Thought of the week

Donald Trump was sworn in as US President again today, Monday. He has pledged to strengthen digital assets and the financial markets with liberal policies and to ensure further innovation and development. This is fuelling hopes that market prices will continue to rise.

Digital Asset News

US President-elect Donald Trump will sign an executive order tomorrow, 20 January, declaring cryptocurrencies a national priority. This measure aims to position the US as a leading nation in the crypto space. As part of the new policy, a Digital Assets Advisory Council will be established. This body will assist the government in developing and implementing policies for cryptocurrencies. Bo Hines, a 29-year-old Yale graduate and former congressional candidate, has been appointed Executive Director of the panel. He will work closely with David Sacks, the newly appointed advisor on artificial intelligence and cryptocurrencies. The forthcoming presidential order provides for several measures to promote the crypto industry. These include the removal of certain regulatory hurdles that previously prohibited banks and financial institutions from holding cryptocurrencies for customers. The government is also planning to create a national Bitcoin reserve. Altcoin reserves of US coins are also being discussed. The crypto industry is very bullish about the announced measures, but this should be taken with a grain of salt, as increased volatility could be the result.

Crypto companies in the European (EU) Union are now subject to new cybersecurity regulations after the Digital Operational Resilience Act (DORA) came into force on 17 January. DORA primarily affects the cybersecurity and resilience practices of virtual asset service providers (VASPs) in the region.

To comply with DORA regulations, financial institutions and crypto companies in the EU must maintain a comprehensive register of their contractual arrangements with external IT service providers to ensure a secure infrastructure and good risk management.

The new DORA regulations complement the EU's new crypto regulation called Markets in Crypto-Assets (MiCA) and aim to improve resilience to disruptions such as cyber-attacks and IT failures to ultimately strengthen investor protection and market integrity.

‘We have established internal teams that now need to take on additional responsibilities to ensure that our policies, procedures and processes continually meet the requirements of DORA,’ Mr Sullivan said, adding: ‘Actions we have taken include reviewing and updating third-party vendor relationships, creating a DORA-compliant register of vendors and preparing additional documentation for our information systems.’

The Bitcoin bull market in 2024 did not lead to a corresponding increase in venture capital funding, suggesting that institutional investors are no longer approaching crypto and blockchain startups with blank cheques. According to a report by Insights For VC on 16 January, the more than 100% rise in Bitcoin's price last year should have led to a similarly sharp increase in blockchain venture capital.

Since January 2023, ‘this correlation has weakened significantly’, according to the report. ‘Bitcoin has reached new all-time highs, while venture capitalist investment activity has barely kept pace.’ ‘The current market sentiment favours Bitcoin and could overshadow other crypto investment opportunities,’ the report continues.

Analysts expect crypto venture capital funding to rebound in 2025, driven by rising prices and changing narratives. According to PitchBook, crypto companies will attract $18 billion in fresh capital this year, which is between 32% and 56% higher than in 2024, depending on the comparison.

Meanwhile, Galaxy Digital predicted that crypto VC deals will grow by 50% year-on-year in 2025. However, both forecasts suggest that funding will fall far short of the 2022 highs, which Galaxy Digital said saw more than $30bn raised.

Digital Asset Market

Market review and outlook

The majority of digital assets experienced volatile upswings and downswings last week, allowing Bitcoin to reach a new all-time high of ~$110,000 at the start of the week. Altcoins are also benefiting from this momentum, but there is noticeable volatility, with prices fluctuating by more than 10% within a day. In the past and coming days, all eyes will be on Donald Trump and his first official acts. Analysts expect the underlying sentiment to remain positive for the time being. According to analysts, the short-term outlook is therefore bullish, although an overheating of the market could also quickly lead to temporary setbacks.

Chart technology

From a technical chart perspective, Bitcoin is once again close to a new all-time high after falling below the $100,000 mark the night before. The current trend channel is positive with strong support levels and the prospect of further market advances. Altcoins such as Ethereum in particular could benefit from this in the long term. Altcoins therefore offer a good risk/reward ratio for the coming days. Increased volatility should be expected at all times, so strategies should be adjusted accordingly.

The next price targets in the event of a positive development: ~$112,000, ~$118,000 ~$122,500

The next price targets in the event of negative performance: ~$103,000, ~$99,500 ~$95,000

Trading idea

Some altcoins were unable to keep up with Bitcoin's strong rise. As a result, altcoins that rank significantly below the local highs could represent a lucrative alternative.