The cryptocurrency market experienced a significant downturn on 1 February, following the announcement of new tariffs imposed by the US. President Donald Trump’s decision to apply 25% tariffs on goods from Canada and Mexico and 10% on Chinese imports led to a market-wide sell-off. Bitcoin’s price dropped by over 5%, reaching a low of around $91,200, before rebounding slightly to about $94,000. Despite the recovery, Bitcoin remains approximately 13% below its all-time high of $109,000.
This price drop has had a ripple effect on the wider crypto market. In the past 24 hours, Ethereum saw a sharp decline of nearly 20%, while other major altcoins such as Ripple, Solana, and Binance Coin also took significant hits, with losses reaching as high as 22%. Trading volume surged by over 200%, indicating heightened selling pressure, which often signals market panic.
Bitcoin’s recent crash follows a period of positive price movement after President Trump’s inauguration, but the new tariff policies have shaken investor confidence. With the overall global crypto market cap dropping by almost 12%, concerns are mounting that long-term investors are capitulating, selling at a loss or lower profits. Market experts, including BitMEX CEO Arthur Hayes, have warned that the risk of a financial crisis could be looming, adding to the uncertainty in the markets.
El Salvador’s Legislative Assembly has amended its Bitcoin Law, making it optional for businesses to accept Bitcoin as payment. The change comes as part of the conditions set by the International Monetary Fund (IMF) for a $1.4 billion loan aimed at strengthening the country’s economy.
In 2021, El Salvador became the first country to adopt Bitcoin as legal tender alongside the US dollar. However, the mandatory Bitcoin acceptance for businesses faced criticism due to the cryptocurrency’s volatility and the population’s limited understanding of digital currencies.
The recent reforms allow businesses to choose whether to accept Bitcoin, and the government will no longer accept Bitcoin for tax payments. This move aims to address concerns raised by the IMF about the potential risks to financial stability and consumer protection while still maintaining Bitcoin’s legal status in the country.
In response to these concerns, the government also plans to scale back its involvement in Bitcoin-related initiatives, including reducing the use of the Chivo Wallet app.
Norway’s central bank has built up over $500 million in indirect Bitcoin exposure through its investments in MicroStrategy and other crypto-focused companies. Research from K33 shows that Norway’s exposure to Bitcoin has nearly tripled in the past year as allocations to crypto-related firms have increased.
The country’s sovereign wealth fund, managed by Norges Bank Investment Management, holds 0.72% of MicroStrategy’s total shares, worth around $514 million as of December 2024. This translates to an indirect holding of roughly 3,214 Bitcoin. Alongside MicroStrategy, the fund also has investments in Tesla, Coinbase, Marathon Digital, Riot Platforms, and Metaplanet, adding another $61 million in exposure.
While Norges Bank’s strategy follows rule-based sector weighting rather than direct Bitcoin purchases, its growing involvement in crypto-linked firms signals increasing institutional acceptance of Bitcoin. Similar investment trends have been seen in Switzerland, where central banks have also allocated funds to MicroStrategy amid its expanding Bitcoin reserves.
Bitcoin experienced a 6% drop on 27 January, as stock markets reacted to the debut of China’s open-source AI model, DeepSeek, which some have dubbed ‘AI’s Sputnik moment.’ The new model developed on a modest budget of just under $6 million, raised concerns in US markets as it posed a competitive threat to American AI giants like OpenAI. The surprise launch led to significant losses across tech stocks, including Nvidia, Apple, and Tesla, with Nvidia seeing a record-breaking 17% drop. Energy stocks, which had relied on revenue from power-intensive US AI models like ChatGPT, also suffered.
While the impact on Bitcoin and other cryptocurrencies may seem directly linked to DeepSeek, experts suggest the broader market sentiment played a bigger role. Cryptocurrency, often seen as a “risk-on” asset, typically mirrors the movements in stock markets. As investor fears triggered sell-offs, major coins like Bitcoin and Ether saw their values fall alongside tech stocks. Despite the dip, some analysts remain optimistic, noting that Bitcoin’s quick recovery amidst a broader market decline signals positive prospects.
DeepSeek’s impact on Bitcoin, however, seems minimal in the long run. The open-source nature of the AI model allows others to incorporate its innovations into their own developments, potentially accelerating AI progress worldwide. While concerns about DeepSeek’s political and privacy implications linger, particularly in the US and EU, the model is expected to drive advancements in AI at a lower cost. Yet, its influence on crypto markets is likely to remain limited, with institutional investors continuing to view cryptocurrencies as a risk-heavy asset class.
The Czech National Bank (CNB) has revealed plans to assess the possibility of adding Bitcoin (BTC) to its reserve assets, despite opposition from European Central Bank (ECB) President Christine Lagarde. The decision follows a review of its 2024 reserve management strategy, where the CNB highlighted ongoing efforts to diversify its investments. While no immediate changes will be made, the central bank intends to conduct a thorough review before making any decisions.
Reports suggest the CNB could allocate up to 5% of its reserves to Bitcoin, amounting to over $7 billion. Governor Aleš Michl has expressed interest in Bitcoin as a potential diversification tool, calling it a “very interesting” asset. However, the ECB remains strongly opposed, with Lagarde insisting that central bank reserves must remain liquid and secure, free from concerns over money laundering or criminal activity.
