BitMart Insights: January Cryptocurrency Market Review and Hotspot Analysis

TL, DR

• This month, the Federal Reserve kept interest rates unchanged and emphasized policy independence. While inflation has eased, it remains above target. Employment remains resilient, but job growth has slowed. Overall, the policy tone is cautious and steady. US stocks oscillated at high levels driven by AI and earnings expectations, but political uncertainties, fiscal expansion, and external risks continue to disturb the market. Looking ahead to February, if inflation continues to decline, US stocks may oscillate upward, but volatility from policy disagreements and geopolitical risks should be watched closely.
• In January, trading volume and total market cap of cryptocurrencies showed range-bound oscillations, with volume spikes lacking sustainability. This reflects a recovery in market activity but persistent bullish-bearish disagreements, making clear trend formation difficult in the short term. Newly launched popular tokens remain mainly VC-backed projects, with Brevis, Sentient, and Fogo performing relatively actively, while meme projects lack sustained heat.
• In January, spot ETFs for BTC and ETH saw net inflows of $2.23 billion and $500 million respectively, indicating a recovery in institutional risk appetite and increased allocation to mainstream assets. Meanwhile, the total circulating supply of stablecoins slightly declined, with USDT remaining stable, and emerging stablecoins like USD1 and USDE growing against the trend, reflecting structural shifts in funds under a stockpile environment.
• Both BTC and ETH experienced key technical support breaches, with short-term momentum weakening. Rebounds are more likely technical corrections, with support levels at around $84,000 and $2,623 respectively. SOL found support near $117 and rebounded but remains under moving average pressure, maintaining a generally oscillating and weak pattern. Watch for risks of accelerated decline if support is broken.
• This month, stablecoins and regulatory issues became market focal points. World Liberty Financial advanced its application for a national trust bank license, while the CLARITY Act made procedural progress in the Senate but with clear partisan divides. Meanwhile, X’s ban on InfoFi projects triggered sector corrections, as platform incentives and traffic governance undergo structural changes. Technologically, ERC-8004 officially launched on Ethereum mainnet, collaborating with x402 micro-payment protocol to lay the foundation for decentralized AI agent economy.

1. Macroeconomic Perspective

Policy Direction

In January, the Federal Reserve decided to keep interest rates steady (3.50%–3.75%), showing confidence in the current economy, while emphasizing data-driven policy adjustments. Although markets debate whether rate cuts might occur between June and September (some expect M6–M9 to see cuts), the short-term stance remains cautious and steady, with no clear tilt toward large cuts. Fed officials repeatedly reaffirm policy independence, advising the next Chair to maintain this principle to prevent political interference in inflation and employment decisions.

US Stock Market Trends

In January, US stocks generally oscillated at high levels upward. The S&P 500 broke through 7,000 points for the first time, driven by AI sectors, strong earnings expectations, and loose policy outlooks. Tech stocks led gains, with Nvidia, Microsoft, and other giants acting as main drivers. However, risks of short-term volatility and sentiment divergence persist, especially amid geopolitical and bond market fluctuations, which could trigger corrections. Overall, the trend remains bullish.

Inflation Data

Latest data shows US inflation easing but still above target: CPI year-over-year around 2.6%–2.8%, core CPI also moderate. Short-term base effects and rent factors may cause monthly rebounds, but the overall downward trend remains intact. Structurally, tariffs and supply chain disruptions continue to influence consumer prices, with inflation expectations likely to stabilize around 2.5%–3% as a “new normal.”

Employment Data

Recent employment figures are contradictory: significant below-expected non-farm job gains, yet unemployment remains stable or slightly lower; wage growth still exceeds inflation, indicating firms are improving efficiency amid marginal labor demand contraction. The employment market remains resilient, but slowing job growth is a key variable for Fed policy considerations.

Political Factors

Political uncertainties continue to impact markets. On one hand, debates over Fed Chair nominations and independence stir attention; on the other, aggressive trade and tariff strategies by the Trump administration have caused short-term volatility, but long-term prospects point toward negotiations to ease tensions. Government shutdown risks also pose potential short-term market pressures.

