Bitcoin Price Rebounds After DeepSeek Scare, Fed Refuses To Cut Interest Rates, and New US Treasury Secretary Is Confirmed

Takeaways

• Bitcoin rebounds after DeepSeek scare, Fed decision: News of a breakthrough by a Chinese AI company sent crypto and tech markets into panic Monday, but prices quickly recovered later this week even as the Federal Reserve opted to pause rate hikes.
• Scott Bessent, a pro-crypto hedge fund manager, has been confirmed as Treasury secretary, tasked with advancing regulation: Bessent’s crypto-friendly stance has excited the industry.
• Jupiter’s new fee buyback program and strategic acquisitions have driven JUP token gains, signaling growth for Solana’s ecosystem: Critics, however, caution against over-centralization and higher user costs, which could stifle innovation.
• SEC wins partial ruling against Kraken in crypto lawsuit: A judge dismissed Kraken's "major questions doctrine" defense, affirming the SEC's belief that it can regulate crypto under existing powers. But the SEC's case against Kraken for selling unregistered securities is still ongoing.
• Cboe BZX re-files for four spot Solana ETFs after previous rejections, banking on improved regulatory conditions in 2025: While Bitcoin and Ethereum ETFs have been approved, Solana’s classification as a security or commodity remains a major hurdle.

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Bitcoin Rebounds Amid DeepSeek AI Impact Concerns, Fed Decision

Bitcoin has climbed back above $105,000, recovering from weekend volatility triggered by Chinese AI firm DeepSeek's breakthroughs. The rebound comes as Wall Street analysts temper fears of DeepSeek's disruptive potential.

DeepSeek’s release of Janus-Pro-7B, an open-source multimodal AI model, initially sparked panic, causing roughly $860 million worth of liquidations in the crypto market and a record $600 billion market cap loss for NVIDIA on Monday. However, some analysts have called the market reaction "overblown" and emphasized DeepSeek's role in demonstrating cost-effective AI innovation rather than threatening established players.

By Wednesday, the crypto market had almost fully recovered despite the Federal Reserve’s decision to leave the benchmark funds rate between 4.25% and 4.5% because of stubborn inflation. The price of bitcoin dipped following the announcement, but quickly rebounded when Fed chair Jerome Powell confirmed in his press conference that the agency would support banks who serve crypto customers.

“Banks can serve crypto customers as long as they manage the risks,” he said. “We are not against innovation and we don’t want to take action to terminate customers that are perfectly legal.”

Senate Confirms Scott Bessent as Pro-Crypto Treasury Secretary

The US Senate has officially confirmed Scott Bessent, a pro-crypto advocate and billionaire hedge fund manager, as the new Treasury secretary, succeeding Janet Yellen. Bessent’s confirmation comes with high expectations, as he joins a Presidential Working Group on Digital Asset Markets to spearhead efforts in creating a federal regulatory framework for crypto.

Bessent is known for his positive stance on crypto, and has previously stated that the crypto economy is here to stay. He has also voiced opposition to a central bank digital currency for the US. His agenda as Treasury secretary aligns with Trump’s economic vision, focusing on crypto innovation and tax cuts.

Industry leaders, including Ripple CEO Brad Garlinghouse, have expressed optimism about Bessent’s appointment, hoping for policies that balance innovation with regulation. Bessent’s appointment could be the first of many pro-crypto steps yet to be taken by President Trump.

Jupiter’s Expansion Sparks Debate Over Solana Ecosystem’s Future

Jupiter, a leading Solana-based decentralized exchange (DEX) aggregator, has unveiled a series of initiatives that have fueled both optimism and concern within the community. The platform introduced a 50% protocol fee buyback program during its Catstanbul 2025 event, locking purchased tokens in a long-term reserve called the “litterbox.”

This announcement, coupled with its acquisitions of Moonshot, a memecoin trading platform, and SonarWatch, an on-chain portfolio tracker, has spurred a significant surge in the price of the JUP token over the past week.

While proponents argue these plans could attract new users and developers to the Solana ecosystem, critics fear monopolistic behavior. Jupiter has also implemented a 5-basis-point fee for basic swaps, which some see as contrary to Solana’s value proposition of low costs and high throughput. Others, however, view this as a commitment to advancing decentralized finance infrastructure and liquidity.

SEC Wins Key Battle Against Kraken's "Major Questions Doctrine" Defense

The SEC scored a partial victory in its lawsuit against crypto exchange Kraken, with a California federal judge rejecting one of Kraken's key defenses. Judge William Orrick ruled on January 24 that the "major questions doctrine" defense—claiming that Congress hadn't explicitly granted the SEC authority over crypto—did not apply.

Orrick explained that the SEC's actions did not constitute an overreach of authority or involve powers "beyond what Congress could reasonably be understood to have granted it." The "major questions doctrine," often invoked in cases involving significant economic implications, has been used by other crypto companies like Coinbase and Ripple to challenge the SEC’s jurisdiction.

The judge however left Kraken's "fair notice" defense intact, allowing Kraken to argue that the SEC failed to provide sufficient warning that its activities violated securities laws. Orrick noted the SEC had yet to demonstrate that Kraken's transactions were obviously covered under the Howey test for investment contracts. The lawsuit, filed in November 2023, accuses Kraken and its affiliates of operating as an unregistered securities exchange since 2018.

Cboe BZX Resubmits Spot SOL ETF Filings Hoping for 2025 Approval

Cboe BZX Exchange has filed new 19b-4 applications on behalf of firms seeking approval for a spot Solana ETF, after previous attempts were rejected. The filings include proposals for the Canary Solana Trust, Bitwise Solana ETF, 21Shares Core Solana ETF, and others.

The resubmission comes amid growing expectations that the Trump administration's pro-crypto stance could lead to regulatory approval in 2025. While spot Bitcoin and Ethereum ETFs gained SEC approval in 2024, Solana’s classification remains a key obstacle, as the agency may treat it as a security rather than a commodity.

A formal acknowledgment from the SEC and publication in the Federal Register will initiate the review process, with industry participants remaining cautiously optimistic. If Solana ETFs do receive approval, it could be good news for the price of SOL and for the wider ecosystem.

-The Gemini Team