Monthly Manager Commentary: January 2025

Multi-Strategy Fund Performance

In January, the Multi-Strategy Fund delivered a strong 10.4% return, outpacing bitcoin’s 9.6% gain as crypto markets rallied amid improving macro conditions. Cooling inflation data towards the end of the month and growing global liquidity supported risk assets, while the broader market digested the geopolitical and regulatory implications of Donald Trump’s inauguration. Notably, the Solana ecosystem emerged as a standout performer, with SOL surging 22.6% and Raydium (RAY), Solana’s largest DEX, soaring 45.4%, which underscores our bullish outlook on its future. We believe Solana is uniquely positioned as the fastest-growing ecosystem for retail, DePIN, and decentralized AI, and our strategic allocation in this high-growth sector is set to capitalize on its evolving leadership in the next wave of digital innovation.

	Multi-Strategy Fund	Bitcoin
January Gross Performance	10.4%	9.6%

Market Commentary

The industry experienced sharp price swings in January, reacting to a series of major events that shaped market sentiment. The month began on a challenging note, with bitcoin (BTC) falling 4% in the first week amid two key developments. First, the Department of Justice (DOJ) received court authorization to sell $6.5 billion worth of bitcoin seized from Silk Road-related investigations. While blockchain data suggests no actual bitcoin was sold, the mere announcement unsettled less-experienced market participants, triggering a sell-off. Notably, bitcoin’s deep liquidity—regularly processing tens of billions in daily trading volume—would likely absorb such selling pressure from the DOJ without major disruption.

Adding to the market’s uncertainty, the Federal Reserve’s first meeting of 2025 struck a more hawkish tone than anticipated. The Fed cited concerns over rising U.S. inflation, stronger-than-expected employment numbers, and potential trade and immigration policy shifts, signaling that interest rate cuts may be less aggressive than previously expected. This development weighed on risk assets, including bitcoin and other cryptoassets, leading to a weak start to the year.

However, by mid-January, market sentiment shifted dramatically. Core CPI inflation data came in lower than expected, suggesting that inflationary pressures may not be as severe as feared. This led to an immediate crypto market rally, with bitcoin, Ethereum, and several altcoins posting strong gains. That momentum accelerated when Donald Trump was sworn in as U.S. president, prompting bitcoin to surge 18% from $94,500 to a record high of $109,000. Investors interpreted Trump’s pro-crypto executive order, including plans to establish a national digital asset stockpile and review digital asset regulations, as a major bullish signal for the industry.

Altcoins also saw significant upside, with Solana (SOL) emerging as one of the top performers. Solana’s price surged 45% to reach an all-time high (ATH) of $286, driven in large part by a trading frenzy surrounding Trump-related meme coins. This surge in activity propelled Solana’s total value locked (TVL) past $10 billion, marking the first time it had reached this milestone since FTX’s collapse. With its low fees and high-speed transactions, Solana has now solidified itself as the leading retail-focused blockchain, attracting both traders and liquidity.

The exuberance was short-lived, however, as a late-month market sell-off was triggered by the emergence of DeepSeek, a Chinese AI model that outperformed OpenAI’s ChatGPT and other U.S.-based competitors while reportedly costing less than 1% of their development budgets. The disruptive nature of DeepSeek caused a sharp decline in U.S. tech stocks, which spilled over into the crypto markets. As investors sought liquidity to cover losses in equities, bitcoin fell to $98,000, before rebounding and stabilizing above $100,000 to close out the month.

Despite the short-term volatility, sell-side pressure from long-term bitcoin holders (LTHs) has notably declined. The volume of bitcoin being deposited to exchanges for sale has slowed, indicating that accumulation and HODLing behavior are now outweighing distribution. This reduction in sell-side pressure means less fresh capital is required to sustain current price levels, supporting bitcoin’s ability to consolidate above $100,000.

While DeepSeek’s impact on traditional equities remains uncertain, we ultimately view its rise as bullish for crypto. The model’s open-source nature is already being leveraged by several decentralized AI platforms, reinforcing the long-term potential for blockchain-powered AI applications. The intersection of crypto and decentralized AI could unlock new innovations, positioning blockchain infrastructure as a key player in the future of artificial intelligence.

January 2025 was a month of early challenges, strong recovery, and late volatility, but it ultimately highlighted crypto’s resilience. With bitcoin holding above $100,000, Solana cementing its dominance, and decentralized AI gaining traction, we remain optimistic about the outlook for the digital asset space in 2025.

The Blockforce Team

Disclaimer:  This is not investment advice. The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction. All Content is information of a general nature and does not address the circumstances of any particular individual or entity. 

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