Developments since the inauguration confirm that the new administration is prioritizing an industry-friendly regulatory environment. Coupled with an easing DXY/yields, a possible TGA spenddown, and favorable seasonality, we think it’s prudent to maintain a long bias.

Powell Makes Some Edits

When the FOMC statement was first released on Wednesday, it carried a distinctly hawkish tilt. The language reflected a more optimistic view on employment (noting that the unemployment rate had “stabilized”) and removed previous references to progress on inflation. This understandably rattled markets, sending the DXY and yields sharply higher.

However, Powell, who appeared steadier and more confident than he did in December, quickly reassured investors during the press conference. He was pressed early on about the major wording changes, but he downplayed their significance, explaining that they were merely an effort to clean up the language and should not be overinterpreted.

Markets reversed course almost immediately—yields fell, crypto bounced, and risk assets finished strong into the close.

A hawkish Fed posed a potential risk to our view that yields and the dollar would continue to roll over post-inauguration, but Powell’s performance and the market’s reaction suggest that this risk has been effectively neutralized as we head into February.

Jay Talks Crypto

As an aside, Powell’s response to a question about crypto was particularly notable. When asked whether crypto deserves a place in the portfolios of everyday Americans, he declined to offer an opinion on its investment merits—stating that such judgments fall outside his purview—but instead focused on banking supervision.

“Banks are perfectly able to serve crypto customers as long as they understand and can manage the risks, and it’s safe and sound, as many of the banks we regulate and supervise already do,” he stated. He later emphasized,
“We’re not against innovation, and we certainly don’t want to take actions that would cause banks to terminate customers who are fully compliant with the law simply due to excessive risk aversion tied to regulation and supervision.”

This marks yet another sign of the regulatory shift that has taken place since election night—a dramatic reversal from the stance seen just a year ago.

Year of the Snake

In a video earlier this week, we highlighted crypto’s historically strong performance in the days following the Lunar New Year. This year, LNY fell on Wednesday, January 29^th. While the merits of factoring seasonality in one’s investment process is often debated, we choose to place significant weight on it when the seasonality is strong. Critics argue that seasonality lacks a clear causal mechanism, but if a pattern between price performance and the calendar is consistently observed, it would be imprudent to ignore it.

Over the past decade, Bitcoin has posted a negative return in the 10 days following LNY only once. During that period, the average and median returns were 8% and 10%, respectively. Altcoins have also exhibited impressive seasonality, with the total altcoin market cap rising in each of the past six years. Based on today’s price action, this trend appears to be holding once again.

SBR Progress

The concept of a Strategic Bitcoin Reserve (SBR) has garnered significant attention from market participants, as its implementation would likely trigger a massive repricing higher, with Bitcoin rapidly approaching gold parity. However, despite the enthusiasm, our view at the start of the year was that establishing a federal Bitcoin reserve would face an uphill battle in the immediate term. This is largely because it is unlikely to be a legislative priority, taking a backseat to more pressing regulatory efforts around stablecoins and market structure.

There is a possibility that Trump, if elected, could issue an executive order allowing the Treasury to purchase BTC via the Exchange Stabilization Fund, but such a move would lack permanence, as it could be reversed by a future administration. However, we did think that the current momentum and broad acceptance of the idea of a Bitcoin reserve would incite a movement at both the state and international levels to entertain the BTC reserve idea ahead of the US federal government.

Since the election, progress at the state level has been impressive. Fifteen states have already proposed some variation of a BTC reserve bill, with two advancing beyond committee and now moving toward a vote.

On the international front, just yesterday, the head of the Czech central bank suggested examining the viability of holding BTC on its balance sheet for asset diversification.

Notably, ECB President Christine Lagarde pushed back against this idea in a speech on Thursday, stating she is confident that BTC will not appear on the balance sheet of any EU central bank. Despite her strong opposition, the fact that central bank presidents are even beginning to discuss Bitcoin in this context is a significant development.

Buyback Trend to Accelerate

Raydium (RAY) has been a consistent outperformer since we first recommended it back in October as part of our “Casino Stack” thesis—alongside JTO and BONK—which benefited from elevated on-chain activity on Solana. Bolstered by its integration with pump.fun, the DEX has maintained a dominant 50-60% market share of DEX volumes since the memecoin platform launched early last year.

We have also viewed Raydium’s tokenomics favorably. The project employs a programmatic token buyback mechanism, using a portion of fees to repurchase RAY on the open market. This creates a positive flywheel effect, where investors can purchase RAY and receive direct value accrual from the platform’s usage. This type of structure is rare in crypto, as few projects have implemented such a direct value-capture mechanism into their tokenomics.

There are several reasons why more teams have not pursued outright value accrual mechanisms. Regulatory concerns are often cited—under the argument that passing value to tokenholders makes the token more susceptible to securities classifications. However, we believe this is often an excuse used by teams to avoid appeasing tokenholders, as foregoing buybacks certainly leaves the project treasury better capitalized.

Liquidity Getting Spread Thing

The past 12 months have witnessed an explosion in memecoins. The rise of token launch platforms like pump.fun and moonshot has enabled a frenetic pace of token creation, far beyond what even the most ardent memecoin enthusiasts could have imagined.

This has siphoned liquidity from the broader altcoin market, as many altcoins lack clear value accrual mechanisms and often suffer from suboptimal supply unlock schedules. As a result, when retail investors sought asymmetric upside, they turned to memes.

However, as developers now compete harder for mindshare and investor attention, we are seeing a shift toward Raydium’s approach, where fundamentals and value accrual take center stage.

• Earlier this week, the Jupiter team (Solana’s leading DEX aggregator) proposed a token buyback program, and JUP responded positively.
• Just yesterday, Tensor (TNSR), the NFT trading marketplace, hinted at a similar initiative.

In our view, this shift is being driven by two key forces:

1. Memecoins siphoning liquidity from the broader altcoin universe, forcing projects to offer better value propositions.
2. A warming regulatory environment, making teams more comfortable with token models that align users, investors, and the core team.

We believe this trend will accelerate in the coming months—and it’s a long-term positive for the space.

Tickers in this report: BTC -0.58% , ETH 2.27% , SOL -0.43% , JTO 0.31% , RAY 3.70% , BONK -3.73% , HNT -0.23% , AERO 0.20% , DOGE 11.99% , XRP -0.92% , VIRTUAL 1.30% , AI N/A% 16Z, USDC -0.01% , MSTR -0.17% , SMLR 0.13% , GDLC, BITW 1.74% , COIN 3.04% , HOOD 3.45% , BRPHF, MARA 4.40% , RIOT 6.86% , WGMI 6.33% , CLSK 6.24% , WULF 6.77% , IREN 5.21% , CORZ 7.85% , BTDR 8.06% , BTBT 6.55% , HUT 7.67% , HIVE 6.97% , BITF 4.17% , CIFR 22.67% , JUP, TNSR 8.27%