The year started with, first, a regulatory landmark for Bitcoin, second, a reminder that inflation hadn’t cooled in December and that a downturn in the economy might still be underway in Europe. In this monthly review, we’ll discuss the following trends shaking the market:
• Solana Flirts with Compliance, Unveils Token Standard
• Ethereum Solidifies its Presence
• Layer 2s Roll Up Sleeves Ahead of Settlement Layer Upgrades
All Eyes on Rate Cuts, Albeit Sticky Inflation
Europe’s annual inflation increased by 3.4% in December. The European Central Bank (ECB) decided to keep the three key interest rates unchanged, bracing itself for a downtrend expected to continue in 2024. With energy inflation in the negative since May 2023, food inflation remains sticky at 6%. With more than 500 ships already taking a detour, unrest in the Red Sea is one of the factors the ECB fears will affect consumer prices if the conflict persists. If not, rate cuts could commence in June.
In the U.S., investors expected the first of three signaled rate cuts to happen as early as March. However, the country’s annual inflation increased by 3.4% in December, the most in three months. Housing, clothing, and car prices are the major contributors to the sticky inflation that has dimmed rate-cut expectations. On January 31, the Federal Open Market Committee (FOMC) decided it would keep interest rates steady. Given inflation is well above the Fed’s 2% target, it indicated that it isn’t ready to cut rates.
On the upside, unemployment claims have dropped to 187K, the lowest since September 2022 – which could clear out recession fears. On that note, the U.S. equities market has been moving sideways in January, dropping after the Fed’s rates decision; the S&P 500 and Nasdaq Composite have increased by ~2% and ~2.7%, respectively, over the past month.
Bitcoin Warms Up to its Wall Street Moment
Seeing $4.6 billion in volume on the first day of trading, 11 spot Bitcoin exchange-traded funds (ETFs) were finally approved in the U.S. even to flip silver, becoming the world’s second-largest commodity by assets under management. While spot Bitcoin products have been present on European stock exchanges for the past five years, their introduction in the U.S. marks a significant milestone. Valued at $45 trillion, American markets are nearly three times larger than their European counterparts, valued at $13 trillion. This paves the way for much broader adoption, solidifying crypto as a legitimate asset class that can seamlessly integrate into the traditional portfolios of the largest asset managers in the world.
Since launch, more than $29 billion have been traded on the products, with total inflows surpassing $1 billion. After successfully switching from a closed-end fund to a spot product, Grayscale’s ETF saw more than $5 billion in redemptions, with nearly a billion being attributed to FTX’s estate bankruptcy liquidations. The underlying asset in question, however, had a bumpy monthly performance. As shown in Figure 1, Bitcoin broke the $49K mark and declined shortly after to $43K, dipping by 3.6% in January. This drop can be due to inflationary pressures and profit-taking measures – especially those linked to bankruptcy proceedings.
Figure 1: Spot Bitcoin ETF Flows
Source: 21Shares
Solana Flirts with Compliance, Unveils Token Standard
Increasing by ~300% in 2023, Solana picked up the pace at the end of January thanks to the airdrop of WEN, a new “meme coin” listed on Jupiter, Solana’s largest decentralized exchange, which released its own governance token on January 31, potentially inviting even more hype to the network. New addresses have surged by 52.5% since WEN’s airdrop. Frenzy aside, there’s more to unpack on Solana’s backend.
On January 24, Solana unveiled token extensions, a set of features to enhance Solana’s existing token standard, Token2022. The upgrade, which introduces 13 new standards in total, includes the ability to introduce confidential transfers to shield transfer amounts for privacy purposes, an interest-bearing standard to generate royalties on tokens, and permissioned tokens that implement access control for specific users and entities. These enhancements are tailored to meet the demands of businesses seeking to construct sophisticated and adaptable tokens that adhere to regulatory standards.
That said, the upgrade strategically places Solana in a prime position to assume a more influential role in tokenization, enhancing the network’s ability to meet the diverse needs of enterprises effectively. Additionally, this development is crucial as it establishes Solana’s competitiveness in a domain that was captivated by Ethereum over the past two years. A degree of dominance is attributed to Ethereum’s reliance on a set of customizable standards, such as ERC3643, which can be explored further in our tokenization report. Finally, the network’s increasing enthusiasm and widespread adoption become evident when analyzing its daily active users, illustrated in Figure 2 below.
