Job openings in the US fell by 556,000 to 7.6 million in December 2024, missing the market expectation of 8 million and indicating a gradual cooling of the labor market.
Some see this as bullish for crypto, due to the dollar weakening. However, the outlook for Federal Reserve interest rate cuts remains highly uncertain, with trade policies continuing to evolve. This global market uncertainty might weigh on crypto, as investors could remain cautious amidst the ongoing volatility.
In a post on X, Arthur Hayes, co-founder and former CEO of BitMEX, identified based on insight from Swiss investor and strategist Felix Zulauf, several concerning US economic indicators, including a declining fiscal deficit, increasing Treasury General Account balance, and reduced foreign lending by US banks, which could potentially slow down the crypto bull cycle.
While a declining fiscal deficit generally signals positive economic health and could help reduce inflation according to the Federal Reserve Bank of San Francisco, aggressive implementation of such policies could significantly reduce liquidity in the financial system.
Previous cryptocurrency bull cycles were driven by expansionary fiscal policies that increased capital flow into risk assets, but the current economic environment - with tighter monetary conditions and higher borrowing costs - may create a more challenging landscape for crypto assets.
Bitcoin fell 6% after US AI and Crypto Czar David Sacks’ press conference on Feb 4 around 21:00 CET due to a lack of immediate pro-crypto policy changes, with traders rotating capital into stablecoins. During the conference, he said "we're evaluating the idea of a Bitcoin reserve — this is one of the first things we're going to look at in the admin. We're still in very early stages of this, and I think the concept of the sovereign wealth fund is separate", which the crypto community took as vague assurances instead of clear regulatory framework.
Stablecoins saw daily inflows of $2.521bn on Feb 4. The current market cap is $220.904bn.
USDC is gaining traction in Europe due to compliance advantages over USDT, Solana is becoming a leading platform for USDC, and stablecoins are increasingly being used for passive income generation through DeFi activities, despite some regulatory concerns around potential wallet freezes and government control.
US BTC and ETH Spot ETFs recorded net daily inflows of over $300m each on Feb 4. For BTC ETFs, this is a reversal from the previous day's net outflows, while for ETH, the $307.8m inflows represent a 268% increase compared to one day prior.
The current global crypto market cap is $3.21 tn, a 0.23% decrease over the last day. The total crypto market 24h volume is $169.48bn, a 27% decrease.
The SEC is reducing its cryptocurrency oversight by restructuring its specialized crypto enforcement unit, with over 50 staff members being reassigned to other departments. This change aligns with Trump's campaign promises to minimize government regulation of digital assets and establish US leadership in the crypto sector. According to The New York Times, the reorganization has led to significant personnel changes, citing five anonymous sources. However, the agency has not confirmed anything officially.
Bitcoin's network hashrate, which is a proxy for competition in the industry and mining difficulty, showed mixed trends in January, according to a report from JPMorgan. While the monthly average hashrate increased slightly by 1% to 785 EH/s, the end-of-month weekly average actually dropped 2% to 781 EH/s compared to December. Despite this variability, mining difficulty decreased 2% month-over-month, though it remains 25% above pre-halving levels from last April.
Senator Bill Hagerty introduced the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act on Feb 4 to regulate stablecoins like USDT and USDC under Federal Reserve oversight. The bill aims to support cryptocurrency innovation while providing regulatory clarity. The GENIUS bill defines stablecoins as digital assets pegged to the US dollar and proposes that issuers with market caps above $10 billion comply with Federal Reserve regulations, while issuers below that threshold would be regulated by the states.
El Salvador has expanded its Bitcoin holdings with recent purchases: 11 BTC acquired on February 4 at $101,816 each, followed by 1 additional BTC at $99,114. El Salvador's total Bitcoin reserves now stand at 6,068 BTC, worth more than $554 million at current prices.
Between Jan 11 and Feb 3, medical technology firm Semler Scientific also increased its Bitcoin position by purchasing 871 BTC for $88.5 million, raising its total Bitcoin holdings to 3,192 BTC. The company financed this acquisition through a combination of convertible bonds and by selling part of its stake in Monarch Medical Technologies. Meanwhile, MicroStrategy paused its 12-week buying spree.
After Bybit temporarily suspended its services for users in India on Jan 12 in response to regulation in the country, the crypto exchange has now successfully registered with India's financial regulator according to a Feb 5 report. Bybit is expected to obtain a full operating license in the coming weeks, allowing it to officially launch its compliant business in the Indian market.