BTC Flat as Alts Drop, BTC ETF Inflows Fade, US Shifts from Roadblocks to Roadmap

• BTC ETFs saw $359M in inflows, while ETH ETFs saw $147M in outflows
• MicroStrategy announced a proposed strike preferred stock offering (STRK)
• The SEC withdrew its controversial SAB 121 

BTC flat while alts drop, ETF inflows fade, corporates continue adding BTC

Crypto markets traded in the red this week, with the total market cap hovering around $3.5 trillion and bitcoin dominance rising above 58%. Among the large caps, bitcoin was unchanged compared with the previous week, while ether dropped by 3.9%. So far this year, the market has surged quickly on any cue, anticipating positive news for crypto, only to give up gains later as none of the events delivered significant long-term impact or sustained momentum. In the US spot only ETF universe, the BTC ETFs saw a net inflow of $359.2 million while ETH ETFs saw a net outflow of $146.6 million in the past 5 trading days.

MicroStrategy (MSTR) boosted its bitcoin holdings to 471,107 BTC after another week of accumulation. The firm, led by Executive Chairman Michael Saylor, also announced a $250 million preferred share offering to fund further BTC purchases. The Series A Perpetual Preferred Stock (STRK) carries a $100 liquidation preference, an $8 annual dividend, and is convertible into Class A common stock at an implied $1,000 per share price. In the week ending January 26, MicroStrategy acquired 10,107 BTC at an average price of $105,596 per bitcoin, bringing its overall average purchase price to $64,511. This follows shareholder approval to increase authorized Class A shares to 10.3 billion from 330 million.

Preferred stock occupies a middle ground between equity and debt, providing investors with bond-like returns while maintaining an ownership stake. MicroStrategy analyst Ben Werkman highlighted its appeal to institutional investors, citing its lack of maturity risk, stable yield, and optional equity upside. He noted that preferred stock could replace convertible bonds for fixed-income accumulation given its structural advantages. “Preferred stock has the potential to be massively more accretive than any convertible offering and definitely more accretive than [share sales]” Werkman posted on X.

As MicroStrategy continues to lead publicly traded bitcoin holders, Japan’s Metaplanet is making its own aggressive push, announcing Asia’s largest-ever equity capital raise to buy BTC. The hotel investor issued 21 million shares through 0% discount moving strike warrants, raising approximately 116 billion yen ($745 million). These warrants let holders buy shares at market price, reducing dilution for existing shareholders. This move reinforces Metaplanet’s “bitcoin-first, bitcoin-only” strategy as it expands its BTC holdings amid the yen’s decline and bitcoin’s record highs. The stock acquisition rights were priced at 363 yen ($2.33) per unit, with exercise prices adjusting to market value. Now the fifteenth largest publicly traded bitcoin holder with 1,762 BTC, Metaplanet saw its stock rise 3% on the day and 16% year to date.

Crypto's US comeback, breaking barriers, broadening adoption

The US Securities and Exchange Commission (SEC) withdrew its controversial SAB 121 last Thursday, shifting how public companies account for customer crypto assets. The rule had required banks and other firms to list these assets as liabilities, making custody costly and limiting regulated institutions from offering the service. Backed by former SEC Chair Gary Gensler, SAB 121 aimed to protect investors in bankruptcies but faced industry pushback and a vetoed Congressional Review Act resolution. Its replacement, SAB 122, directs companies to follow Financial Accounting Standards Board (FASB) or International Accounting Standards, clearing the way for banks to custody digital assets — an important shift for the buy side.

The new guidance also reminds firms to continue disclosing their responsibility to safeguard crypto assets. SEC Commissioner Hester Peirce, who had opposed SAB 121, welcomed its withdrawal, calling it a step toward clearer regulatory frameworks for crypto. Tesla saw a $600 million unrealized gain on its bitcoin holdings in Q4 2024, benefiting from FASB accounting rule that allows companies to mark digital assets to market each quarter. This adjustment pushed the reported value of Tesla’s bitcoin holdings to $1.076 billion by year-end, up from $184 million in the previous quarter. Arkham Intelligence estimates the company holds approximately 11,509 BTC, worth around $1.21 billion, making it the fourth-largest publicly traded bitcoin holder after MicroStrategy, Marathon Digital, and Galaxy Digital, per CoinGecko.

Arizona lawmakers are moving toward bitcoin adoption, with the Arizona State Senate Finance Committee approving the “Arizona Strategic Bitcoin Reserve Act” (SB1025) in a 5-2 vote on Jan. 27. Co-sponsored by Republican Arizona State Senator Wendy Rogers and Republican Arizona State Representative Jeff Weninger, the bill would allow Arizona to allocate up to 10% of public funds into bitcoin and other digital assets. State entities, including the Treasury and retirement systems, could invest in virtual currencies, with provisions for secure storage in a segregated account. The bill also leaves room for alignment with a potential federal Strategic Bitcoin Reserve, if established by the US Treasury.

Fed chair Powell emphasized the Fed's approach to crypto is focused on monitoring banks, not stifling innovation. He clarified that banks are fully capable of serving crypto customers as long as they understand and can manage the risks involved, calling it a “safe and sound” practice for banks that are properly regulated. While acknowledging that the “threshold has been a little higher” for banks engaging in crypto activities due to the newness of digital currencies, Powell stressed that banks within the federal safety net (those offering deposit insurance) must ensure these activities are secure. He offered reassurance that the Fed does not want to impede innovation or create a regulatory environment where banks cut ties with legal crypto customers due to excessive risk aversion.

While the price action has been muted, developments at a rapid pace are paving the way for broader digital asset adoption in the US. The evolving regulatory landscape is providing clarity and removing obstacles for financial institutions to engage with crypto. With these advancements, the potential for digital assets to become a mainstream asset class continues to grow, driving increased interest and participation across various sectors. Comparing the sentiment from January 2023 to now is like night and day — it's as if a decade of progress has unfolded in the blink of an eye.

Macro pulse 

Among TradFi assets, oil futures fell by 3.7% compared to the previous week and US equities dropped by 0.8% as markets digested FOMC minutes. The Fed's decision to keep rates at 4.25-4.50% as expected initially sparked a hawkish reaction, especially after it removed the language stating that "inflation has made progress toward the Committee's 2 percent objective". However, Fed Chair Powell later clarified in the Q&A that the change was merely a language adjustment, not a shift in policy. This led to a dovish reversal of the initial market moves. Powell also emphasized that the Fed is not rushing to change its policy stance, noting that while the policy remains less restrictive than when rate cuts began, there has been no fundamental shift in its assessment of the situation. Meanwhile, the US Dollar Index dipped by 0.2% and the 10-year US treasury yields slipped by 8 bps while the Gold & Silver Index rose by 0.4% week on week.

^{*Note: Weekly (7 calendar day) performance figures are as of 8am SGT on January 30, 2025} 

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