The revelation of the fission of the crypto market in February 2025: Pessimists are always right, and optimists always move forward

Author: Revc, Golden Finance

Game and fission of the crypto market in February 2025

The crypto market after Trump's re-election is both a carnival of policy dividends and a test field for endogenous risks. With the release of key economic data in February 2025, the adjustment of the regulatory framework and the acceleration of technological iteration, the market continues to fluctuate in the tension between "optimists moving forward" and "pessimists warning". This article analyzes the current market dynamics from a multi-dimensional perspective and explores its deep logic.

1. Policy shift: the struggle between liberalization commitments and implementation risks

Optimist narrative: The Trump administration’s “crypto utopia” policy is advancing rapidly, SEC Chairman Gary Gensler resigns, the cumulative assets under management of Bitcoin ETFs exceed 1.1 million BTC (BlackRock IBIT accounts for 45%), the U.S. Bitcoin Reserve Program is being legislated in Texas and Pennsylvania, and the price of Bitcoin exceeds $100,000.

Pessimists question: The national Bitcoin reserve plan faces high volatility risks. Against the backdrop of a federal deficit of $1.8 trillion, the coordination resistance between Congress and the Federal Reserve may cause a policy implementation gap.

New developments in February:

- SEC turns to "guided regulation": New Chairman Paul Atkins promotes the top ten priorities of the cryptocurrency working group, clarifying the attributes of token securities and exploring compliance paths, but emphasizing crackdown on fraud.

- FIT21 bill advances: If passed by the Senate, it will divide the regulatory boundaries between the SEC and the CFTC, but Republican Senator Cynthia Lummis warned that "the bill needs to balance innovation and investor protection."

2. Meme coin craze: political tokenization and bubble risk

Optimist logic: The market value of Trump's Meme coin TRUMP once exceeded US$15 billion, and the transaction volume on the Solana chain surged (100 million active addresses), attracting retail investors to enter and expanding the user base.

Pessimists are cold-eyed: TRUMP coin plummeted 60% after its launch, Melania coin diverted funds, Coinbase's former CTO denounced it as a "zero-sum lottery", and industry leaders warned that the bubble burst may repeat the FTX-style trust collapse.

February data verification:

- The proportion of memecoin transactions has increased: accounting for 11% of the trading volume of the top 300 crypto assets (excluding stablecoins), but speculation has led to increased market volatility, with a 24-hour liquidation amount of US$346 million.

- WLFI asset allocation controversy: WLFI transferred $307 million in assets to Coinbase Prime and increased its holdings of ETH and WBTC to hedge against volatility, but the token swap agreement was questioned for using political influence to lock in liquidity.

3. Macroeconomic linkage: the double impact of non-agricultural data and debt crisis

Optimists expect that in January 2025, the U.S. will add 143,000 non-farm jobs, lower than the expected 169,000, and the unemployment rate will drop from 4.1% to 4%. One hour after the release of the non-farm payrolls data, Bitcoin fell back to around $100,000, but affected by inflation concerns and tariff threats, the three major U.S. stock indexes fell overnight, and Bitcoin fell back to around $96,000.

Trump said during a meeting with Japanese Prime Minister Shigeru Ishiba that "reciprocal tariffs" would be announced next week, which could escalate the trade war. Nationwide chief strategist Mark Hackett pointed out that the market initially focused on non-farm payrolls, but Trump's tariff announcement became a new focus. Despite the slowdown in job growth, low unemployment may allow the Federal Reserve to keep interest rates unchanged, and the market expects only one rate cut this year.

Pessimists warn: The U.S. national debt has exceeded 36 trillion U.S. dollars, and the debt rating is facing the risk of downgrade. If the U.S. debt crisis triggers a global liquidity crunch, the crypto market may collapse simultaneously with risky assets.

Market resilience test in February:

- Game of US dollar hegemony: The US dollar index rose to 108, and the narrative of Bitcoin as "digital gold" was strengthened, but WLFI sold part of ETH to lock in profits, exposing its short-term speculative nature.

- Fed policy contradictions: The Trump administration's attempt to stimulate the economy by managing the 10-year Treasury yield conflicts with the Fed's independence and exacerbates market uncertainty.

4. Technology-driven and bubble concerns: Ethereum upgrade vs. VC valuation overvaluation

Optimists cheer: Ethereum's Pectra upgrade (expected for Q1-Q2 2025) aims to comprehensively improve Ethereum's performance and user experience. The upgrade will focus on improving account abstraction, simplifying private key management and enabling more diverse transaction functions; enhancing L2 compatibility, reducing transaction costs and improving efficiency; optimizing the staking mechanism, lowering the threshold for participation and increasing ETH liquidity; improving EVM performance and enhancing the security of smart contracts; and improving light client support and increasing network decentralization. The goal of the Pectra upgrade is to make Ethereum easier to use, cheaper, and more secure, thereby accelerating its mass adoption and consolidating its leading position in smart contract platforms.

Pessimists’ analysis: The valuations of new public chains such as TON and SUI are inflated (SUI FDV reaches US$54 billion), the homogeneous competition among altcoins exposes the lack of innovation, and the RWA project Plume Network promised US$4.5 billion in assets before its launch, but its TVL is only US$64 million.

Technical milestones in February:

- Frax L2 is launched: Fraxtal supports frxETH and FRAX as Gas tokens, and leading protocols such as Curve Finance have settled in, but it is questionable whether it can attract hundreds of millions of US dollars in TVL in the first month.

- EigenLayer re-staking boom: TVL exceeds US$12.1 billion, but the 33% staking cap raises centralization concerns, and airdrop incentives may exacerbate short-term speculation.

5. Regulation and international game: Decentralized ideal vs. political manipulation of reality

Optimist’s vision: The EU MiCA framework comes into effect, and global regulatory convergence drives compliance.

Pessimists reveal that the WLFI project has suffered a loss of tens of millions of dollars, and the Trump family has been accused of "using political influence to reap profits", with decentralization becoming a vassal of power.

Geopolitical risks in February:

- Trump’s territorial dispute: He proposed radical issues such as “American Gulf”, which caused tension in the international situation, and the crypto market’s long orders were liquidated by US$282 million in 24 hours.

- CBDC confrontation escalates: Trump firmly resists the digital dollar, while China accelerates the promotion of the digital RMB, and the risk of fragmentation of the global payment system increases.

Conclusion: Reshaping industry value between enthusiasm and sobriety

The "Trump era" in the crypto market is a prism that reflects the complex entanglement of political power, capital game and technological innovation. Pessimists see the reefs of policy repetition, Meme coin bubble and debt crisis; optimists embrace the dividends of institutional entry, Ethereum upgrade and global capital expansion.

Historical experience warns: The real winners in the market need to dynamically balance between the two perspectives

1. Get rid of "Trump addiction": The policy is obviously unsustainable (the president's promise fulfillment rate is only 31%), and the industry needs to shift from "regulatory arbitrage" to the construction of intrinsic value of technology.

2. Resist the "crypto giant baby mentality": WLFI's floating losses and VC bubbles reveal that over-reliance on external dividends will weaken anti-cyclical capabilities, and only infrastructure and application layer innovations can survive bull and bear markets.

If the crypto industry can take this opportunity to consolidate its technological foundation during the period of policy relaxation and stay sober amid frenetic speculation, it will be able to nurture the true miracle of crypto civilization amid the turbulence.