Crypto Market Update

Market Performance

“Prepared at UTC 07.36 am”

Today’s Key Events

• President Trump and Israeli Prime Minister to Meet
• US NFP and Unemployment Rate to be Released
• Avax Token Unlock

US Macro Data Set

• US December Retail Sales: Came in at 0.0% month-on-month (expectation 0.4%, previous 0.6%). Core sales were -0.1% month-on-month (expectation 0.5%, previous 0.2%, revised down from 0.4%). The data pointed to a loss of momentum on the consumption side. The weak performance led to cautious assessments of the growth outlook in the markets.
• ADP Employment Average: According to ADP data, the average weekly job growth for the four weeks ending January 24 was 6,500. In the previous period, this figure was 7,750. Although the four-week average declined slightly, the overall trend remained below 10,000, showing no sharp deterioration. Markets focused on the nonfarm payrolls data to be released on Wednesday.
• US Default Rates: The default rate on US consumer debt rose to 4.8% in the fourth quarter. This rate increased by 0.3 points compared to the previous quarter, reaching its highest level since 2017. The increase was driven by high default rates among low-income households and young borrowers. Data from the New York Fed’s Household Debt and Credit Report pointed to a deterioration in credit quality.

Interest Rate Message from Fed Officials

Two hawkish Fed officials signaled that interest rates could remain unchanged for a longer period. The officials emphasized that there should be no rush to cut interest rates unless there is a significant deterioration in the labor market. Expectations for interest rate cuts remain high in the first half of the year. The statements indicated that the patient stance in monetary policy would continue.

• Cleveland Fed President Hammack said interest rates could remain unchanged for a long time. He stated that officials should be patient when evaluating incoming data. He said fiscal support and low interest rates could support growth and the job market. On inflation, he said he expected progress this year.
• Dallas Fed President Logan said falling inflation alone was not enough to warrant a new rate cut. He stated that additional cuts would not be justified without a significant weakening in the job market. He noted that employment growth over the past six months has been in line with population growth and that hiring is at break-even levels. He stated that he is not fully convinced that inflation has returned to 2%, but expects improvement this year.

US-Iran Tensions

• Military activity came to the fore ahead of the US-Iran talks. According to AXIOS, Trump said that if the talks failed, he could deploy another aircraft carrier strike group to the Middle East. US officials confirmed discussions regarding the deployment of a second group. Trump stated that Iran wanted an agreement and was conducting more serious negotiations under military pressure.
• The Commander of the Iranian Air Force announced that the forces are at their highest level of readiness. Stating that the air force is fully prepared, the commander emphasized that any attack would be met with a determined response. The announcement showed that tensions between the US and Iran continue. Military activity in the region is being closely monitored.

Latest Fed Monetary Policy

According to CME’s “Fed Watch” data, the probability of the Fed keeping interest rates unchanged in March is calculated at 80.4%, while the probability of a 25 basis point cut is 19.6%. The probability of a cumulative 25 basis point cut in April is 36%, the probability of keeping rates unchanged is 58.8%, and the probability of a cumulative 50 basis point cut is 5.3%. In June, the probability of a cumulative 25% cut rises to 49.3%. US President Donald Trump said interest rates should be two points lower than their current level.

Messages from Senior US Officials

• US Treasury Secretary Bessent said in an interview with Fox News that the crypto market structure bill should be passed this spring. He said, “We need to complete the crypto market structure law.” He expressed optimism about the law passing. The statement raised expectations regarding the regulatory process in Washington.
• U.S. Commerce Secretary Lutnick said the dollar exchange rate has been artificially inflated for years. He said GDP growth is expected to exceed 5% in the fourth quarter. He described the dollar’s current level as more natural. He stated that reasonable growth exceeding 6% is expected in the first quarter.

House of Representatives Vote

The U.S. House of Representatives rejected President Johnson’s attempt to block the vote on Trump’s tariff decisions by a vote of 217 to 214. Three Republican lawmakers voted against it, along with 214 Democratic members. The vote paved the way for Democrats to bring the decision against the tariff policy to the plenary. Although Trump has the authority to veto the decision, the development may be met with resistance at the White House.

Progress at Stablecoin Meeting

No final agreement was reached at the stablecoin meeting held at the White House, but the parties held extensive discussions. Banks indicated for the first time that they were open to evaluating any proposed exemptions. Previously, they had been firmly opposed to transaction-based reward exemptions. Discussions focused on the definition of “permitted activities.”

Staff Reduction at the CFTC

The entire enforcement team at the CFTC’s Chicago office has left the agency. The office, which once had 20 enforcement attorneys, has been completely shut down. The staff reduction coincided with the agency’s process of expanding its oversight of crypto and prediction markets. Under Caroline Pham’s leadership, there was a reduction of over 21% in staff numbers last year.

Cyber Draft from Japan

The Japanese Financial Services Agency published a draft for strengthening cybersecurity for crypto asset exchange operators and began collecting opinions until March 11. The draft includes measures against social engineering and supply chain threats. A mandatory cybersecurity self-assessment is planned starting in fiscal year 2026. Information sharing and pilot penetration tests are also anticipated in the sector.

Russia’s Crypto Law

The Russian State Duma passed a law confirming the property status of cryptocurrencies on its third reading. The law clarifies the rules for searching for and seizing crypto assets in criminal cases. Seized assets can be transferred to a state-owned special wallet if technical conditions are met. It requires approval by the Federal Council and the President’s signature to enter into force.

Swap Pilot from the UK

The Bank of England has launched a six-month pilot project called the “Synchronization Laboratory.” Eighteen companies, including Chainlink, Swift, and LSEG, are participating in the project. The aim is to test the atomic settlement of tokenized assets with sterling. The experiments will be conducted without using real funds.

Bitcoin Message from Saylor

Michael Saylor announced that his company will not sell Bitcoin and will continue to buy it. He said that despite a paper loss of over $5 billion, the strategy will not change. He stated that they will continue to buy Bitcoin every quarter. The announcement showed that the long-term stance continues.

Zero Network from LayerZero

LayerZero announced the Layer 1 blockchain network $Zero. The network supports lightweight validators and high-performance block producers with zero-knowledge proof technology. The target is 2 million transactions per second for each Zone. The system includes QMDB, FAFO, Jolt Pro, and SVID components.

Uniswap Wins Lawsuit

Uniswap founder Hayden Adams announced that they won the patent lawsuit against Bancor. The lawsuit involved allegations of patent infringement related to the fixed-product automated market maker infrastructure. Bancor claimed that Uniswap used its smart contract technology without permission. Uniswap stated that the allegations were unfounded.