TLDR
Trump’s upcoming inauguration and potential crypto-friendly executive orders are driving market optimism
Bitcoin dominance dropped from 58.5% to 57.3%, suggesting traders are positioning for altcoin rallies
Stablecoin supply increased by $1.3B last week while BTC and ETH saw outflows
Core inflation surprised at 0.2% MoM, leading to a drop in US 2-year rates
Crypto markets show increased correlation with S&P 500, reaching above 40%
Recent market data reveals a notable shift in cryptocurrency trading patterns as Donald Trump’s January 20 inauguration approaches. Multiple indicators suggest traders are repositioning their portfolios, with particular movement toward altcoins and away from market leader Bitcoin.
According to recent Coinbase analysis, Bitcoin’s market dominance has decreased from 58.5% to 57.3% during the January 15 inflation relief rally. This decline coincides with a $1.3 billion increase in stablecoin supply over the past week, indicating potential preparation for new market movements.
The cryptocurrency market’s connection to traditional finance appears to be strengthening. Data shows the 65-day rolling correlation between the COIN50 index and the S&P 500 has risen above 40%, up from December’s average of 35%. This increased correlation comes as markets process new economic data and anticipate policy changes.
December’s core inflation numbers came in lower than expected at 0.2% month-over-month, or 3.2% year-over-year. These figures fell below median Bloomberg survey forecasts of 0.3% and 3.3% respectively, triggering a 10-basis point drop in US 2-year rates.
The Federal Reserve’s stance remains data-dependent, creating some uncertainty in market expectations. Fed Governor Chris Waller recently stated that “rate cuts could happen in the first half of the year” and that March remains a possibility for policy adjustments.
Trading data shows contrasting capital flows between major cryptocurrencies and smaller alternatives. While Bitcoin and Ethereum recorded net outflows of $457 million and $206 million respectively, stablecoin inflows suggest increasing interest in altcoin positions.
Options market data provides additional insight into trader expectations. Deribit Bitcoin options show max pain points of $94,000 for January 31 expiry and $98,000 for February 28, 2025. However, this figure drops to $80,000 for the March 28 expiry, which carries the highest open interest at $8.7 billion.
The incoming Trump administration has included cryptocurrency-related reforms in its list of potential day-one executive orders. These may include the repeal of Staff Accounting Bulletin (SAB) 121 and measures to address banking access issues within the industry.
Bo Hines, executive director of the future presidential crypto council, has established a January 15 deadline for crypto-related executive order proposals. The tight timeline suggests implementation of planned policies may take time after inauguration.
Market positioning appears healthy across the cryptocurrency space, with single-digit funding rates in major cryptocurrencies and low teen funding rates in more active altcoins. This creates what analysts describe as a clean setup heading into the presidential inauguration.
Trading volumes on major exchanges remain robust, though patterns suggest a shift in investor focus. The COIN50 index, which tracks a broader range of cryptocurrencies, has shown a 1.93% increase over 24 hours and an 8.04% gain over seven days.
US spot Bitcoin ETFs currently hold 1.13 million BTC with total assets under management of $113.21 billion. Ethereum ETFs maintain positions of 3.55 million ETH, with assets valued at $12.23 billion.
Stablecoin metrics continue to provide important market signals. USDT maintains its $137 billion market cap, while USDC stands at $46.23 billion. These stable assets play a crucial role in providing market liquidity and enabling rapid position adjustments.
Recent regulatory developments include potential changes to crypto oversight under the incoming administration. Reports suggest new SEC leadership may pause some enforcement cases as part of a broader crypto regulatory overhaul.
Market funding rates remain relatively stable, with traditional finance overnight rates at 4.50%, while cryptocurrency-specific rates range from 1.50% to 8.00% depending on the asset and platform.
Trading activity shows healthy market depth and liquidity across major exchanges, with balanced order books suggesting stable price discovery mechanisms remain in place.
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