Volatility continues to haunt crypto markets, despite Trump: Report

Bengaluru: The global cryptocurrency market surged to $3.76 trillion in early January this year, driven by a 4.3% monthly increase in market capitalisation.

This was brought on by US President Dolald Trump's pro-crypto policies, fuelling renewed optimism in the industry, according to a report by Binance Research out on Monday.

The policy shift also sparked hopes for a more favourable regulatory environment. As a result, the market was witnessing heightened activity, with key crypto assets reaching new highs.

This marks a rebound from December’s downturn following the Federal Reserve’s signal of only two rate cuts for the year.

However, late-month momentum for January faltered as DeepSeek overtook ChatGPT as the most downloaded app. This raised concerns about overvaluations in the US tech sector and triggered a sharp market reaction, wiping out billions of dollars from both US and cryptocurrency markets.

Following this, early February saw heightened market volatility amid concerns over potential US tariff policies, impacting risk assets globally, including cryptocurrencies.

The change in US administration with pro-crypto Republicans, along with the departure of former SEC Chair Gary Gensler, sparked a wave of new crypto Exchange-Traded Fund (ETF) filings in January, as per the report.

Currently, there are 47 active filings in the US spanning 16 distinct asset categories, including memecoins. While renewed optimism for digital asset regulation has driven momentum for token-based ETFs, the new approval framework is still unfolding, leaving timelines uncertain.

The advent of token launchpads and the memecoin mania has also led to the creation of over 37 million tokens, with projections exceeding 100 million by year-end.

However, this growth has fragmented capital, making it harder for tokens to sustain prices and achieve high valuations. The influx of new tokens fuels speculation, reduces attention spans and discourages long-term holding.

Crypto platform Solana’s decentralised exchange (DEX) volumes have exceeded those of Ethereum every month since October 2024. In fact, in January, the Solana-to-Ethereum DEX volume ratio reached its all-time high of over 300%. Solana's growth has been driven by its leadership in the memecoin and AI agent narratives, with the recent launch of the $TRUMP and $MELANIA memecoins further boosting its performance in January.