Bitstamp Monthly Briefing – January 2025

January saw its fair share of market swings, and we’re breaking down the biggest movers and trends shaping the crypto landscape.

A key focus theme this month? Stablecoins. As adoption hits record highs, big players like Visa and PayPal are leaning in, and regulatory discussions are heating up.

Here’s our January Monthly Briefing!

Market update

The total crypto market cap rose 8.4% month-over-month, reaching $3.45 trillion by the end of January. Meanwhile, trading volume on the leading crypto spot exchanges we monitor dropped 17% during this period.

BTC’s market dominance grew by 0.71 percentage points month-over-month, reaching 58.8%.

Total crypto market cap (grey) and BTC dominance (green)

Source: Total crypto market cap, Bitcoin dominance

Past performance is not a reliable indicator of future results. The performance of crypto assets can be highly volatile. Data taken on February 1, 2025.

Biggest movers in January

• +1316.8% Onyxcoin (XCN) – After nearly two years of dormancy, XCN’s price surged significantly in January.
• +52.5% XDC Network (XDC) – Continued its strong uptrend from the last quarter of 2024.
• +45.7% XRP (XRP) – Growth fuelled by regulatory optimism, RippleNet expansion, and potential ETF approval.
• -55.6% Pudgy Penguins (PENGU) – Technical indicators suggest bearish momentum is still building.
• -49.7% Virtuals Protocol (VIRTUAL) – Reversed sharply at the start of the month, giving up most of December's gains.
• -39.0% dogwifhat (WIF) – Continued downward trend, marking its second consecutive double-digit decline.

Among top 100 CMC assets. Past performance is not a reliable indicator of future results. The performance of crypto assets can be highly volatile. Data taken on February 1, 2025.

Key macro & crypto events in February 2025

• February 12: US Inflation & Core Inflation rate
• February 12-13: Arabian Blockchain and Crypto Expo Dubai in Dubai, UAE
• February 16-04 March: ETHDenver (side events) in Denver, CO, USA
• February 19: US FOMC Minutes
• February 19: Governing Council of the ECB (online – virtual event)
• February 18-20: Consensus Hong Kong in Hong Kong
• February 23-03 March: ETHDenver in Denver, CO, USA
• February 27: US GDP Growth Rate QoQ

The rise of stablecoins: A pillar of the crypto ecosystem

Stablecoins have emerged as a critical component of the cryptocurrency market, offering price stability and facilitating seamless transactions between digital assets. Unlike volatile cryptocurrencies such as Bitcoin and Ethereum, stablecoins are pegged to traditional financial instruments like the U.S. dollar, gold, or real-world assets. This peg makes them a reliable bridge between fiat currencies and the digital economy. As the crypto market continues to evolve, stablecoins have become increasingly essential for traders, investors, and businesses looking to engage with blockchain-based financial services.

The role of stablecoins in crypto markets

Stablecoins often function as the digital equivalent of fiat currency, allowing users to move funds efficiently between exchanges and decentralized applications. Tether (USDT) remains dominant, accounting for over 50% of daily Bitcoin trading volume, while USD Coin (USDC) and PayPal USD (PYUSD) continue to gain traction.

Beyond trading, stablecoins are widely used in remittances, DeFi, and e-commerce. Their ability to offer low-cost, instant transactions makes them a viable alternative to traditional banking, especially in regions with underdeveloped financial infrastructure. In countries facing inflationary pressures, such as Argentina, stablecoins have become a preferred hedge against currency devaluation.

Explosive market growth and institutional adoption

The stablecoin market has grown rapidly, surpassing $200 billion in total capitalization (an all-time high). Since the US presidential election in November 2024, stablecoin liquidity has increased by $37 billion, a trend historically linked to bullish market momentum. Analysts suggest rising stablecoin liquidity often precedes major rallies, as traders use stable assets to prepare for future price movements. Additionally, the growth of yield-bearing stablecoins, now comprising over 3% of the total market, has fueled the expansion of tokenized treasuries, which saw a 414% increase in market capitalization in 2024, reaching $5.6 billion.

Payment giants such as PayPal and Visa have embraced stablecoins for cross-border transactions, recognizing their potential to revolutionize the global payments industry. According to reports, stablecoin transaction volume in 2024 surpassed that of Visa and Mastercard by over 7.68%, with stablecoins transferring a staggering $27.6 trillion compared to the $23.8 trillion processed by the two traditional payment networks.

Regulatory developments and shifting market dynamics

In the United States, a shifting political landscape under Donald Trump’s presidency has fueled speculation about greater regulatory clarity for stablecoins. A more favorable regulatory stance could accelerate adoption and cement stablecoins as mainstream financial instruments.

Meanwhile, under Europe’s MiCA regulation, only compliant stablecoins can be used in regulated markets. As a result, Tether (USDT) has been delisted from EU exchanges, and EURT has been discontinued. JPMorgan analysts predict that MiCA could boost adoption of euro-pegged stablecoins and set the stage for future US crypto regulations.

What’s next for stablecoins?

The future of stablecoins looks promising as they continue to play a crucial role in the broader financial ecosystem. Their increasing liquidity, rising transaction volumes, and growing institutional adoption indicate that stablecoins will remain a dominant force in both crypto and traditional finance. As regulatory frameworks evolve and more financial institutions integrate stablecoins into their payment networks, their influence will likely expand further.

With stablecoins now deeply embedded in the digital economy, their continued growth could be a key driver for the next phase of the cryptocurrency market. Whether as a trading tool, a means of preserving wealth, or a bridge between traditional and decentralized finance, stablecoins are set to redefine the way value is exchanged in the modern financial world.

Recommended reads

The Solana Thesis: Internet Capital Markets by Kyle Samani (Multicoin Capital)

Multicoin Capital has been investing in Solana since its early days and believes it is now positioned as the leading blockchain for Internet Capital Markets. With a $100 billion market cap and surpassing Ethereum in key on-chain metrics, Solana offers unmatched speed, low fees, and broad financial applications that could outperform traditional finance giants like NYSE, NASDAQ, and Visa. The essay argues that Solana can reduce financial service fees by 90-99% while capturing more market value than legacy players. By integrating payments and finance into a seamless, scalable ecosystem, Solana is expanding the financial landscape beyond traditional systems.

Is This a Bubble by A Wealth of Common Sense

Financial markets are constantly shifting, with narratives evolving rapidly. Just two years ago, a recession seemed inevitable, but now concerns have shifted toward a speculative bubble. Howard Marks defines a bubble as a temporary mania driven by irrational exuberance, FOMO, and the belief that prices can only go higher. While current valuations are high, Marks argues that we have not yet reached true bubble territory. However, growing speculation, deregulation, and the rise of AI-driven innovation could set the stage for a future bubble. Human nature suggests that when technological revolutions occur, bubbles inevitably follow.

Bitcoin Deep Dive Data Analysis & On-Chain Roundup by Bitcoin Magazine

Bitcoin’s strong start to 2025 suggests significant upside potential, supported by key on-chain metrics and market sentiment. The Puell Multiple indicates miner recovery, historically a bullish signal, while the MVRV Z-Score shows room for growth compared to past cycle peaks. The Fear and Greed Index reflects sustained bullish sentiment, and retail investor activity remains low, suggesting untapped demand. Additionally, increasing risk appetite in traditional markets aligns with Bitcoin’s bullish phases. While short-term volatility is possible, overall indicators suggest Bitcoin is positioned to reach new all-time highs in the near future.

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