Jan 3 2025: Bitcoin climbed on Friday, continuing its recovery from a sharp New Year sell-off as traders anticipated a clearer U.S. regulatory landscape under President Donald Trump.
The spotlight remained on stablecoin Tether (USDT), which saw its market capitalization experience its steepest decline since the 2022 FTX collapse. This drop came in the wake of the European Union’s Markets in Crypto-Assets (MiCA) law, which took full effect in late December. Compliance concerns led several European exchanges and Coinbase Global Inc (NASDAQ:COIN) to delist Tether.
Crypto Market Recovers Amid Mixed Sentiment
The broader cryptocurrency market faced heavy selling pressure in the final week of 2024 as traders secured profits after a stellar year. However, cautious optimism returned as expectations of slower U.S. interest rate cuts tempered pessimism.
Bitcoin gained 1.2%, trading at $96,852.7 by 23:41 ET (04:41 GMT), after briefly surpassing the $97,000 mark earlier in the day. Market sentiment remained buoyed by the prospect of more favorable U.S. crypto regulations under the incoming administration.
Impact of MiCA on Tether
Tether’s market capitalization dropped 1.4% over the past week to $137 billion, largely due to MiCA’s stringent requirements. The law mandates stablecoin issuers within the EU to maintain higher capital reserves, enhance liquidity, and secure operational licenses.
As the largest dollar-pegged stablecoin, USDT plays a vital role in facilitating cryptocurrency transactions. Despite the challenges posed by MiCA, its dominance in the market is expected to cushion the overall impact of these new regulations.
Altcoins Extend Gains Post-2024 Boom
Altcoins continued their upward momentum on Friday after starting the year on a weaker note. Despite year-end losses, most major altcoins posted impressive gains for 2024, driven by optimism that regulatory clarity under Trump’s administration could attract more investments beyond Bitcoin.
Ethereum, the second-largest cryptocurrency, rose 1.1% to $3,454.56, while XRP, ranked third, climbed 1.6% to $2.4405.
Other notable performers included Solana, Cardano, and Polygon, which recorded gains between 0.4% and 2%. Meme token Dogecoin also rose, adding 2.1% to its value.
The cryptocurrency market’s resilience underscores investor confidence in its potential for growth amid evolving regulatory landscapes and market dynamics.
