Feb 2025 Market Commentary: Bitcoin, Altcoin & Policy Impact
Author: Hillroute Date: February 25, 2025
Executive Summary:
Bitcoin & Altcoin Performance: Bitcoin saw a pullback following President Trump’s 25% steel and aluminum tariff announcement, as investors reacted to potential economic slowdowns. Ethereum and major altcoins also experienced volatility, with institutional demand remaining a key factor in market movements. As macroeconomic shifts continue, investors are closely monitoring regulatory developments and broader market trends.
Regulatory Landscape: The U.S. is shifting toward structured crypto oversight, with Trump’s administration appointing pro-crypto officials. The SEC is advancing regulation, stablecoin policies are evolving, and South Korea lifted its institutional trading ban.
Technological Advancements: Traditional finance is aligning with crypto. Nasdaq’s in-kind Bitcoin ETF redemptions boost efficiency, Cboe’s 24-hour trading mirrors crypto markets, AI-driven DeFi solutions like Nolus enhance accessibility, and Brazil’s B3 expands derivatives with Bitcoin options and ETH/SOL futures, deepening institutional engagement.
Institutional & Market Developments: Downside-protected Bitcoin ETFs are emerging, Strategy (formerly MicroStrategy) continues accumulation, and USDC’s market cap hit $56B, fueled by Solana-based DeFi application.
Global Trends: Crypto is becoming increasingly intertwined with political and macroeconomic factors, as reports suggest Trump-affiliated ventures exploring Ethereum. Trade tariffs have triggered short-term volatility, while the $500M lost to memecoin scams highlights the urgent need for stronger regulation. In a more severe incident, Bybit has suffered a $1.46B hack.
Bitcoin & Altcoin Performance: Key Market Shifts Amid Regulatory Changes
The cryptocurrency market is undergoing a significant transformation as institutional adoption, regulatory shifts, and macroeconomic factors reshape the landscape. Bitcoin’s latest price action has reinforced its dominance, while Ethereum and altcoins navigate volatility amid growing investor interest. As policymakers refine their stance, the integration of crypto into traditional finance is becoming more apparent, signaling a maturing market.
Bitcoin’s Surge and Market Volatility
Bitcoin’s network activity remains strong, with miner revenue reaching a one-month high of $62 PH/s despite rising network difficulty. However, market volatility followed as President Trump’s announcement of a 25% tariff on steel and aluminum impacted broader risk assets. While trade policies influenced crypto markets, Bitcoin showed resilience, supported by institutional interest. Meanwhile, discussions around a sovereign wealth fund and potential Bitcoin reserves in U.S. states continue to drive industry conversations.
Ethereum’s Mixed Performance and DeFi Strength
Ethereum, despite lagging behind Bitcoin’s rally, demonstrated resilience. Network activity gained momentum, with active addresses up 37% to 575,000 and daily transactions rising to 1.3M in January, with Uniswap alone processing nearly $1B in daily trading volume. Uniswap remains the largest decentralized exchange (DEX) operating on the Ethereum blockchain. Institutional interest remained evident, highlighted by World Liberty Financial’s $47M ETH purchase and the increasing demand for Ethereum ETFs, suggesting long-term potential.
Altcoin Market Struggles Amid Liquidations
The broader altcoin market experienced notable declines in Jan 2025, with Solana, Dogecoin, and XRP losing over 10%, contributing to an 8.5% market drop. This downturn triggered $770M in long liquidations, reflecting heightened market volatility. However, optimism persists regarding more crypto ETFs, particularly a spot Litecoin ETF, which analysts believe has a 90% chance of SEC approval by year-end due to Litecoin’s clearer regulatory standing. Its approval seems more likely since it has already gone through key regulatory filings, and the SEC is expected to classify it as a commodity.
Regulatory Landscape: Toward Structured Oversight
Trump’s First 30 Days: Pro-Crypto Policies and Regulatory Shifts
President Trump’s return to office has marked a decisive pro-crypto shift, with key appointments such as Paul Atkins (SEC), Scott Bessent (Treasury), and Brian Quintenz (CFTC). His administration has launched a crypto working group to explore a national crypto reserve while reinforcing opposition to a U.S. CBDC. Additionally, Bessent’s deep expertise in digital assets suggests a policy direction that favors structured oversight rather than restrictive measures.
Regulatory agencies are aligning with this shift. The Federal Reserve has clarified its stance, allowing banks to serve crypto clients while urging Congress to provide stablecoin legislation. Meanwhile, the SEC is forming a dedicated crypto task force under Commissioner Hester Peirce, signaling a move away from aggressive enforcement. With key Fed officials acknowledging stablecoins’ role in global payments, clearer legislative guidance is expected.
