff policies will have an impact on the cryptocurrency market, and market uncertainty will increase.
