Weekly Update: 12th of February
What happened between the 5th and 12th of February?
- The digital assets market is adjusting to Trump's newly announced 25% tariffs on aluminum and steel as it seeks stability amid uncertain market conditions. Read more
- Short positions against Ethereum increase over 500% while the network fees drop to a multi-year low. Read more
- Of the sixteen U.S. states in the race for a Bitcoin Reserve, Arizona and Utah take the lead. Read more
- Central African Republic becomes the first country to launch a memecoin. Read more
Digital assets market recovers lost ground
On the weekend of February 1st, financial markets were shaken as Trump announced tariffs on Canada, Mexico, and China. While markets initially reacted negatively, they largely recovered after the tariffs were postponed by a month. However, on February 9th, Trump introduced new tariffs, imposing a 25% duty on steel and aluminum imports into the U.S. This triggered a temporary decline in leading assets such as Bitcoin and Ethereum, though both quickly rebounded to pre-announcement levels. Fear remains the dominant sentiment in the market, prompting traders and investors to adopt a more cautious approach. While current market conditions are less favorable than before, there is no clear indication that we have reached a peak.
Ethereum is struggling
While Bitcoin has had a slow start to the year, Ethereum is facing its own challenges. During last week, Ethereum short positions increased over 500% since the U.S. presidential election, rising 40% in the last week alone, signaling bearish sentiment among traders. Additionally, daily transaction fees on the Ethereum network have dropped to their lowest level since September 2024, indicating a significant decline in activity. As a result, Ethereum has turned inflationary again, as it relies on network usage for token burns. However, investor interest remains strong through traditional channels, with Ethereum spot ETFs continuing to see inflows.
First U.S. states take the lead in the race of a Bitcoin reserve
Since Trump’s presidential election, an increasing number of U.S. states are seriously considering the establishment of a Strategic Bitcoin Reserve at the state level. Currently, sixteen states have introduced legislation to create their own reserves, with Utah and Arizona leading the way as their proposals have passed the first reading. However, the process remains lengthy, as the legislation must still go through a second committee vote, followed by a second reading and final vote. Once approved, the legislation can be enacted, allowing the respective jurisdictions to formally establish their Bitcoin reserves.
Memecoin craziness continues
Earlier this year, the market saw President-elect Donald Trump and his wife, Melania, launch their own memecoins—an event many hoped would mark the end of the trend. However, on February 9th, the Central African Republic (CAR) followed suit, unveiling its own memecoin. The country's president announced the token’s launch on social media, sparking a surge in its value to a market capitalization of approximately $900 million—nearly 30% of the nation’s Gross Domestic Product. Despite the initial excitement, traders are urging caution as wallets linked to the project have reportedly been offloading significant amounts of the token. This is not CAR’s first adventure in digital assets; in 2022, the country made Bitcoin a legal tender.
In other digital assets news
- U.S. asset manager BlackRock is set to launch a Bitcoin Exchange Traded Product in Europe.
- Real-World Asset project Ondo Finance unveils layer-1 blockchain for institutions to tokenize RWAs.
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