Planting Coins: 01/25

Management Summary

• The altcoin rally was briefly interrupted by statements from the Fed in December.
• The Fear and Greed Index has eased significantly, although the price level of Bitcoin has been maintained.
• The constant outflows of Bitcoin reserves from crypto exchanges are still exciting to observe.

What is the crypto investing series? 

This blog post is the first report in 2025 about the Kaleido Digital Asset Core (KDAC) Strategy. Read more about our crypto portfolio framework here. Don't forget to sign up to our newsletter to get the next reporting straight in your mailbox! 

Fed’s Statements Interrupt Altcoin Rally

The crypto market experienced significant volatility in December 2024. Following a bullish first half of the month, fueled by optimism for a potential continuation of November's altcoin rally, a clear shift to negative momentum occurred mid-month. The US Federal Reserve (Fed) caused uncertainty across markets with restrictive-sounding communication regarding future interest rate policies. These statements triggered a short-term decline in cryptocurrency prices and a significant reversal in market sentiment.

Fed’s Statements Interrupt Altcoin Rally

The abrupt end to the altcoin rally led the market into a phase of consolidation. The Fed's comments highlighted the greater sensitivity of altcoins to macroeconomic uncertainties, while Bitcoin maintained its status as a “safe haven” within the crypto universe. While Chainlink was the only portfolio asset to gain 5% in December and thus ended the year with a positive total of +15%, altcoins such as ATOM, DOT and NEAR corrected between 26 and 30%. They all ended the year as a whole in negative territory. Since the launch of the Kaleido Digital Asset Fund in mid-March, Bitcoin has been the top performer with +44%, just ahead of Cardano with 36%. The smart rebalancing and the equally weighted strategy thus ensured a positive year-end result for the fund of +3.9% in the seed share class and 2.6% in the institutional share class.

With a renewed focus on Bitcoin and its dominance recovering from temporary lows in November and early December, the outlook for altcoins remains uncertain. It remains to be seen whether they can regain momentum in the new year. Meanwhile, market sentiment is expected to stay highly responsive to macroeconomic signals, particularly further Fed statements and developments in global interest rate trends.

Potential Trend Reversal in Bitcoin Dominance

A look at the Fear & Greed Index reveals an exciting insight. While we were still clearly in the extreme greed range at the beginning of December, the index recovered into the neutral range and is now at a value of 60 at the beginning of January, with a Bitcoin value of just under USD 100k. When Bitcoin was still targeting this USD 100k hurdle in November, the Fear & Greed Index was still significantly higher at over 80 points. Sentiment has therefore cooled considerably here, which could provide scope for a further rise.

Fear & Greed Index Cooled Down in the Meantime

A look at the withdrawals of Bitcoin from crypto exchanges provides the same picture as last month, which continues unabated and thus clearly underlines the spot demand once again. For Ether, on the other hand, outflows have stabilized and it remains to be seen whether the Ethereum narrative can be revived at the beginning of this year.

Bitcoin Exchange Reserves are Dwindling

The coming weeks will show how macroeconomic factors affect crypto prices. After the festive period, some investors will certainly be keen to trade, but it should be noted that the markets will take another close look at the latest inflation figures and PMI figures after the last rather hawkish Fed communication and that a potential sell-the-news event could also be on the cards with the imminent inauguration of Donald Trump. However, we are not changing our fundamentally positive assessment as a result but are bracing ourselves for more volatility.

Disclaimer: This piece of information is for marketing and entertainment purposes only and should not be taken as an investment recommendation. Remember that all investments involve risk. Please read our full Marketing Disclaimer here.