Markets look set to end the week higher despite a rough start, triggered by a selloff in tech stocks. Concerns arose after the release of a new Chinese AI model that challenges US dominance in artificial intelligence (AI) and raises questions about current AI valuations. Chinese startup DeepSeek unveiled a cheaper and more efficient large language model (LLM) that rivals US-based competitors like ChatGPT while requiring significantly less computing power. The news led to a selloff in major US tech stocks, including Nvidia, and coincided with a sharp drop in cryptoassets.
Bitcoin saw a notable pullback early in the week, falling below the $100,000 mark. This decline triggered over $850 million in crypto liquidations within 24 hours, primarily affecting long positions. Within the crypto sector, AI-related tokens were among the hardest hit, with weekly losses reaching 40%. Meanwhile, markets shrugged off concerns about US President Trump’s self-imposed February 1st deadline for imposing tariffs on Canada, Mexico, and China. On Thursday, Trump reiterated plans for a 25% tariff on imports from Mexico and Canada but added to the uncertainty by suggesting that some provisions remain undecided.
In a major policy shift, the US Senate confirmed pro-crypto hedge fund manager Scott Bessent as the new Treasury Secretary, replacing Janet Yellen. Bessent is expected to join the “Presidential Working Group on Digital Asset Markets,” reportedly established under an executive order signed by Trump last week.
Meanwhile, the Federal Reserve kept interest rates steady, as widely expected, maintaining the federal funds rate between 4.25% and 4.50%. During the post-meeting press conference, Fed Chair Jerome Powell stated that US “banks are perfectly able to serve crypto customers as long as they can understand and service the risks.” Last week, in a landmark decision, the SEC officially rescinded the controversial Staff Accounting Bulletin (SAB) No. 121, a rule introduced in 2022 under former SEC Chair Gary Gensler that had restricted banks from offering Bitcoin and crypto custody services by requiring them to record crypto holdings as liabilities on their balance sheets.
Market Overview
The global cryptoasset market capitalization currently amounts to roughly $3.75 trillion – little changed from the $3.79 trillion last week, with bitcoin accounting for 55.5%. Among the Top 30 cryptoassets by market cap, Hyperliquid (HYPE) outperformed, gaining more than 17% over the week. The price of bitcoin (BTC) fell marginally by 0.8% to almost $105,062 while the price of ether (ETH) increased moderately by 0.5% to $3,401. The total value locked (TVL) in DeFi is sitting at $125 billion, with Ethereum (excluding Layer 2s) accounting for about 53.5% of TVL. Arbitrum One remains the largest Layer 2 by value locked, accounting for about 33% of the $54 billion in assets. Base is the clear leader in L2 user activity, averaging an impressive 111 user transactions per second over the past 24 hours.
This Week’s Headlines
- Elon Musk’s DOGE is considering blockchain adoption in government efficiency push, Bloomberg reports
- SEC approves Bitwise’s combined Bitcoin and Ethereum ETF
- Nasdaq files to change BlackRock’s Bitcoin ETF to allow for in-kind redemptions
- Trump Media starts new fintech platform Truth.Fi focusing on crypto, ETFs
- Kraken relaunches staking in US roughly two years after settling SEC charges
- Fed Chair Jerome Powell says banks can serve crypto clients as long as they can manage the risk
- Czech central bank approves proposal to assess investing reserves in bitcoin
- ECB president Christine Lagarde “confident” bitcoin will not enter EU central bank reserves
- Community members rally behind Danny Ryan to become Ethereum Foundation‘s next leader in unofficial vote
- Former SEC Chair Gary Gensler returns to MIT
- MicroStrategy buys another 10,107 bitcoin for $1.1 billion, bringing holdings to 471,107 BTC
Notable Deals and Fundraising
- Cipher Mining secures $50 million investment from SoftBank
- Web3 domain infrastructure firm D3 Global raises a $25 million Series A round led by Paradigm
- Irreducible raises $24 million in a Series A funding round co-led by Paradigm and Bain Capital Crypto
- Elastos raises $20 million to build native Bitcoin DeFi protocol
- Decentralized identity platform Humanity Protocol raises $20 million in a round led by Pantera Capital and Jump Crypto
- Binance founder CZ’s YZi Labs leads $16 million investment in token distribution platform Sign
- Crypto accounting platform Cryptio raises $15 million in Series A extension
- New Layer 1 network developer Pod raises $10 million in seed funding
- Blockchain interoperability protocol Analog reaches $300 million valuation in $5 million round ahead of token launch
- Execution platform Mevvy raises $2.8 million in seed round led by Multicoin Capital
- Jupiter acquires majority stake in Moonshot, announces “Jupnet” and $10 million AI fund