Fiscal and External Risks

US fiscal expansion and easing measures (like MBS purchases) help lower real financing costs and support the housing market but may marginally push inflation higher. External risks include US-EU trade frictions, geopolitical events (e.g., Greenland land purchase), and global bond market turbulence, adding uncertainty. Japanese bond market and yen fluctuations further influence global asset prices.

February Outlook

In February, markets will closely watch trade negotiations, government shutdown developments, Fed Chair nominations, and upcoming PCE and employment data. With fundamentals stable, US stocks may continue oscillating upward, but policy disagreements and external risks could increase volatility. If inflation remains around 2.5%–3%, it could open a window for rate cuts mid-year. In the short term, policy remains data-driven and cautious. Strategic focus should be on tech earnings, AI growth, precious metals as safe havens, and macro-driven asset rotations.

2. Cryptocurrency Market Overview

Token Data Analysis

Trading Volume & Daily Growth Rate

According to CoinGecko, as of January 28, overall crypto market trading volume fluctuated significantly, averaging around $110 billion to $160 billion daily. Multiple volume spikes occurred but lacked sustainability, often quickly reverting, indicating no clear trend formation. Structurally, active trading was driven more by short-term funds and event-driven factors rather than sustained long-term capital inflows. Overall, January’s volume reflects activity recovery but persistent bullish-bearish disagreements, favoring range-bound oscillations.

Total Market Cap & Daily Change

As of January 28, CoinGecko data shows total crypto market cap oscillated between $3.00 trillion and $3.37 trillion, with controlled volatility. Most trading days saw ±1% fluctuations, with only occasional corrections or rebounds. After reaching a high mid-month, no decisive breakout occurred, followed by a pullback and sideways consolidation. Overall, January’s market cap indicates a mature consolidation phase, with balanced bullish and bearish forces, likely to continue range-bound in the short term.

New Hot Tokens in January

Newly launched hot tokens in January remain mainly VC-backed projects, with meme tokens lacking sustained popularity. Notable projects like Brevis, Sentient, and Fogo showed active trading volumes post-launch.

3. On-Chain Data Analysis

BTC, ETH ETF Inflows and Outflows

January BTC Spot ETF Net Inflow of $2.23 Billion

This month, BTC spot ETFs experienced significant capital inflows, with a net increase of $2.23 billion, indicating improved institutional sentiment. BTC prices rose slightly from $87,835 to $89,104, up about 1.4%, driving ETF assets from $113.07 billion to $115.3 billion (+1.9%). After prior volatility, risk appetite recovered, and funds flowed back into Bitcoin-related instruments, reflecting renewed institutional confidence in BTC’s long-term value.

January ETH Spot ETF Net Inflow of $500 Million

ETH spot ETFs saw moderate inflows of about $500 million, signaling a steady return of institutional demand. ETH prices increased from $2,947 to $3,022, up roughly 2.5%, with ETF assets rising from $17.72 billion to $18.22 billion (+2.8%). Compared to previous outflows, January shows stabilization, with growing confidence in Ethereum’s ecosystem and long-term prospects.

Stablecoin Inflows and Outflows

January Stablecoin Circulating Supply Decreased by $1.82 Billion

Affected by structural adjustments in the crypto market, off-chain fund inflows slowed, and stablecoin supply slightly declined from about $281.3 billion to $279.5 billion, down 0.64%. USDT remained relatively stable, with minor outflows of 0.24%, maintaining its core role as settlement and store of value. USDC experienced more noticeable outflows, decreasing by about 4.71%, indicating some funds shifting from compliant stablecoins to other assets or on-chain use cases.

Meanwhile, some non-mainstream or emerging stablecoins grew against the trend. USDE and DAI expanded by 4.25% and 1.82%, respectively, showing renewed demand for certain mechanism-based stablecoins. PYUSD continued modest growth, up 2.7%. Notably, USD1’s circulation surged 63.05%, becoming the fastest-growing stablecoin this month, reflecting structural fund shifts toward new stablecoin products amid stockpile conditions.

4. Major Cryptocurrency Price Analysis

Bitcoin (BTC) Price Analysis

BTC hovered near the 20-day EMA (~$90,521), which acted as resistance, and broke below the prior upward trendline, indicating a shift from bullish to bearish in the short term.

