Crypto Enters a Crucial Week for Bitcoin, Ethereum, and Macro Events

As we step into the second week of January, crucial events are set to influence the cryptocurrency market, especially regarding Bitcoin and Ethereum. Here are the key updates that every crypto holder should be aware of.

Key Takeaways

Bank of America allows its advisers to recommend cryptocurrency exchange-traded products (ETPs), potentially impacting market dynamics.
Ethereum is set to implement the second “Blob Parameter Only” upgrade (BPO2) aimed at enhancing scalability.
Stellar will upgrade its testnet to Protocol 25, also known as “Stellar X-Ray,” enhancing privacy for developers.
Macro factors continue to influence the cryptocurrency market, particularly with U.S. political events affecting prices.

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Bank of America Opens the Advisory Doors for Crypto

Beginning January 5, advisers from Bank of America Private Bank, Merrill, and Merrill Edge can now recommend multiple crypto exchange-traded products (ETPs) to their clients. This shift removes previous restrictions on asset thresholds and transitions advisers from a solely execution-focused role to one where they provide active allocation guidance.

Chris Hyzy from Merrill noted in an early December statement that the bank views a modest investment of 1% to 4% in digital assets as suitable for investors with a strong interest in thematic innovation and a willingness to accept volatility. While the immediate impact might seem small, Bank of America's extensive wealth distribution network means that even a minor long-term allocation to cryptocurrencies could significantly affect market prices.

Ethereum's Significant Upgrade

On January 7, Ethereum will implement its second “Blob Parameter Only” upgrade (BPO2), increasing the maximum blob target per block to 14 and the overall maximum to 21. This upgrade aims to boost data throughput for rollups without being part of a larger hard fork. The Ethereum Foundation describes this upgrade as a minimal and safe approach to enhancing blob throughput following the Fusaka updates.

For layer 2 (L2) users, this upgrade will directly affect data availability pricing. With more blobs available, fees for blob usage may decrease, benefiting end-user transaction costs. However, these benefits are contingent upon demand matching the increased capacity, as higher demand could limit any fee reductions.

Additionally, Hyperliquid’s HYPE token will have a supply event on January 6, where team members will receive an initial allotment of 1.2 million HYPE tokens, worth around $31.2 million. Nearly one-quarter of the total supply, approximately 237 million tokens, is under a structured release plan. Market reactions to token unlocks can lead to sell pressure, depending on how recipients choose to manage their tokens.

Stellar will also be upgrading its testnet to Protocol 25, branded “Stellar X-Ray,” on January 7 at 21:00 UTC, with the mainnet vote scheduled for January 22. The upgrade aims to enhance privacy for developers by enabling them to build privacy applications using zero-knowledge (ZK) cryptography while maintaining the transparency of the network.

Macro Landscape Impacting Crypto

The current macroeconomic landscape isn’t helping cryptocurrencies develop clear narratives. Over the weekend, the U.S. forces captured Venezuelan President Nicolás Maduro, leading to a spike in Bitcoin and crypto prices. Oil prices fluctuated initially but later stabilized due to limited expectations of near-term supply disruptions.

The geopolitical implications of this event suggest a risk of escalation rather than just a one-off occurrence, with U.S. President Trump hinting at further regional interventions. The opening of U.S. markets this week will be critical.

On another note, politics surrounding interest rates also weigh heavily on the market. Trump has stated he will announce his nominee to replace Fed Chair Jerome Powell, whose term ends in May 2026, early this year. This has turned into a live variable for the market, influencing perceptions of the potential direction of interest rates. Prediction markets indicate significant activity with expectations surrounding the nomination by January 9, marking a potential point of volatility for crypto desks, despite mainstream media maintaining a more ambiguous timeline.

As of the latest update, the total cryptocurrency market capitalization stands at $3.12 trillion.

Total crypto market cap chart Total crypto market cap rises back above the 2021 high, 1-week chart | Source: TOTAL on TradingView.com