Beyond policy, Trump’s World Liberty Financial fund has made significant crypto investments, energizing the sector. However, broader economic and geopolitical factors have introduced volatility—Trump’s China tariffs have affected market sentiment. Looking ahead, focus will shift to stablecoin legislation and state-level Bitcoin reserves, reinforcing the U.S. as a growing hub for digital assets.
Global Regulatory Trends: Easing Restrictions
Beyond the U.S., South Korea is lifting its ban on institutional crypto trading, expanding corporate access to the market. Similarly, Bybit’s removal from France’s regulatory blacklist reflects a broader trend of jurisdictions shifting from restrictions to compliance frameworks. These global shifts reinforce institutional confidence and crypto’s growing integration into mainstream finance.
Technological Advancements: Bridging Traditional Finance and Crypto
Enhancing Market Infrastructure
The convergence of traditional finance and crypto is accelerating, driven by infrastructure upgrades and AI integration. Nasdaq’s proposal to enable in-kind redemptions for BlackRock’s Bitcoin ETF marks a pivotal shift, improving efficiency for institutional investors. Similarly, Cboe’s introduction of 24-hour stock trading mirrors crypto’s always-on markets, signaling traditional exchanges’ adaptation to decentralized finance (DeFi) models.
AI and DeFi Innovation
AI-powered solutions are making DeFi more accessible. Nolus’ integration of AI assistance into lending simplifies user interactions, lowering barriers to adoption. Meanwhile, Brazil’s B3 exchange is expanding crypto derivatives, adding Bitcoin options and ETH/SOL futures—another sign of increasing institutional engagement with digital assets.
Institutional & Market Developments: Strengthening Confidence in Bitcoin
Innovative Financial Products
Institutional adoption continues to grow with innovative financial products designed to mitigate Bitcoin’s volatility. Calamos has launched the CBOJ Bitcoin ETF, which provides 100% downside protection by investing in U.S. Treasuries and options on Bitcoin index derivatives. This ensures that investors’ principal remains intact, regardless of Bitcoin’s price movements, while offering an upside potential of 10% to 11.5% over a year. Two additional ETFs, CBXJ and CBTJ, will offer 90% and 80% downside protection, respectively, with higher upside caps. Despite a 0.69% management fee—above industry averages—these ETFs cater to risk-averse investors seeking exposure to Bitcoin with minimized downside risk.
Meanwhile, Strategy (formerly MicroStrategy) continues its aggressive Bitcoin accumulation despite reporting a $670M Q4 loss. The company now holds over 499,096 BTC, reinforcing its long-term conviction. If Bitcoin sustains a price above $96,000, Strategy could qualify for inclusion in the S&P 500 by June 2025, marking a milestone for corporate Bitcoin adoption.
Stablecoin Growth and Market Strength
The stablecoin sector is expanding, with USDC’s market cap surging to $56 billion, largely driven by Solana-based DeFi activity. USDC is widely used on Solana due to its fast transactions and low fees, making it a preferred choice for DeFi applications and payments. Meanwhile, Coinbase’s Q4 revenue beat expectations at $2.27B, underscoring growing investor participation amid an improving U.S. regulatory environment.
Global Trends: Crypto’s Role in Policy and Finance
Political Influence on Crypto Markets
The intersection of politics and crypto adoption is becoming increasingly evident. Reports suggest that the Trump family is exploring Ethereum-based business ventures, reinforcing Ethereum’s expanding role in mainstream finance.
However, policy decisions continue to drive market volatility. Trump’s new trade tariffs wiped out $450B from global crypto markets, underscoring macroeconomic risks. Despite short-term fluctuations, some analysts believe that a weaker U.S. dollar and lower bond yields could enhance Bitcoin’s long-term appeal.
Security Risks in Crypto Markets: Bybit Hack Highlights Ongoing Threats
Despite growing institutional support, security remains a major concern in the crypto space. In 2024 alone, over $500M was lost to memecoin scams, exposing persistent vulnerabilities. Now, in a more severe incident, Bybit has suffered a $1.46B hack, with a hacker gaining access to its ETH cold wallet and transferring 401,346 ETH and staked ETH to a new wallet, which is now being liquidated.
Conclusion: A Market in Transition
The crypto market is entering a new phase, shaped by institutional adoption, regulatory clarity, and technological advancements. While volatility remains a key challenge, the increasing acceptance of Bitcoin, the evolution of Ethereum’s ecosystem, and the expansion of financial products indicate a maturing asset class.
Looking ahead, the approval of more crypto ETFs, advancements in DeFi, and the integration of AI into trading infrastructure will continue to drive market growth. As traditional finance embraces digital assets, the line between crypto and global finance is blurring—ushering in a new era of innovation and adoption.