The cryptocurrency market noticed Layer-1 blockchain market capitalizations rise by 6% in January 2025, regardless of blended efficiency throughout completely different segments of the trade, in response to a report by J.P. Morgan JPM.
What Occurred: The report highlights a divergence between large-cap cryptocurrencies, which posted beneficial properties, and smaller altcoins, which typically underperformed.
Common day by day buying and selling volumes declined by 24%, reflecting a cooling-off interval following the robust market efficiency in December 2024.
Bitcoin BTC/USD and Solana SOL/USD had been the first contributors to market cap progress in January, with Bitcoin rising 10% and Solana surging 25% over the month.
In distinction, Ethereum ETH/USD noticed its market capitalization decline by one %.
J.P. Morgan analysts emphasised that market appreciation was concentrated in a number of large-cap cryptocurrencies, whereas most smaller Layer-1 tokens, together with Polkadot DOT/USD, Avalanche AVAX/USD, and Toncoin TON/USD, skilled double-digit losses of their market caps.
The report said that absolutely the change within the collective market capitalization for Layer-1 protocol tokens, excluding Bitcoin and Ethereum, rose 6% month-over-month.
Nevertheless, the report additionally famous that the group’s month-to-month common market capitalization truly declined by 2%.
Ethereum struggled in January, with its market capitalization shrinking by one % to roughly $398 billion.
Its buying and selling volumes additionally fell by 25%, in response to TradingView knowledge.
J.P. Morgan analysts famous that Ethereum’s underperformance relative to Bitcoin was mirrored within the Bitcoin-to-Ethereum market capitalization ratio, which rose 11% month-over-month.
This means that buyers favored Bitcoin over Ethereum within the present market cycle.
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The cryptocurrency market in January additionally responded to regulatory shifts beneath the brand new United States administration.
J.P. Morgan highlighted that the Securities and Trade Fee repealed the controversial rule requiring banks providing digital asset custody to categorise it as each an asset and a legal responsibility.
Moreover, the White Home established a working group for digital belongings, led by a newly appointed coverage official.
The spot Bitcoin exchange-traded merchandise reached their one-year anniversary in January.
Over the previous yr, these merchandise attracted $36.5 billion in inflows, with BlackRock’s product rising because the market chief, amassing $37.7 billion in internet inflows.
In January alone, Bitcoin exchange-traded merchandise attracted 5.2 billion {dollars}, whereas Ethereum merchandise recorded solely $100 million {dollars} in new internet inflows.
Analysts at J.P. Morgan emphasised that January marked the fourth-best month of internet flows for Bitcoin exchange-traded merchandise since their launch in 2024.
The Bitcoin mining sector skilled a comparatively quiet month by way of community hashrate progress, with hashrate rising by just one % to 785 exahashes per second.
Nevertheless, block reward income remained steady at $57,200 per exahash per second, contributing to a $50 million funding from SoftBank into Cipher Mining.
In the meantime, the CME Group introduced the launch of day by day expiring choices on Bitcoin futures, additional increasing its cryptocurrency derivatives choices.
Ethereum’s subsequent main protocol improve, anticipated in March 2025, goals to double the variety of processing models per block from three to 6, growing the capability for Layer-2 transactions to 420 transactions per second.
Regardless of a decline in buying and selling volumes and ongoing regulatory uncertainty, the cryptocurrency market maintained robust valuations, with Layer-1 protocols posting a 6 % market capitalization achieve in January 2025.
Bitcoin continued to dominate, whereas Ethereum underperformed forward of its upcoming improve.
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