Figure 2: Comparison of Daily Active Users between Leading Smart Contracts and Scaling Platforms
Source: 21Shares, Artemis
Ethereum Solidifies its Presence
Following the eagerly awaited approval of the BTC Spot ETF in the United States, Ethereum began overperforming, potentially signaling what might unfold next in the market. Namely, investors may have started to speculate on a Spot Ethereum ETF, as Ethereum could be in a favorable position due to the existence of an ETH futures ETF in the U.S. – a reminiscent feature of Bitcoin’s position ahead of the SEC approval. This belief prompted the second-largest cryptocurrency to surge by 15% shortly after the approval, only to retrace those gains in the subsequent days. However, the anticipation surrounding the next U.S. ETF approval is not the sole source of excitement for Ethereum, especially as the network approaches its next major upgrade.
Dubbed Dencun, the network’s refinement aims to slash gas fees for Ethereum’s scaling solutions by nearly 90%. This will be achieved by introducing what’s known as data blobs, a novel data container that efficiently carries substantial amounts of data at a lower verification cost. This breakthrough is poised to significantly reduce settlement costs for rollup networks such as Arbitrum, Optimism, and Polygon.
With the successful completion of the first dress rehearsal on the Goerli Testnet, the path is now paved for two additional trial runs on January 30 and February 7, leading to a mainnet deployment expected in late March. This upgrade is pivotal, standing out as a key driver of excitement around Ethereum and its extensive ecosystem of scaling solutions, as evidenced by the network’s surging daily transactions reaching a multi-year high in Figure 3 below.
Figure 3: Daily Transactions on Ethereum
Source: Glassnode
Layer 2s Roll Up Sleeves Ahead of Settlement Layer Upgrades
For instance, Polygon intensified its focus on the modular Chain Development Kits (CDK) solution, allowing businesses to craft their own adaptable blockchains as a strategic move to advance its tokenization initiatives. A notable example is Libre, a CDK-based protocol tailored for institutions that provides compliant issuance and automated lifecycle management of alternative investments. Hamilton Lane and Brevan Howard are its inaugural adopters.
Furthermore, Polygon pushed ahead with its vision for shared liquidity by introducing AggLayer. A solution that aims to interconnect all CDK-based networks through ZeroKnowledge proofs, facilitating unified liquidity across its ecosystem. This development positions Polygon distinctly in comparison to similar modular networks such as Arbitrum and Optimism. Finally, Polygon unveiled that its zkEVM network has been upgraded into a Type2 EVM-compatible network, meaning that developers can now deploy their code on Polygon zkEVM exactly as it is on Ethereum without any additional auditing or modifications necessary.
Conversely, Arbitrum announced that its custom blockchain development solution, Orbit, will enable networks built on top of its framework to designate their tokens as gas currencies, a departure from the conventional reliance on ETH once they fulfill a specific criterion. This upgrade ensures that networks utilizing Orbit can establish utility for their tokens, accompanied by advanced features like gas subsidy. The remarkable flexibility provided by Orbit places Arbitrum on equal footing with platforms like Cosmos, making it a more appealing choice for developers seeking flexibility in their blockchain development decisions. However, even if users choose to transact with alternative currencies on Arbitrum-based networks, potentially reducing demand for ETH in user transactions, it’s important to highlight that Arbitrum’s validators (sequencers) are still required to settle transactions on Ethereum using ETH. This implies that the demand for ETH as a settlement currency won’t be significantly diminished for networks that opt for this method.
To recap, with Ethereum’s gas fees peaking at an average of 156 GWEI (around $6.5) in 2023, the Dencun upgrade couldn’t have come at a more opportune moment to streamline the user experience for those preferring to remain within Ethereum’s ecosystem to benefit from its network effects and liquidity advantages. This is a reality that we at 21Shares believe will inspire Ethereum competitors to contemplate transitioning to Layer 2 solutions. This thesis can be further explored in our market outlook for 2024.
This strategic shift enables ETH alternatives to tap into Ethereum’s vibrant and sticky user base and provides an opportunity to maximize profits by leveraging the network’s coveted blockspace. This point holds particular relevance for networks like Solana, which presently face challenges in achieving profitability due to the network’s minimal fees and high levels of subsidization.
With that in mind, the business model success of scaling networks is clearly illustrated in Figure 4 below, highlighting their ability to generate substantial profits even after the costly data submission on the Ethereum mainnet. Nevertheless, the responsibility lies in scaling solutions to distinguish themselves and incorporate a range of features that appeal to the distinct use cases within their respective networks.