Trend and momentum indicators show the 20-day EMA flattening and turning downward, RSI below zero, signaling bearish momentum. Rebounds are likely technical corrections, with support at around $84,000. If this support fails, further decline toward $80,600 is possible, with market sentiment weakening. Conversely, a quick recovery above short- and medium-term moving averages could weaken bearish momentum, targeting the key resistance at $97,924.

Ethereum (ETH) Price Analysis

ETH broke down from a symmetrical triangle pattern, disrupting the previous balance and indicating short-term bearishness.

The breakdown suggests the pattern’s directional decision is complete. Price remains below key moving averages, with limited bullish momentum. Short-term, a rebound might attempt to retest the triangle’s interior, but resistance at the moving averages and former support-turned-resistance will likely suppress upward moves.

If ETH weakens again, the downside target is near $2,623, a critical support level. A quick recovery above the triangle’s upper boundary would suggest a false breakdown, potentially leading to an accelerated rebound.

Solana (SOL) Price Analysis

SOL found support near $117 and rebounded, indicating some medium-term buying interest. However, it remains below major moving averages, with the rebound mainly technical.

The 20-day EMA (~$131) is a key resistance. If the price encounters resistance and falls back, the downtrend may continue. A breakdown below $117 could accelerate decline toward $95, increasing volatility. A sustained move above the moving averages would weaken bearish momentum, possibly leading to a sideways range between $117 and $147.

5. Hot Events This Month

1. World Liberty Trust Applies for US National Trust Bank License

This month, World Liberty Financial, via its subsidiary World Liberty Trust, submitted a de novo application to the OCC to establish a national trust bank. The bank aims to directly issue, redeem, and custody USD1 stablecoins. With circulation exceeding $3.3 billion, the project plans to offer free conversion between USD and USD1 at launch, aiming to expand stablecoin circulation and use cases with minimal friction. This move signifies a shift toward regulated banking frameworks, transforming product narratives from “crypto asset tools” to “regulated digital dollar channels.”

Simultaneously, World Liberty Financial has partnered with Pakistan to incorporate USD1 into a regulated digital payment system for cross-border payments and settlements. This reflects a strategic move by emerging markets under FX pressures and geopolitical constraints to adopt dollar stablecoins for more efficient cross-border settlement, reducing reliance on traditional clearing systems. If approved, USD1 could expand significantly in compliance, institutional access, and cross-border scenarios, with risk management and regulatory transparency being key concerns.

2. The 2025 Digital Asset Market Clarity Act: Increased Partisan Struggle

The CLARITY Act (H.R. 3633) made procedural progress in the Senate, passing the Agriculture Committee 12–11 along party lines. Chairman John Boozman ® called it a breakthrough after months of collaboration, while Democrat Corey Booker acknowledged progress but emphasized ongoing negotiations. The vote was strictly partisan, with no Democratic support, leaving uncertainty before full Senate approval. The bill still needs to pass the Banking Committee, where contentious issues like stablecoin yields, DeFi definitions, and regulatory scope slow progress. The White House plans further inter-agency discussions next week to reconcile positions. If passed, it will be combined with the House version and signed into law.

The core goal is to clarify SEC and CFTC jurisdiction, provide safe harbors for DeFi, and improve stablecoin regulation. The most contentious issue remains the restriction on “passive yields” (earning rewards just by holding), with industry groups warning it could harm US stablecoin competitiveness. The bill’s advancement is seen as procedural but highlights deep partisan divides and long-term challenges.

3. X Bans InfoFi Projects and Algorithmic Mechanisms

This month, X imposed systemic restrictions on InfoFi projects, including banning accounts, reducing visibility, and cutting data interfaces. The sector’s market cap dropped about 11.5%, with Kaito down over 20%, and Cookie about 15%. The platform explicitly stated it would no longer accept third-party API payments for such mechanisms, signaling rejection of InfoFi models.

