Bitget Daily Digest (February 5) | Eric Trump advocates for ETH; SEC actions spark "regulatory relaxation"

Market highlights

1. Trump signs an executive order to establish a sovereign wealth fund, led by the Treasury and Commerce Departments, fueling speculation about potential government allocations to crypto assets. Meanwhile, his son, Eric Trump, publicly urges investors to "accumulate ETH now," amplifying market chatter. At the same time, the Trump-linked crypto project WLFI proposes a token swap offer, although both Tron and Movement Labs swiftly clarify that they are not involved, stressing that all market operations are public.

2. The NYSE submits a 19b-4 application with the SEC to convert Grayscale's Litecoin Trust into a spot ETF. If approved, this would mark traditional markets' first indirect exposure to LTC. In other developments, Berachain announces its mainnet launch on February 6, accompanied by its token release. The project's economic model revolves around staking its token, BERA, and its governance token, BGT, which adjusts inflation dynamically via Proof-of-Liquidity (PoL).

3. Intensive SEC regulatory shifts: The SEC's crypto assets unit plans to reassess the security classification of certain tokens, potentially creating room for "non-security" designations. According to The New York Times, the SEC has disbanded its over-50-member crypto enforcement team, which is being interpreted as a move toward regulatory relaxation under Trump. The SEC also launches a new Crypto Task Force website, emphasizing its commitment to balancing innovation with investor protection.

4. On-chain data reveals that over 1.07 billion USDC flowed into CEXs yesterday. Historical backtesting suggests such inflows typically correlate with positive price movements for BTC, often signaling price rebounds after approaching market bottoms. Meanwhile, U.S. energy giant Enron launched its $ENRON token, which surged over 673 million at launch, although full project details have yet to be released.

Market overview

1. $BTC experiences short-term price fluctuations, first rising and then falling, reaching $96,000 at one point, while the broader market sees a decline. $ETH surpasses $BTC in trading volume, claiming the top spot. Small-cap tokens like $T2T2 and $FURY show impressive price increases.

2. The Nasdaq and small-cap indices rise by over 1%. Major tech giants including Meta, Google, Netflix, Amazon, and IBM hit all-time highs. However, AMD fluctuates during after-hours trading, dropping over 10% after a 5% rise. China-concept stocks surge by over 4%.

3. Currently standing at 97,710 USDT, Bitcoin is in a potential liquidation zone. A 1000-point drop to around 96,710 USDT could trigger over $100 million in cumulative long-position liquidations. Conversely, a rise to 98,710 USDT could lead to more than $154 million in cumulative short-position liquidations. With short liquidation volumes far surpassing long positions, it's advisable to manage leverage carefully to avoid large-scale liquidations. 

4. Over the past 24 hours, the BTC spot market recorded $29 billion in inflows and $30.5 billion in outflows, resulting in a net outflow of $1.5 billion.

5. In the last 24 hours, $BTC, $ETH, $XRP $SOL, and $DOGE led in net outflows in futures trading, signaling potential trading opportunities. 

6. According to the latest data from SoSoValue, U.S. spot Bitcoin ETFs recorded a single-day inflow of $35.6551 million, bringing cumulative inflows to $40.301 billion, with total holdings reaching $118.406 billion. Meanwhile, spot Ethereum ETFs saw a single-day inflow of $4.1384 million, bringing cumulative inflows to $2.847 billion, with total holdings at $10.034 billion. Both saw positive inflows compared to the previous day. 

Highlights on X

1. @NachoTrades: Token watchlist based on market recovery expectations, event-driven trends and sector rotation logic

Several tokens are attracting attention due to short-term events or fundamental changes: ONDO benefits from expectations surrounding BlackRock's participation in a project meeting on February 6. TAI strengthens its position in the AI sector through its listing on Revolut and inclusion in NVIDIA's incubation program. JUP's recent acquisitions, token burns, and stable revenue are seen as value drivers. XRP continues to act as a retail sentiment indicator. ARC, an AI sector token, gains attention for its technical rebound momentum. Additionally, high-volatility memecoins like HYPE and FARTCOIN exhibit speculative "buy-the-dip" behavior, though their risk-reward ratios should be assessed carefully in the context of overall market liquidity.

X post: https://x.com/NachoTrades/status/1886858526850764998

2. @Nachi: Tariff strategies and crypto manipulation speculations: Analyzing the link between political tactics and capital accumulation during market lows

Trump's recent push for a 25% tariff policy is being criticized as a "political negotiation tool," intended to pressure Mexico and Canada into reaching agreements, with the possibility of applying similar tactics toward China, though with greater resistance. Simultaneously, attention has turned to Eric Trump's significant purchases of Ethereum (ETH) at low levels and his public endorsements, sparking speculation that he may possess insider knowledge of policy shifts, such as the inclusion of crypto assets in the sovereign wealth fund. Analysis suggests that recent extreme volatility in the crypto market may stem from coordinated capital operations: leveraging tariff news to induce panic selling, liquidating leveraged positions, accumulating at low prices, and then driving prices higher to trigger FOMO buying, ultimately positioning Bitcoin to break its all-time high.

