January 27, 2025

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Trading Desk Insights

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Bitcoin opened the final week of January with a significant pullback, entering a consolidation phase after reaching a new all-time high. The decline was exacerbated by a sharp sell-off in tech stocks, driven by the rise of DeepSeek, a Chinese AI startup. Despite being built on a modest budget of under $6 million, DeepSeek's AI models have surpassed the capabilities of top U.S. firms, raising concerns over America's dominance in the sector. This disruption has spooked markets, igniting a global sell-off. Notably, while Microsoft is set to allocate $80 billion to AI in 2025 and Meta's investments range between $6 billion and $65 billion, questions are mounting about the overvaluation of many U.S. tech companies.

The impact was felt across the crypto market, with liquidations soaring to $907 million in the last 24 hours. BTC trading volume surged by 170%, reaching $111 billion, while funding rates dipped into negative territory overnight before recovering this morning. Many AI-related tokens have suffered declines, but TAO has bucked the trend, outperforming its peers and gaining 6.5%. SUI dropped 34% from its all-time highs, now hovering around the 50% Fibonacci retracement level, presenting a potential entry point. SOL has also found support at its 20-day moving average, making it another attractive buy zone. The focus is now on the Nasdaq to gauge the direction of the broader market.

In macroeconomic news, the Federal Reserve will hold its first policy meeting of the year on Wednesday, with investors closely watching for any signals on interest rate moves. Fed funds futures currently price in a 99% probability of rates remaining unchanged, with a 35% chance of a 25bps rate cut in March.

Additionally, MicroStrategy has added 10,107 BTC to its balance sheet for $1.1 billion, purchasing at an average price of $105,596 per Bitcoin. The company has also filed for a mixed securities shelf offering, potentially raising capital to continue acquiring more Bitcoin and for general corporate purposes.

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The News Room

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MicroStrategy Launches 2.5 Million Perpetual Preferred Share Offering Called STRK

MicroStrategy has officially launched its Series perpetual strike preferred stock offering, issuing 2.5 million shares under the ticker STRK. This perpetual preferred stock, available to institutional and select retail investors, pays fixed quarterly dividends and has a liquidation preference of $100 per share. Proceeds from the offering will be used for general corporate purposes, including further bitcoin acquisitions. MicroStrategy recently added 10,107 BTC to its holdings, now totaling 471,107 BTC valued at over $46 billion. The preferred stock includes conversion options into Class A common stock and redemption clauses under specific conditions. Highlighting the offering’s appeal, analysts noted its embedded volatility tied to bitcoin, providing investors with potential for higher returns. Co-founder Michael Saylor emphasized the company's aim to offer both volatility and returns exceeding those of bitcoin by 1.5x.

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Ripple Expands U.S. Presence with Money Transmitter Licenses in New York and Texas

Ripple has obtained Money Transmitter Licenses (MTLs) in New York and Texas, enabling it to offer fully licensed cross-border payment solutions in the U.S. This expansion aligns with growing demand from banks and crypto firms for compliant, real-time payment systems. Ripple now holds over 55 global MTLs, including 33 across the U.S., and has a strong regulatory presence with licenses in jurisdictions such as Singapore, Ireland, and Dubai. The firm highlighted optimism about a pro-crypto regulatory shift under the Trump administration and emphasized its readiness to support digital asset adoption. Despite ongoing legal battles with the SEC over XRP's classification as a security, Ripple's operations have grown significantly, generating $70 billion in payment volume across 90 markets and launching the RLUSD stablecoin. With U.S.-based hiring surging, Ripple is poised for further domestic growth in the evolving crypto landscape.

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Crypto Markets Slide as DeepSeek Disruption and Bearish FOMC Outlook Trigger Risk-Off Sentiment

Bitcoin has fallen below $100,000 for the first time since mid-January, dropping over 5% in 24 hours amid bearish sentiment and macroeconomic uncertainty ahead of Thursday’s FOMC meeting. The decline aligns with disruptions in tech markets following China's DeepSeek AI breakthrough, which has sparked risk-off sentiment and increased demand for safe-haven assets like gold. DeepSeek’s cost-effective, open-source AI model has challenged U.S. tech dominance, adding to market volatility. Analysts highlight bitcoin’s continued correlation with equities, as Nasdaq futures also fell sharply. Despite expectations of a Fed rate pause, concerns over inflation data and tech sector disruptions are keeping crypto markets under pressure, with bitcoin likely to remain range-bound until clearer catalysts emerge.

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Crypto Charts

ETF Flow

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Disclaimer

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This research is for informational use only. This is not investment advice. Other than disclosures relating to Secure Digital Markets this research is based on current public information that we consider reliable, but we do not represent it is accurate or complete, and it should not be relied on as such. The information, opinions, estimates, and forecasts contained herein are as of the date hereof and are subject to change without prior notification. We seek to update our research as appropriate.

Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation. The price of crypto assets may rise or fall because of changes in the broad market or changes in a company's financial condition, sometimes rapidly or unpredictably. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur. Fluctuations in exchange rates could have adverse effects on the value or price of, or income derived from, certain investments. We and our affiliates, officers, directors, and employees, excluding equity and credit analysts, will from time to time have long or short positions in, act as principal in, and buy or sell, the securities or derivatives, if any, referred to in this research.

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