Crypto growth slows to 8% in January
According to a JPMorgan report, the cryptocurrency ecosystem experienced slower growth in January, despite the total market capitalisation increasing by 8% to approximately $3.4 trillion.
Trading activity, however, declined, with average daily trading volumes dropping by 24%.
Bitcoin (CRYPTO:BTC), Solana (CRYPTO:SOL), and XRP (CRYPTO:XRP) drove market cap growth, while average daily trading volume (ADV) declined across the ecosystem.
JPMorgan analysts suggest the U.S. election was a catalyst, and market activity and token price levels are finding equilibrium.
Decentralised finance (DeFi) and non-fungible tokens (NFTs) performed poorly, with significant deterioration across multiple metrics.
Regulatory progress includes the Trump administration establishing a crypto task force and rescinding accounting rule SAB 121.
Bitcoin's correlation with small-cap tech stocks in the Russell 2000 has strengthened, challenging its perception as a stable alternative to gold.
The movement of Bitcoin is progressively mimicking highly volatile small-cap tech stocks.
Layer-1 blockchain market capitalisations rose by 6% in January 2025, but Ethereum (CRYPTO:ETH) saw its market capitalisation decline by 1%.
Bitcoin and Solana were primary contributors to market cap growth, with Bitcoin rising 10% and Solana surging 25% over the month.
Ethereum struggled in January, with trading volumes falling by 25%, and its market capitalisation shrinking by 1% to approximately $398 billion.
JPMorgan highlighted that the SEC repealed the rule requiring banks offering digital asset custody to classify it as both an asset and a liability.
Analysts at J.P. Morgan emphasised that January marked the fourth-best month of net flows for Bitcoin exchange-traded products since their launch in 2024.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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