Figure 4: Monthly Net Profits of Ethereum Scaling Solutions
Each week the 21Shares Research team will publish our data-driven insights into the crypto asset world through this newsletter. Please direct any comments, questions, and words of feedback to research@21shares.com
Disclaimer
The information provided does not constitute a prospectus or other offering material and does not contain or constitute an offer to sell or a solicitation of any offer to buy securities in any jurisdiction. Some of the information published herein may contain forward-looking statements. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties and that actual results may differ materially from those in the forward-looking statements as a result of various factors. The information contained herein may not be considered as economic, legal, tax or other advice and users are cautioned to base investment decisions or other decisions solely on the content hereof.
Michael Saylor’s bold Bitcoin bet and Strategy’s risk analysis
Bitcoin price technical analysis: Where are the liquidation levels?
What are real-world assets and why do we need tokenization?
Michael Saylor’s bold Bitcoin bet and Strategy’s risk analysis
Strategy (formerly MicroStrategy) has amassed a staggering $43 billion in Bitcoin, positioning itself at the forefront of the corporate “reserve race.” Under the leadership of Bitcoin maximalist Michael Saylor, the company now boasts an $84 billion market cap. But with such an aggressive strategy, how sustainable is its approach—and what risks lie ahead? We break it down in today’s analysis.
Bitcoin price technical analysis: Where are the liquidation levels?
A drop below $72,000 could flush longs, while a breakout above $90,000 may squeeze shorts. One key positive indicator is that Bitcoin continues to print higher lows since March 10, which preserves a bullish market structure in our view. Dive into our technical analysis.
What are real-world assets and why do we need tokenization?
Imagine owning a slice of a skyscraper or a piece of fine art with just a few clicks. Tokenization, the act of converting ownership rights to real-world assets (RWAs) into tradable tokens, has surpassed $10 billion in on-chain value, unlocking global 24/7 access to once-exclusive markets with liquidity, efficiency, and yield. Find out how it works.
Research Newsletter
Each week the 21Shares Research team will publish our data-driven insights into the crypto asset world through this newsletter. Please direct any comments, questions, and words of feedback to research@21shares.com
Disclaimer
The information provided does not constitute a prospectus or other offering material and does not contain or constitute an offer to sell or a solicitation of any offer to buy securities in any jurisdiction. Some of the information published herein may contain forward-looking statements. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties and that actual results may differ materially from those in the forward-looking statements as a result of various factors. The information contained herein may not be considered as economic, legal, tax or other advice and users are cautioned to base investment decisions or other decisions solely on the content hereof.
Invesco BulletShares 2030 EUR Corporate Bond UCITSETF EUR Acc (BSE0 ETF) med ISIN IE000I25S1V5, försöker följa Bloomberg 2030 Maturity EUR Corporate Bond Screened-index. Bloomberg 2030 Maturity EUR Corporate Bond Screened Index följer företagsobligationer denominerade i EUR. Indexet speglar inte ett konstant löptidsintervall (som är fallet med de flesta andra obligationsindex). Istället ingår endast obligationer som förfaller under det angivna året (här: 2030) i indexet. Indexet består av ESG (environmental, social and governance) screenade företagsobligationer. Betyg: Investment Grade. Löptid: december 2030 (Denna ETF kommer att stängas efteråt).
Den börshandlade fondens TER (total cost ratio) uppgår till 0,10 % p.a. Invesco BulletShares 2030 EUR Corporate Bond UCITSETF EUR Accär den billigaste och största ETF som följer Bloomberg 2030 Maturity EUR Corporate Bond Screened index. ETFen replikerar det underliggande indexets prestanda genom samplingsteknik (köper ett urval av de mest relevanta indexbeståndsdelarna). Ränteintäkterna (kupongerna) ackumuleras och återinvesteras.
Invesco BulletShares 2030 EUR Corporate Bond UCITSETF EUR Acc är en mycket liten ETF med tillgångar på 6 miljoner euro under förvaltning. Denna ETF lanserades den 18 juni 2024 och har sin hemvist i Irland.
Produktbeskrivning
Invesco BulletShares 2030 EUR Corporate Bond UCITSETFAccsyftar till att ge den totala avkastningen för Bloomberg 2030 Maturity EUR Corporate Bond Screened Index (”Referensindexet”), minus avgifternas inverkan. Fonden har en fast löptid och kommer att upphöra på Förfallodagen.
