Jan. 21, 2025

CoinDesk 20 Index: 3,865.33  -3.34%
Bitcoin (BTC): $103,880.74   -2.88%
Ether (ETH): $3,297.60  -0.16%
S&P 500: 5,996.66  +1%
Gold: $2,723.39  +0.55%
Nikkei 225: 39,027.98  +0.32%

Bitcoin fell to just above $101,000 after crypto wasn't mentioned in President Trump's inaugural speech. BTC touched a record high over $109,000 on Monday amid expectations among crypto traders that Trump's plan to establish a strategic bitcoin reserve would feature during his inauguration. This wasn't to be and BTC dropped more than 5% during the following few hours before recovering to trade above $103,000 late in the European morning. Other crypto majors also recorded losses with SOL, DOGE and ADA all around 10% lower in the last 24 hours. The broader digital asset market, as measured by the CoinDesk 20 Index, fell 6.5%.

Official memecoins of President Donald Trump and First Lady Melania lost as much as 60% in the past 24 hours amid heavy profit-taking after Monday’s inauguration. Futures tracking the two tokens have fared similarly bad for traders, with liquidation losses at nearly $70 million for those betting on higher prices. These are not thinly-traded tokens where prices are easy to shift, either. Data shows TRUMP amassed over $19 billion in volumes over a 24-hour period, while MELANIA saw $4.5 billion exchange hands. Major tokens, such as Tron's TRX and Cardano’s ADA did under $4 billion in volumes in the same period, indicative of the high interest in the Trump family-themed tokens.

Deribit-listed options show a persistent bullish outlook for bitcoin relative to ether. BTC call options traded pricier than ETH calls across time frames, according to risk reversals tracked by Amberdata. BTC's risk reversals show short-term and near-term calls trading at a four to five volatility points premium to puts. Meanwhile, ETH calls trade at a lesser volatility premium to puts. In other words, the ether-bitcoin ratio is seen extending the downtrend. The ratio hit a three-year low of 0.03 early this week. The bias favoring BTC is particularly striking given that Trump did not mention the strategic bitcoin reserve on Monday, despite expectations that he would.

The U.S. is set to hit its debt limit of roughly $36 trillion, meaning it cannot borrow more from the public to fund its operations. The very thought of the world's largest economy being unable to borrow more might scare investors, but a default and government shutdown won't happen immediately. Outgoing Treasury Secretary Janet Yellen has said the Treasury will implement "extraordinary measures," buying time at least till March 14. 

One potential measure could be running down the Treasury General Account (TGA), the government's operating account at the Fed used to collect taxes, customs duties, proceeds from the sale of securities and public debt receipts while facilitating government payments. The previous debt ceiling episode of early 2023, which involved using TGA to meet expenses, positively affected risk assets, including bitcoin.

That's because when the government spends the TGA balance, the cash goes to bank accounts of various entities at commercial banks. That boosts the amount of reserves held by commercial banks. With more reserves, they have a better capacity to lend money, potentially increasing lending or investment in the broader economy and financial markets.

As of Monday, the balance of the Treasury General Account was $677 billion.

- Omkar Godbole