Why Isn't The Crypto Market Pumping?🤔

This past week was significant for the crypto market, yet the prices remain stagnant.

Jan 26, 2025

Hey Thinkers 💡

What an extraordinary week for the crypto industry! The market witnessed groundbreaking moves from President Donald Trump and the SEC, setting the stage for a transformative future. Let’s break down the key highlights:

🇺🇸 Donald Trump Signs Crypto Executive Order

In a landmark event, President Trump signed a Crypto Executive Order aimed at making the United States the global leader in crypto innovation. The signing ceremony was punctuated by a powerful moment as tech investor David Sacks encouraged the President with the words, “Make America the world capital of crypto!”

Key Points of the Executive Order:

CBDC Ban: U.S. agencies are prohibited from promoting or establishing Central Bank Digital Currencies (CBDCs) domestically or internationally.
President’s Working Group on Digital Assets:
- Tasked with recommending regulatory and legislative proposals for digital assets.
- Must deliver a federal regulatory framework for digital assets (including stablecoins) within 180 days.
- Will evaluate the potential creation of a national digital asset stockpile, possibly derived from lawfully seized cryptocurrencies.

This Executive Order signals a strong pro-crypto stance, aiming to foster innovation while addressing the need for regulatory clarity.

In addition, President Trump issued a full and unconditional pardon to Ross Ulbricht, creator of Silk Road and an influential figure in Bitcoin’s early history.

📜 SEC Repeals SAB 121

In another major development, the SEC repealed SAB 121, an accounting rule that treated crypto holdings as liabilities on banks’ balance sheets. This move eliminates a significant barrier, allowing banks to:

Custody crypto assets.
Build new crypto financial products.

The SEC also announced the formation of a "Crypto Task Force" to develop a comprehensive regulatory framework for crypto. The task force will be led by Hester Peirce, a.k.a. Crypto Mom, marking a significant step forward in crypto regulation.

Coinbase CLO Paul Grewal summed up the week perfectly:

“POTUS denounced debanking and said America would be a crypto capital. He then issued an EO with a Crypto Czar, a working group, regulatory compatibility, dollar-backed stablecoins, a pardon for Ross, a SEC Crypto Task Force led by Hester Peirce, and Cynthia Lummis leading a Digital Assets Subcommittee. Imagine Week 2 and beyond!”

📉 Market Reaction: Why No Bull Run?

Despite the bullish news, the market has not responded with the massive rally some expected. Here’s why:

“Buy the Rumor, Sell the News”: Trump’s inauguration and Executive Order seem to have followed this classic market pattern.
Post-Q4 Cooldown: After a strong Q4 run, the market appears to be undergoing a natural correction, similar to the January 2021 pullback following Q4 2020's rally.
Volatility Normalization: Major news weeks, like FOMC announcements, often bring high volatility. The market needs time to stabilize.
Liquidity Trends: Global liquidity is beginning to rise again after months of decline. This will eventually trickle into risk assets like Bitcoin and stocks, but there is typically a lag.

📊 Positive Indicators for the Future

Several macroeconomic and market signals point to a potential bull run ahead:

DXY Weakening: The U.S. Dollar Index (DXY) is breaking down, a bullish sign for risk assets.
Stock Market Bullishness: Analyst Bob Loukas shared a bullish chart for the S&P 500, forecasting a move to 6,800. He noted, “Just Week 2 of a new Cycle for stocks. Picture perfect cycle action this bull market.”
- Historically, the stock market serves as a leading indicator for crypto, meaning bullish action in equities often precedes rallies in digital assets.

📅 Patience is Key

While the crypto market remains in a cooling-off phase, the foundation for the next strong bull run is being laid. Between Trump’s pro-crypto actions, the SEC’s pivot toward clarity, and the rising tide of global liquidity, the future looks incredibly bright for crypto.

Stay patient and remember: seasonality, macro trends, and market cycles all play a role in the timing of the next big move.

Brian Q. from Santiment discussed the market sentiment around the inauguration in our latest episode.

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