Last week began with the much-anticipated inauguration of Donald Trump as U.S. President, bringing excitement among crypto enthusiasts. However, the final week of January saw a sharp 6.5% drop in the entire crypto market. The main factors driving this decline were the explosive rise of the AI app DeepSeek, uncertainty surrounding the U.S. Federal Reserve’s (FED) decisions on interest rates, and disappointment over Trump’s initial moves on crypto.
The week also saw major developments, including the kidnapping of Ledger’s co-founder, Musk’s actions that caused Dogecoin (DOGE) to spike 11% before dropping, and a surge in beginner crypto traders due to the TRUMP token. This week’s crypto news also takes a closer look at Trump’s early accomplishments for the crypto sector in his first week as President.
Bitcoin Below €95,000: What Caused the Drop?
Last week started on a positive note for Bitcoin. Just hours before Trump’s inauguration, BTC reached a new all-time high (ATH) of €106,135. However, during the inauguration, Trump made no mention of cryptocurrencies, which negatively impacted market sentiment. Traders and investors were eagerly waiting for immediate pro-crypto actions from Trump, but none came, further dampening enthusiasm. By the end of the week, Bitcoin was hovering around €100,000.
The final week of January began on January 27th with Bitcoin falling approximately 5% below the key $100,000 (€95,000) level for the first time under Trump’s presidency. The entire crypto market dropped 6.5%, with some cryptocurrencies seeing losses of over 10%. The main drivers were the global stock market’s reaction to the explosive growth of China’s AI app DeepSeek and uncertainty around FED decisions.
Despite market volatility, institutional investors remain committed. Michael Saylor, co-founder of MicroStrategy, published Bitcoin’s performance chart for the 12th consecutive week, a move typically followed by a Monday purchase of additional Bitcoin. Saylor commented on the market’s fluctuations with a tweet on X: “Volatility is a gift to those who believe.”
DeepSeek, the ChatGPT Competitor, Shakes Global Stock and Crypto Markets
DeepSeek, a Chinese AI model comparable to ChatGPT, was relatively unknown until recently. Last week, the startup released a groundbreaking language model called R1, which experts claim rivals or even outperforms ChatGPT’s top models. Unlike its competitors, DeepSeek’s model is practically free.
After its January 2025 launch, DeepSeek’s rapid rise pushed it to the number one spot in the U.S. App Store, making it the top-rated free app and surpassing ChatGPT. Analysts have called this a “Sputnik moment” in the global AI race, as it challenges U.S. dominance in artificial intelligence.
DeepSeek’s success—and the fact it was developed for just $6 million in two months using a fraction of the GPUs required by OpenAI—sent shockwaves through both stock and crypto markets. Tech companies like Nvidia saw their shares decline due to fears of reduced demand for expensive chips. Additionally, capital moved out of risky assets, negatively impacting the crypto market. Bitcoin fell below $100,000 for the first time under Trump, with the steepest declines seen in AI-related tokens.
Will the Federal Reserve Lower Interest Rates?
Markets are also jittery this week as they await new announcements from the U.S. Federal Reserve. The FED is expected to make decisions about interest rates, but experts believe rates will remain unchanged due to rising inflation.
Federal Reserve Chair Jerome Powell is under pressure from President Trump, who is pushing for lower rates in light of falling oil prices, arguing this should happen globally. Meanwhile, new data, including quarterly GDP and the Personal Consumption Expenditures (PCE) Index, considered the FED’s “preferred” inflation indicator, will be released in the coming days.
FED decisions on interest rates significantly impact global markets and investor sentiment. Higher rates strengthen the U.S. dollar and reduce interest in risky assets like cryptocurrencies, slowing their growth. Conversely, lower rates encourage investments and liquidity flow into higher-risk markets, including crypto.
Trump’s Crypto Promises Start Rolling Out
While Trump didn’t mention crypto during his inauguration, he has already taken steps to fulfill some of his promises.
A few days after the inauguration, Trump signed an executive order banning CBDCs (Central Bank Digital Currencies). While this might seem minor, it’s a significant move, as CBDCs pose a threat to financial freedom by giving issuers complete control over spending and money flows.
On January 23rd, Senator Cynthia Lummis was appointed chair of the Banking and Digital Assets Committee. Her first proposal was to adopt Bitcoin as a strategic financial asset. The proposal will first be reviewed by the committee, where Lummis seeks consensus, then passed through the Senate, and finally signed by Trump.
While this marks a step forward for the crypto sector, it isn’t the immediate executive order establishing a national Bitcoin reserve that investors hoped for. Implementation of these measures will take more time.
Why the TRUMP Token is a Risky Bet for Beginners
After last week’s record highs, the TRUMP and MELANIA tokens saw significant declines—TRUMP fell by 50%, and MELANIA dropped a staggering 74%. These tokens sparked interest among beginner crypto traders, with trading apps dominating the top spots in the U.S. App Store early last week.
However, beginners should exercise caution when trading or investing in the TRUMP token. As a meme token, it’s highly volatile, with most of its supply concentrated in the hands of a few whales (large investors), who can significantly impact its price. The token’s utility is minimal and uncertain, making it a highly risky and unpredictable investment.
Some believe TRUMP could act as a long-term barometer for public opinion on Trump’s presidency, with potential growth tied to pro-crypto policies—or declines in their absence. However, others remain skeptical, citing risks of corruption, as buying or selling the token could directly affect Trump’s wealth.
Elon Musk’s Government Efficiency Agency Causes an 11% DOGE Spike
Elon Musk’s Department of Government Efficiency (DOGE) launched its official website on January 21st. Initially, the website featured the Dogecoin (DOGE) logo, causing the token’s price to surge 11% to €0.38 within an hour. However, the Dogecoin logo was later removed from the site, leading to a price drop. The agency now faces a potential lawsuit from the National Security Counselors public interest law firm over alleged transparency violations.
The agency, led by Musk, aims to cut trillions of dollars from the federal budget and enhance government accountability through transparency. Musk is also exploring blockchain applications—a concept not new to U.S. politics. In April 2024, former presidential candidate Robert F. Kennedy Jr. proposed placing the entire federal budget on the blockchain, allowing citizens to view all budget items anytime.
Kidnapping of Ledger Co-Founder Ends Safely
David Balland, co-founder of Ledger, was kidnapped in central France. Paris prosecutor Laure Beccuau revealed that Balland and his wife were taken from their home and held in separate locations, with kidnappers demanding cryptocurrency ransom from another Ledger co-founder. Thankfully, the police quickly intervened, safely rescuing Balland and his wife.
Ledger is a leading company in cryptocurrency security, developing cold wallets for storing digital assets like Bitcoin, Ethereum, and more.
Last week was an eventful one for the crypto market, with everything from Bitcoin’s record highs and AI developments to significant market declines. Events like the Ledger co-founder’s kidnapping, Trump’s initial crypto actions, and the impact of DeepSeek AI on markets underscore the complexity of this sector.
Investors, especially beginners, should stay cautious and closely monitor macroeconomic and political developments affecting cryptocurrencies. Stay updated with our weekly crypto news every Monday, and don’t forget to catch up on last week’s updates to stay informed.