Referensindexet är utformat för att återspegla resultatet för EUR-denominerade, investeringsklassade, fast ränta, skattepliktiga skuldebrev emitterade av företagsemittenter. För att vara berättigade till inkludering måste företagsvärdepapper ha minst 300 miljoner euro i nominellt utestående belopp och en effektiv löptid på eller mellan 1 januari 2030 och 31 december 2030.
Värdepapper är uteslutna om emittenter: 1) är inblandade i kontroversiella vapen, handeldvapen, militära kontrakt, oljesand, termiskt kol eller tobak; 2) inte har en kontroversnivå enligt definitionen av Sustainalytics eller har en Sustainalytics-kontroversnivå högre än 4; 3) anses inte följa principerna i FN:s Global Compact; eller 4) kommer från tillväxtmarknader.
Portföljförvaltarna strävar efter att uppnå fondens mål genom att tillämpa en urvalsstrategi, som inkluderar användning av kvantitativ analys, för att välja en andel av värdepapperen från referensindexet som representerar hela indexets egenskaper, med hjälp av faktorer som index- vägd genomsnittlig varaktighet, industrisektorer, landvikter och kreditkvalitet. När en företagsobligation som innehas av fonden når förfallodag kommer kontanterna som fonden tar emot att användas för att investera i kortfristiga EUR-denominerade skulder.
ETFen förvaltas passivt.
En investering i denna fond är ett förvärv av andelar i en passivt förvaltad indexföljande fond snarare än i de underliggande tillgångarna som ägs av fonden.
”Förfallodag”: andra onsdagen i december 2026 eller sådant annat datum som bestäms av styrelseledamöterna och meddelas aktieägaren
Det betyder att det går att handla andelar i denna ETF genom de flesta svenska banker och Internetmäklare, till exempel DEGIRO, Nordnet, Aktieinvest och Avanza.
Since President Trump appointed Mark Uyeda as acting SEC chair two months ago, many investigations into crypto businesses have been dropped, as the SEC moves away from regulation by enforcement and works to create a framework for digital assets. As regulations become clearer and news flow turns more positive, crypto prices—which dropped sharply this week—should begin to better reflect the new regulatory landscape in the US.
We believe this regulatory shift could ultimately help trigger the next leg of the current bull run, as investors better understand the significance of regulatory clarity and seek to acquire bitcoin and altcoins at what we believe are currently very favorable levels.
Market Highlights
SEC Dismisses Crypto Enforcement Actions
The SEC dropped its enforcement actions against crypto-related companies Kraken, Consensys, and Cumberland DRW.
This indicates a shift in SEC’s regulatory approach, favoring clearer guidelines over enforcement actions. Such a pivot could foster a more predictable environment, encouraging innovation within the sector.
Banks to Engage in Crypto Activities
The FDIC has rescinded previous guidelines which prevented financial institutions from engaging with crypto activities without prior sign-off.
By removing bureaucratic hurdles, banks may more readily offer crypto-related services, potentially leading to broader adoption and integration of digital assets.
Bitcoin ETFs Inflow Streak Surpassed $1 Billion
US spot Bitcoin ETFs have recorded a 10-day inflow streak exceeding $1 billion marking the longest such streak in 2025.
This underscores growing institutional and retail investor confidence in Bitcoin as an asset class that helps increase market stability and possibly paving the way for the approval of other crypto-based financial products.
Market Metrics
All NCITM constituents had negative performance last week, with XRP (-10.8%) and UNI (-10.7%) seeing the steepest declines. ETH also experienced a sharp drop (-9.1%), contributing to NCITM’s underperformance relative to BTC (-2.9%). The NCITM -4.2% decline reflects a broader risk-off sentiment in the crypto market, as investors reassess their positions amid ongoing macroeconomic uncertainties.
NCITM (-4.2%) extended its underperformance last week, deepening year-to-date losses. Traditional indices like the S&P 500 (-1.5%) and Nasdaq 100 (-2.4%) saw smaller declines. The gap between crypto and other risk assets continues to widen, while gold has emerged as the top performer in 2025, gaining nearly 20% amid ongoing macroeconomic uncertainties. This trend highlights a growing risk-off sentiment, with investors shifting toward defensive assets and away from high-volatility investments.