The crypto market has been highly volatile this month, having first broken through the $100,000 mark on December 5, then experiencing a dramatic retreat from December 9 to 10. Afterward, the market slowly fluctuated upwards, just when market investors thought BTC would break through $110,000, Fed Chairman Powell's hawkish speech dealt a heavy blow to the warming market, leading to a bloody correction in the altcoin market, with some altcoins nearly halving from this month's peak.
Is the bull market really over? What will the future market look like? Although the market is unpredictable, what catalysts will emerge in January? Why is January's performance worth looking forward to?
1. Trump will be inaugurated as president on January 20.
When Trump won this year's US election, the 'MAGA' banner swept across the entire crypto market like a tidal wave. Under the principle of America First, Trump views cryptocurrencies as an important part of the US financial system and has already begun planning to make Bitcoin a national reserve asset. Amidst the urgent preparations of the government team, a large number of crypto-friendly bureaucrats have taken office. The Trump family is also actively participating in the on-chain economy under the name 'World Liberty Finance' (WLFI), having purchased over $75.26 million in crypto-related assets. This article aims to piece together the roadmap for the American 'crypto renaissance' led by Trump's appointed team from the data on Trump's appointments and on-chain project bets.
The leadership team of Trump's new government includes many crypto-friendly individuals, and in the newly established 'Presidential Advisory Council on Digital Assets', the chairman 'Crypto Czar' David Sacks, who previously served as COO at Paypal, will take on the role of AI and crypto supervisor for the US government. In his personal and Craft Ventures investment history, most projects are related to crypto asset management and Bitcoin infrastructure (such as crypto asset managers BitGo and Bitwise, Lightning Network applications like Lightning Labs, Voltage, etc.). Expectations are that under Trump's administration, crypto compliance custody products will advance further, potentially finding suitable asset exits for Bitcoin reserves.
As for the US Securities and Exchange Commission (SEC), Trump's dismissal of current chairman Gary Gensler is already a settled matter, and he also nominated Paul Atkins as the new SEC chairman on December 4. Paul, the CEO of consulting firm Patomak Global Partners, previously served as an SEC commissioner during the George W. Bush administration and has extensive experience in finance and cryptocurrency.
As Trump's crypto policies gradually take effect, WLFI is expected to play a greater 'barometer' role in the future crypto market. Its asset allocation and strategic partnerships will continue to influence market trends, while potential support from professional institutions like Polychain will provide ongoing momentum.
In the future, WLFI may continue to invest around high-quality DeFi assets while enhancing its brand value and market voice through collaborations with other projects. In summary, WLFI has become an important barometer in the US crypto market due to its unique asset allocation, strategic partnerships, and political influence. Its future development will continue to attract widespread market attention and provide important reference signals for investors.
Bitcoin reserve plan risks
With the start of the new presidential term, everyone will be watching Trump's words and actions. While the bullish sentiment for Bitcoin exists, it would be quite pessimistic if Trump completely ignores the reserve plan. A more likely scenario is that the reserve plan does not happen or is delayed by certain events.
In the latter case: as long as it is beneficial to Bitcoin, it is initially a bearish but ultimately bullish event.
The market is focused on Trump's every move regarding the crypto market. If he can fulfill his promises made during the campaign, the crypto market may usher in its own golden age.
2. FTX is about to start repaying debts.
On December 17, FTX and its affiliated debtors announced that the Chapter 11 restructuring plan approved by the court will officially take effect on January 3, 2025.
The first round of distribution will start within 60 days after the effective date and will only be for approved creditors in the convenience class. FTX has reached agreements with cryptocurrency custodians BitGo and trading platform Kraken to provide asset distribution services to retail and institutional clients.
According to disclosed data, FTX's first round of repayment distribution, which took effect on January 3, includes $16 billion in cash.
Some tokens previously held by FTX/Alameda, such as SOL/WLD, have basically been sold off.
The compensation received by creditors is cash rather than tokens, indirectly reducing market selling pressure and increasing the probability of some compensation funds flowing back into crypto, thus boosting the market.
3. Bitcoin generally rises during the Lunar New Year.
As early as early February 2024, Markus Thielen, founder and head of research at 10X Research, indicated that Bitcoin tends to rise by 11% around the Lunar New Year. Over the past 9 years, traders buying Bitcoin 3 days before the Lunar New Year and selling it 10 days after have made good profits.
February 10 is the Spring Festival in 2024, and Bitcoin rose from $43,000 on February 5 to around $53,000 by February 15, and began to rise continuously thereafter, reaching a peak of $72,000 on March 15.
Token recommendations
1. AI
The market has already experienced several waves. The next wave is expected to arrive soon. Buying and holding will not yield good results. Goat, the token that initiated all this, has already fallen 60% from its peak and may continue to perform poorly.
Preferred: Application technology / Swarms / Games / Consumer-centric AI
ALCH (game development), Griffain (helping to control wallets), Digimon, Ai16z, etc., are all preferred.
2. DeFi
DeFi will continue to be a great narrative, but it is very difficult to invest in, as very few tokens can benefit from it, and even if they do, they may not see significant increases.
Frankly speaking, in terms of risk-reward, DeFi is not the first choice.
Preferred: AAVE / ENA / Morpho / Euler / USUAL
Secondary choice: stablecoins / payment-related tokens
3. L1
L1 will make a comeback. It is evident that Hype is a focus. L1 itself is something that the market has always overlooked – it is one of the neglected areas but holds enormous opportunities (just as Hype has grown tenfold).
Preferred: SUI / Hype
Secondary choice: Abstract
4. NFT tokens and game tokens
The NFT token space deserves attention. PENGU is slowly recovering, Azuki has ANIME tokens, Doodles has... whatever it is. It is expected that NFTs will not revive, but their tokens will return. Additionally, it is interesting to delve deeper and find interesting games with upcoming tokens.
Preferred: Pengu / Anime (Azuki) / Spellborne / Treeverse
Secondary choice: Prime / Off the grid (if tokens are launched) / Overworld
The Spring Festivals of 2021, 2022, and 2024 all fell in early February, while the Spring Festival in 2023 occurred at the end of January. The chart clearly shows that during the month of the Lunar New Year, BTC's rise has consistently exceeded 10%, peaking at an astonishing 43.55%.
The Spring Festival in 2025 is on January 29, which is earlier than in previous years.
The market often has self-fulfilling prophecies, such as 'October rally', and the performance during the Lunar New Year is worth looking forward to.
