Crypto Market Stabilises

Bitcoin has been consolidating within the $90K range despite ongoing volatility driven by tariffs. This week, it reacted sharply to news of Donald Trump's plan to impose a 25% tariff on all steel and aluminium imports, briefly dipping to $94K before rebounding to $98K. Meanwhile, certain altcoins saw strong recoveries, with Total3 (the total crypto market cap excluding BTC and ETH) rising 5.5% this week, while Bitcoin dominance (BTCD) fell 4.8% from its recent high, suggesting capital is flowing into altcoins.

After a brief hiatus, MicroStrategy has resumed its Bitcoin accumulation, purchasing 7,633 BTC for $742.4 million at an average price of $97,255 per BTC. Additionally, crypto’s Fear & Greed Index has dropped to its lowest level since September last year, signalling fear in the market. This index, which measures overall market sentiment, has historically been a useful indicator in bull markets, as extreme fear often aligns with strong buying opportunities, while extreme greed typically marks ideal moments to take profits. If history is any guide, this sharp decline in sentiment could be setting the stage for the next major market move.

Weekly Price Update

States and Countries Piling In

This cycle is widely recognised as the government and institutional adoption phase, and this week, that trend is on full display. More than half of US states have now proposed bills to adopt Bitcoin, a rapid acceleration in regulatory interest.

U.S. Strategic Bitcoin Reserve - States Proposing a Reserve Bill

Meanwhile, reports from Japan, the world's fourth largest economy, suggest the government is considering slashing crypto taxes from 55% to 20% and lifting the ban on Bitcoin ETFs. This potential policy shift mirrors the growing momentum sparked by the US, particularly its leadership's positioning of the country as the global hub for Bitcoin. No major economy wants to risk falling behind.

What we’re witnessing isn’t just a shift in US state policies, it's a ripple effect extending beyond American borders. As the world’s largest economy embraces Bitcoin, other nations are compelled to follow suit or risk losing relevance in the evolving financial landscape.

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Bitcoin Ownership By Type

Approximately 69.4% of Bitcoin’s circulating supply is held by individuals, according to Bitwise, making institutional and government adoption more complex. This distribution suggests that as demand from major players grows, the market dynamic between buyers and sellers could become increasingly interesting.

A significant portion of Bitcoin ETF purchases occur over the counter (OTC), meaning they are conducted off-exchange. This method is used for efficiency, confidentiality, and minimising market disruption. Analysts have recently noted that OTC Bitcoin reserves are naturally depleting, which could soon render this strategy unsustainable.

With continued adoption from institutions like MicroStrategy, BlackRock, and potentially governments, a supply shock may be on the horizon. If OTC liquidity dries up, major buyers may have no choice but to purchase directly from exchanges, putting direct upward pressure on price.

Bitcoin Ownership by Type

• As shown above, approximately 69.4% of BTC is held by individuals, 7.5% is estimated to be lost, and ETFs now control over 6.1% of the supply. As a result, exchange liquidity is declining.

FTX Repayments

FTX, once one of the world’s largest crypto exchanges, collapsed in late 2022 after it was revealed that customer funds had been misused, leading to billions in losses. Many users had their assets frozen and have been waiting for repayments ever since.

Now, the first round of repayments is set to go live on February 18, injecting $1.2 billion of liquidity back into the market. This phase covers claims under $50,000, with eligible holders receiving 119% of the value of their assets at the time of FTX’s collapse.

This is a bullish event, as it not only returns funds to affected users but will lead to fresh capital into the market. Many of these investors have been sidelined for years, and with their liquidity finally being unlocked, a significant portion could flow right back into Bitcoin, altcoins, and other high conviction plays, acting as a catalyst for further upside this cycle. Repayments are being made in stablecoins, meaning there’s minimal risk of direct sell pressure on crypto assets. If recipients choose to cash out, they’ll be selling stablecoins rather than BTC or altcoins, leaving the broader market unaffected.

B3: The Gaming Layer on Base

B3 is a gaming infrastructure layer built on Base, led by a team of ex-Coinbase engineers, specifically from the Base ecosystem engineering team. It has the full backing of Jesse Pollak (Head of Base) and is focused on enabling game studios, developers, and gamers to build open, on-chain ecosystems. $B3 only launched two days ago and has already secured a Coinbase listing, and is becoming a core part of Coinbase's GameFi strategy.  

B3 Highlights:

• 6M+ players*
• 225m transactions*
• 90+ live games
• 5+ game-chains launching in Q1 2025 from top studios and brands, including:
  • Parallel ($PRIME Chain) – A third-person sci-fi extraction shooter developed and led by one of the strongest teams in Web3 gaming (Echelon Prime).
  • Infinigods ($GOD Chain) – Created by the studio behind Web3’s most-downloaded mobile game and a top-10 contender in the Luck Battle genre

*as at 5 February 2025

Uniswap Labs Launches Unichain

Uniswap Labs has introduced Unichain, a decentralised Layer 2 solution on Ethereum, designed to improve security and reduce unfair trading advantages.

With help from Flashbots, Unichain speeds up transactions to under a second, which improves efficiency for liquidity providers and traders while also opening up new arbitrage opportunities.

The UNI token will play a role in validation, with 65% of net revenue allocated to validators and stakers, though its impact on the ongoing "fee switch" debate remains uncertain. However, Uniswap Labs’ unilateral development of Unichain, without consulting token holders, has sparked controversy, reigniting debates over governance and equity in the ecosystem.

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