InfoFi projects use external points, leaderboards, and other mechanisms to turn social activity into tokenized rewards—essentially “attention mining.” These mechanisms divert user behavior from native platform recommendations and incentives, with the platform bearing infrastructure costs while external protocols capture attention value. X is accelerating its native creator incentive system (ad revenue sharing, Grok rewards) to regain control over traffic and rewards. This month, X revealed a new recommendation algorithm based on large models predicting user interactions, enabling “AI autonomous learning” of preferences and reducing monopolistic exposure through diversity scoring. The algorithm emphasizes content relevance and diversity, while weakening external influence. Under this ecosystem strategy, automated interactions and low-quality content generated by InfoFi are seen as detrimental to user experience and recommendation quality. The ban reflects not only commercial fee disputes but also platform governance and algorithmic adjustment considerations.

Post-restriction, Kaito shut Yaps incentives and shifted toward cross-platform creator distribution and AI data tools; Cookie DAO focuses on B2B data services. Short-term, token valuations and community confidence are pressured; long-term, whether InfoFi can evolve from social-attention incentives to independent data infrastructure remains uncertain. Market participants should monitor on-chain metrics and strategic shifts rather than social noise.

6. Outlook for Next Month

1. Progress of the 2025 Digital Asset Market Clarity Act

While the bill has passed the Senate Agriculture Committee, partisan voting and slow committee review pose hurdles before full Senate approval. In the short term, White House-led multi-party coordination will be critical. If compromises are reached on stablecoin yields, DeFi definitions, and regulatory scope, the bill could see substantive progress by 2026; otherwise, delays into 2027 are possible. Market impact depends on the final version: strict limits on passive yields could force stablecoin projects to adopt active yield models (lending, market-making, liquidity mining), raising participation barriers and slowing expansion in payments and savings. If market-based rewards are permitted within a compliant framework, it could accelerate blockchain-finance integration and enhance US stablecoin competitiveness—provided transparency, risk disclosure, and liquidity regulation are strengthened to prevent hidden leverage and de-pegging risks. The next quarter is crucial for determining whether US regulation shifts toward “functional segmentation + layered risk management,” affecting the long-term evolution of stablecoins, DeFi, and TradFi on-chain.

2. ERC-8004 Deployment and x402 Ecosystem Development

On January 28, ERC-8004 was officially deployed on Ethereum mainnet. February will be key for real-world adoption. ERC-8004 complements Coinbase’s x402 micro-payment protocol: the former addresses decentralized identity, reputation, and verification for AI agents; the latter provides HTTP-native stablecoin micro-payments, enabling on-chain AI service discovery and value exchange, laying the groundwork for decentralized machine economy. Early projects are beginning to integrate these standards, such as payment routers, micro-payment tools, and agent management platforms, in test or early mainnet phases.

Developer activity and cross-protocol collaboration are expected to increase as the standards mature, forming a complete stack for commercial AI agents. Infrastructure projects like payment facilitators, SDKs, and monitoring tools will attract early users and feedback, crucial for performance and user experience evaluation.

In the short term, as the ecosystem is still nascent, transaction volumes and agent registrations may be modest. However, with tooling improvements and cross-chain collaboration needs, this combo could become a core technical path for building next-generation decentralized AI service ecosystems.

3. Future of World Liberty Trust

With the trust bank license application submitted, the regulatory and institutional prospects for USD1 will become clearer. If approved, USD1 can operate legally under US federal regulation, issuing, redeeming, and custodying stablecoins, potentially becoming a compliant digital dollar channel for institutions and cross-border payments. This would significantly boost acceptance among financial institutions, exchanges, and enterprises, increasing circulation and trust.

In the short term, USD1’s use cases are expected to expand into more institutional payments and cross-border settlements, especially in emerging markets like Pakistan, where partnerships aim to demonstrate the advantages of dollar stablecoins over traditional clearing systems. The peg to USD and free conversion features could attract more retail and institutional users, driving circulation growth and global payment ecosystem integration. However, approval remains uncertain, and full deployment may take months. Strict compliance with reserve management, audits, AML, and transparency will be essential. The project’s risk control and compliance capabilities must match rapid market expansion; otherwise, growth could be constrained. Regulatory changes, cross-border cooperation, and competition from other stablecoins or CBDCs will influence its trajectory.

Next month, focus should be on OCC approval progress, partnerships in emerging markets, institutional adoption, user activity, and project compliance. These factors will determine USD1’s competitiveness and sustainable development in the global payment and stablecoin ecosystem.