Weekly Update: 15th of January

Hodl Team
15 January 2025
Welcome to our weekly update, where we provide insights into the latest developments in the digital assets market.

What happened between the 8th and 15th of January?

  • The U.S. states of New Hampshire and North Dakota introduced legislation for a strategic Bitcoin reserve at the state level. Read more
  • The U.S. Department of Justice (DoJ) has been cleared to sell $6.5 billion in Bitcoin which was seized from the infamous Silk Road marketplace. Read more
  • Better than expected Non-Farm Employment Change figures decreased the possibility of multiple rate cuts in 2025, causing the wider digital assets market to experience a retracement. Read more
  • Bitcoin reserves on centralized exchanges near a 7-year low. Read more

More states join the race for a Bitcoin reserve

New Hampshire and North Dakota have become the latest U.S. states to introduce legislation for a strategic Bitcoin reserve. North Dakota and New Hampshire introduced their legislation on January 7th and 9th, respectively. The North Dakota bill proposes including digital assets and precious metals in the state treasury’s portfolio to hedge against inflation. Meanwhile, the New Hampshire bill focuses on adding digital assets to the treasury. Notably, the bill allows investment only in digital assets with a market cap exceeding $500 billion on average over the past 12 months or in stablecoins. This requirement makes Bitcoin the only asset eligible for investment.

Additionally, exciting news emerged from the U.S. Senate, as the Banking Committee plans to launch a subcommittee on digital assets. Rumors suggest it will be led by Senator Cynthia Lummis, a known advocate for digital assets.

Department of Justice to sell $6.5 billion of Bitcoin

On January 9th, a U.S. federal court approved the U.S. Department of Justice (DoJ) to sell 69,370 Bitcoin, worth approximately $6.5 billion, marking the end of a four-year legal battle. These Bitcoins were seized from the infamous dark web marketplace Silk Road. As of January 14th, the U.S. government still holds over 198,000 Bitcoin, worth $19 billion. Some market participants reacted negatively to this news, anticipating increased selling pressure. However, despite the ruling, the liquidation process will take time, as federal asset forfeiture involves several administrative steps and appeal windows.

U.S economic figures cause a drop in the market

On January 10th, the latest non-farm employment change and unemployment rate figures were published. Both figures exceeded expectations, with the U.S. adding 100,000 more jobs than forecasted and the unemployment rate coming in lower than anticipated. This signaled a resilient U.S. economy despite high interest rates. As a result, market participants now expect fewer interest rate cuts than initially anticipated, negatively impacting the digital assets market, as periods of low interest rates are more favorable for risk-on assets. Consequently, the market experienced heightened volatility, with Bitcoin dropping below $90,000 before quickly recovering and briefly surpassing $97,000.

Bitcoin reserves hit a multi-year low

On January 13th, CryptoQuant data revealed that Bitcoin reserves across centralized exchanges had dropped to 2.35 million Bitcoin, the lowest level since June 2018. Many market participants attribute this decline to the growing institutional adoption of Bitcoin, particularly through Bitcoin ETFs. These financial instruments have collectively accumulated over 1.1 million Bitcoin and show no signs of slowing down. With Bitcoin’s supply steadily decreasing, some market participants anticipate a price rally driven by a supply shock. This phenomenon occurs when strong buyer demand meets a shrinking supply, as is currently the case with Bitcoin. Additionally, Bitcoin leaving centralized exchanges often signals that investors intend to hold the asset for the long term, whereas high inflows to exchanges typically indicate selling activity.

In other digital assets news

  • James Howells, an IT engineer from Newport, Wales, has lost his legal battle to recover a hard drive containing more than $770 million worth of Bitcoin.
  • Italy's largest bank, Intesa Sanpaolo, has made its first Bitcoin purchase, acquiring 11 Bitcoin, worth just over $1 million.

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