Cautious Recovery After Turbulent Weekend

Every week, Amdax summarizes what's happening in the crypto market for you. Want to learn more? Click through for further insights. 

This newsletter is a co-production with our partner Bitcoin Alpha.

Market Update 

Stay informed in three steps:

1. Trump’s Announcement of Import Tariffs Triggered a Sharp Decline

Over the weekend, the newly elected U.S. president announced import tariffs on goods from Canada, Mexico, and China. Given the potential macroeconomic impact, investor uncertainty quickly surged. This was reflected in financial markets that remained open over the weekend, including the crypto market.

2. Bitcoin Lost About 7% in a Few Hours

Despite the market reaction, bitcoin’s price decline remained relatively limited following the announcement of the tariffs. The total drop from the January peak of $109,000 to its Monday low of around $91,000 amounts to roughly 16%. Earlier in this bull market, corrections of around 20% were observed.

3. Ether Dropped 28%, and Many Altcoins Fell Even Further

A strong wave of sell-offs hit the crypto market overnight from Sunday to Monday. This was partly driven by forced liquidations of leveraged positions. In a market with reduced liquidity, such liquidations quickly lead to sharp price declines. A cautious recovery followed in the days after.

News Overview

Signal out of the noise:

• The Race for Strategic Bitcoin Reserves in the U.S. is in Full Swing
  
  Fifteen U.S. states now have serious plans to acquire bitcoin for their reserves. Pennsylvania set the tone in November 2024 with a bill proposing to invest up to 10% of public funds in bitcoin. The driving forces? Increasing political influence of crypto, growing support from the Trump administration, and, of course, bitcoin’s massive price gains in recent months. Critics argue that bitcoin’s volatility makes such investments risky.

• Scott Bessent Sworn in as U.S. Treasury Secretary
  Bessent is set to defend the Trump administration’s fiscal policies, including tax cuts and controversial import tariffs. A notable detail? He sees opportunities in digital innovations like bitcoin and has been critical of the idea of a digital dollar. While his exact policies remain to be seen, he appears to be a strong advocate for crypto. Analysts expect his stance to influence U.S. crypto regulations positively.

• U.S. Government and Congress Move Forward with Crypto Legislation
  During a press conference, Trump’s crypto czar David Sacks Sacks announced the formation of a House and Senate task force with stablecoin regulation as its top priority. Sacks spoke of a "golden era" for digital assets, emphasizing that the U.S. does not want to lose its position in crypto innovation. At the same time, regulators are working on broader market structure laws, which could bring more clarity for investors and businesses.

• Binance Under Scrutiny Again in France
  French authorities have launched a criminal investigation into potential money laundering and tax fraud at Binance. The probe focuses on activities between 2019 and 2024, including alleged illegal promotions of services via social media and influencers. These allegations come on top of previous legal troubles, such as the record $4.3 billion fine in the U.S. and regulatory blockages in the UK. Although Binance strongly denies the accusations, analysts believe these developments further reduce its chances of securing a MiCA license in the EU.

Amdax’s Take

Trump’s import tariff announcement triggered a sell-off in the crypto market, but notably, fund flows into U.S. crypto funds remained stable. Ether funds even recorded positive inflows, reaffirming continued confidence among traditional investors. Meanwhile, the U.S. is accelerating efforts to regulate crypto, which could ultimately provide more clarity and drive further adoption.