The CNB’s exploration of Bitcoin aligns with a broader global trend of national reserves incorporating digital assets. In the US, former President Donald Trump recently signed an executive order allowing a crypto working group to study the potential for a national Bitcoin stockpile. With growing interest among G20 nations, the debate over Bitcoin’s role in central banking is far from over.
Donald Trump’s media company has launched Truth.Fi, a financial services platform aimed at cryptocurrency investments. The initiative, backed by Trump Media & Technology Group, will allocate up to $250 million from its $700 million cash reserves to assets like Bitcoin, crypto-related securities, and ETFs.
This move follows a trademark application last year and reports that Trump Media considered acquiring Bakkt, a licenced crypto service provider. Trump has also voiced support for World Liberty Financial, a decentralised finance protocol. Through his company, which operates Truth Social and various crypto assets, he has become the first US president with direct ties to the industry.
Crypto supporters see this as a potential boost for regulatory acceptance, while critics like Senator Elizabeth Warren have raised concerns over his crypto-linked associates. As Trump deepens his involvement in digital assets, the industry watches closely for signs of shifting policies in Washington.
Hong Kong’s Securities and Futures Commission (SFC) has awarded its first two crypto operational licences of 2025 to exchanges PantherTrade and YAX. These licences bring the total number of crypto licences issued since mid-2024 to seven, as Hong Kong continues its push to regulate the virtual asset industry.
Both exchanges were registered under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO), marking a significant step in the city’s efforts to ensure secure crypto trading. The SFC has been focused on rigorous checks, including Know Your Customer (KYC) processes, asset safeguarding, and cybersecurity, to ensure high regulatory standards.
With Hong Kong aiming for a balanced approach, it has now formally licensed 10 exchanges since 2020, including four in December 2024. These measures are designed to protect investors while promoting growth in the digital asset sector.
Currently, only four cryptocurrencies—Bitcoin, Ether, Avalanche, and Chainlink—are legally available for trade in Hong Kong, highlighting the city’s cautious but forward-looking stance on crypto regulation.
El Salvador’s Congress has quickly approved a reform to its bitcoin law, aligning it with a recent agreement with the International Monetary Fund (IMF). The amendment, proposed by President Nayib Bukele and passed within minutes, makes bitcoin acceptance voluntary for businesses. Lawmakers from Bukele’s New Ideas Party, who hold a majority in Congress, ensured the bill’s swift passage.
Bitcoin was declared legal tender in El Salvador in 2021 alongside the US dollar, drawing international attention and strengthening Bukele’s reputation as a cryptocurrency advocate. However, an IMF-backed $1.4 billion loan deal, finalised in December, required limits on the government’s bitcoin exposure.
The lender specifically urged El Salvador to make bitcoin acceptance optional for the private sector, a key aspect of the newly approved law.
Ruling party lawmaker Elisa Rosales defended the reform, arguing it would secure bitcoin’s status as legal tender while ensuring its effective implementation. The law passed with 55 votes in favour and only two against.
Bukele’s government remains committed to bitcoin, recently confirming plans to continue acquiring the cryptocurrency for national reserves. Market optimism surrounding cryptocurrency policies under US President Donald Trump has contributed to bitcoin’s rising value.
Ripple CEO Brad Garlinghouse has called for a more inclusive approach to digital asset reserves, advocating for a US stockpile that represents a variety of cryptocurrencies rather than favouring a single token like Bitcoin or XRP. Highlighting the importance of a multichain ecosystem, he stressed the need for a level playing field in the crypto industry, stating, ‘Maximalism remains the enemy of crypto progress.’
Recent comments from US President Donald Trump have sparked discussions about a national digital asset reserve, an idea he supported before the election. However, market predictions suggest only a 17% chance of this initiative being authorised within Trump’s first 100 days in office.
Ripple’s XRP, used primarily for cross-border payments and remittances, remains integral to the company’s operations despite fluctuating values. On Monday, XRP traded at $2.65 following a brief spike to $3.09, reflecting the volatile nature of the cryptocurrency market.
The Czech National Bank is evaluating whether to include bitcoin in its reserves, Governor Aleš Michl revealed. No immediate decision is expected, but if approved, the bank could allocate up to 5% of its €140 billion reserves to the cryptocurrency.
Michl, who has focused on diversifying reserves since taking office in 2022, has already increased gold purchases and shifted investments toward equities. He plans to present the bitcoin proposal to the bank’s board, acknowledging the asset’s volatility as a key consideration.
While some central banks remain sceptical about bitcoin’s role as a reserve asset, growing institutional adoption has fuelled debate. The European Central Bank continues to reject bitcoin, likening it to speculative bubbles, while Switzerland has seen calls for its central bank to hold bitcoin alongside gold.
Interest in bitcoin has surged, with its value more than doubling in 2024. BlackRock’s bitcoin exchange-traded funds and the US government’s new cryptocurrency initiatives have contributed to its rise, making it an increasingly attractive option for investors.