X post: https://x.com/alphawifhat/status/1886597094619931012

3. @jason_chen998: $350 million token sale and disclaimer clauses throw doubt on WLFI

The crypto project WLFI has been criticized as a "risk-free arbitrage scheme", with tokens sold for $350 million (only 25% of the total supply). If the remaining 75% were sold at the current price of $0.05, over $4 billion could be realized. On its official website, the project stated, “You should not be purchasing $WLFI as an investment on a speculative basis or otherwise, for a financial purpose or with an expectation of resale for a profit or otherwise,” thereby disclaiming any promise of returns. Recent market rumors suggested that WLFI proposed a swap plan with multiple projects, requiring them to purchase $10 million worth of WLFI tokens (non-transferable), in exchange for which WLFI would acquire an equivalent amount of project tokens. This arrangement created an arbitrage scheme similar to that depicted in the movie Trivisa. While Trump supporters claimed that the unrealized losses were part of the strategic plan, other analysis points out that the model is essentially "zero-cost money printing", as there is no LP constraints on fundraising, and the losses are borne by participants. Conversely, investors who blindly follow "on-chain whales" to increase their holdings fail to distinguish between the risks of "testing the waters with only 100 SOL" and "going all-in as a retail investor.

X post: https://x.com/jason_chen998/status/1886431056330731644

4. @blockTVBee: Sharp contradiction of double-standard accusations and the failure of ecosystem incentives behind the Ethereum controversy

Criticism of Ethereum arises from double standards. When compared to Bitcoin, its proof-of-stake (POS) mechanism faces accusations of a "lack of production cost"— critics ignore the hard investment of over 1.05 million validator nodes (far exceeding Solana’s 1408 nodes). However, when compared to Solana, the criticism shifts to a "lack of application innovation," and technological breakthroughs such as Pendle’s LSTfi, the dynamic AMM of the Maverick protocol (MAV), the ERC-404 protocol, and Virtuals in the BASE ecosystem are overlooked. Market sentiment is essentially driven by coin prices: rising prices tend to rationalize everything while falling prices prompt rejection of any justification. Deeper contradictions point to the Ethereum Foundation for failing to provide guidance to the ecosystem. Despite continued funding for Layer 2 technologies, top-tier applications (such as Virtuals) have been forced to shift to Solana due to a lack of official support, and GMX and more have shown interest in relocating to another chain. In 2024, EF continued with the same incentive strategy — remaining indifferent to innovative projects that required traffic support (especially those not incubated by EF) — which has led to further internal divisions within the ecosystem.

X post: https://x.com/blockTVBee/status/1886707387576541668

Institutional insights

1.Mechanism Capital: If a trade war turns real, Ethereum will drop to $2200 – $2400

X post: https://x.com/Rewkang/status/1886648582725665204

2.Bernstein: Sovereigns to hoard gold and Bitcoin as economic buffers

Article: https://www.theblock.co/post/338474/crypto-market-trump-tariffs-price-plunge

3.Bitwise: Bitcoin impacted by tariff policy, but showing resilience with continuous institutional accumulation

Article: https://blog.bitfinex.com/bitfinex-alpha/bitfinex-alpha-btc-roiled-by-tariff-hikes-but-remains-resilient/

4.Santiment: Buy opportunities when most traders are skeptical of cryptocurrency

X post: https://x.com/santimentfeed/status/1886347253473738906

News updates

1. An Ohio senator has proposed a bill to establish a Bitcoin reserve and accept it as a payment method.

2. The U.S. SEC is reducing the size of its crypto enforcement unit.

3. David Sacks, Trump's Crypto Czar, is studying the feasibility of a Bitcoin reserve.

4. Chairperson of the U.S. House Financial Services Committee: Both chambers of Congress will form a cryptocurrency working group.

5. Eric Trump, Donald Trump's second son, on X: "It's a great time to add ETH."

Project updates

1. Grayscale has officially submitted a 19b-4 application for a Litecoin (LTC) ETF.

2. The lending protocol Ionic suffered an attack resulting in losses of $8.6 million. Its predecessor, the Midas protocol, had been attacked twice.

3. Berachain will announce its tokenomics before the token generation event (TGE) on February 6.

4. Taiko partners with Avalon Labs; users who provide liquidity will qualify for airdrops.

5. The Ethereum network increased its block gas limit for the first time since proof-of-stake migration.

6. Tron and Movement Labs have denied involvement in a token swap agreement with the WLFI crypto project.

7. Monad announced that its testnet will launch in February.

8. Vitalik Buterin revealed that the Pectra network upgrade for Ethereum will be released in March.

9. Pudgy Penguins posted on X: "Burn incoming".

10. WLFI clarified that its routine cryptocurrency asset mobilization is not a token sale.

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