Trump's First Month in Office: Cryptocurrency Assets Amid Market Turmoil

In early 2025, as the new government marked its first month in office, the intertwining of U.S. policy dividends and economic uncertainty triggered market turbulence. On one hand, the policies implemented by the new government brought warmth to the market; on the other hand, technological breakthroughs in the AI field impacted traditional tech stocks, leading to a series of financial fluctuations. In February, with the release of key economic data, adjustments to regulatory frameworks, and the acceleration of technological innovations, the encryption market experienced intense turmoil and reshuffling.

In February 2025, the U.S. economy showed signs of "slow growth," with multiple indicators reflecting a slowdown in economic growth. Although the GDP maintained a growth rate of 2.3% in the fourth quarter, there were signs of cooling in the labor market: non-farm payrolls added fewer jobs than expected in February, and hourly wage growth slowed to its lowest level in recent times. The consumer confidence index has declined for three consecutive months, reflecting public concern over decreasing purchasing power.

In terms of inflation, the core CPI in January increased by 2.5% year-on-year, a slight decrease from the previous month. The year-on-year core PCE price index fell to 2.6% in January, a recent low. However, the new government's policy of imposing additional tariffs on imported goods from Mexico and Canada may raise inflation expectations. According to a model from a certain agency, this policy could lead to an additional increase of 0.3 to 0.5 percentage points in the US CPI in the second quarter.

In terms of interest rate policy, the market generally expects that the Federal Reserve will maintain interest rates unchanged in the near term. However, considering the uncertainty of inflation and the potential impacts of tariff policies, the Fed's decision on interest rate cuts still carries uncertainties. The core challenge facing the U.S. economy in 2025 is to seek a balance between "slowing growth" and "inflation resilience." The new government's tariff policies have further complicated this issue and have also impacted the pricing logic of global supply chains.

In the field of AI, the rise of DeepSeek has reshaped the market's demand logic for AI infrastructure. Its open-source model significantly reduces power dependency through algorithm optimization, pushing the industry from a "power race" to an "algorithm efficiency" transformation. This breakthrough has shaken the advantageous position supported by high capital expenditures of tech giants, coupled with concerns over global supply chain fluctuations, leading to a severe blow to tech stocks. In February, the Nasdaq index fell by 4%, marking the worst monthly performance in recent times.

The cryptocurrency asset market has also not been spared from this volatility. The correlation between Bitcoin and the Nasdaq has risen to a recent high, indicating that the crypto market is increasingly influenced by traditional financial markets. The market's excessive defensive mindset over AI breakthroughs and policy uncertainty has led investors to withdraw from high-risk assets, putting downward pressure on the crypto market.

After the new government took office, the encryption sector welcomed a series of favorable policies, such as the establishment of a cryptocurrency working group and the exploration of national cryptocurrency reserves. However, affected by external factors, the cryptocurrency market experienced severe adjustments in February, with Bitcoin falling below $100,000 and a total monthly decline of 17.39%. This round of adjustments reflects the chain reaction of global risk asset sell-offs and demonstrates the market's self-regulation after excessive leverage.

It is worth noting that Bitcoin has shown certain resilience during this fluctuation. Some institutions view this short-term volatility as a long-term allocation opportunity, such as a certain technology company significantly increasing its holdings of Bitcoin in mid to late February. Moreover, the price trends of gold and Bitcoin are increasingly converging, reflecting the strengthening of Bitcoin's "digital gold" attribute.

The current encryption market is in a vacuum of news, and the traditional narrative effect is diminishing. However, three major trends are reshaping the market landscape: the regulatory paradigm is shifting from suppression to guidance, the market is transforming from speculation-driven to technology-driven, and the integration of AI and encryption technology is becoming a new breakthrough point. As the market completes the clearing of leverage and new narratives take shape, crypto assets may usher in a new round of rising opportunities.

As the new government marks its first month in office, the market has entered a complex state of chaos. Despite frequent short-term fluctuations, the inherent scarcity of Bitcoin remains unchanged, giving it the vitality to transcend cycles. As a famous work states: "Chaos is not a pit, but a ladder." In this era full of uncertainty, the encryption asset market may be nurturing new opportunities.