Bitcoin Price Faces Pressure as Treasury Rejects Bailouts, TRM Labs Hits $1B, and Ethereum Dusting Spikes

In a pivotal day for digital assets, three major developments converged to shape the cryptocurrency landscape, signaling evolving regulatory stances, robust venture capital interest, and emerging network security challenges. The United States government clarified its position on market stability, a blockchain intelligence firm achieved a significant milestone, and new data revealed a concerning trend on the world’s largest smart contract platform. These events collectively underscore the maturing yet complex nature of the global crypto ecosystem as it navigates the intersection of innovation, investment, and security.

US Treasury Firmly Rejects Bitcoin and Crypto Market Bailouts

During a congressional testimony on Wednesday, U.S. Treasury Secretary Scott Bessent delivered a clear message to cryptocurrency investors. He stated unequivocally that the federal government possesses neither the authority nor the intention to backstop Bitcoin or the broader digital asset market during periods of severe price decline. This declaration directly addresses a lingering question within financial circles about whether systemic crypto entities could expect federal intervention similar to traditional banks.

Secretary Bessent, who also chairs the Financial Stability Oversight Council (FSOC), emphasized that investors bear full responsibility for the risks inherent in decentralized assets. His testimony arrived amid a notable market downturn, with Bitcoin testing support near $70,000 and Ether falling below the $2,200 level. This official stance reinforces a core principle of the crypto space: self-sovereignty and the absence of centralized safety nets. Consequently, market participants must rely on their own risk assessment and management strategies.

Context and Implications of the Regulatory Stance

This position is not entirely new but represents a formal, high-level confirmation. Historically, U.S. regulators have maintained a cautious distance from direct market support for crypto. The 2008 financial crisis led to government bailouts for traditional institutions, creating a precedent that some speculated might extend to large, interconnected crypto firms. However, the decentralized and global nature of cryptocurrencies presents a fundamentally different challenge. Regulators lack clear jurisdictional levers and the practical means to execute such rescues. This testimony effectively closes the door on that speculation, potentially encouraging more prudent leverage and risk practices within crypto-native institutions.

TRM Labs Secures $70M Series C, Reaches Coveted Unicorn Status

In a strong counter-narrative to regulatory caution, blockchain intelligence platform TRM Labs announced the successful closure of a $70 million Series C funding round. This investment values the company at $1 billion, granting it the prestigious ‘unicorn’ designation. The round was led by Blockchain Capital and included participation from a notable consortium of traditional and crypto-native firms like Goldman Sachs, Citigroup’s venture arm, and Galaxy Ventures.

TRM Labs provides artificial intelligence-driven solutions to public and private institutions aiming to combat financial crime in the digital asset space. The company’s technology focuses on tracing illicit fund flows, identifying fraud patterns, and preventing cybercrime that leverages automation. Esteban Castaño, TRM Labs’ co-founder and CEO, stated the firm is “building AI for problems that have real consequences for public safety, financial integrity, and national security.” This funding round highlights a critical trend: significant capital is flowing into the blockchain infrastructure layer, particularly into companies that enhance security, compliance, and trust.

The Signal for Blockchain Analytics and Security Investment

The participation of major traditional financial institutions like Goldman Sachs and Citi Ventures is especially telling. It indicates a growing demand from incumbent finance for sophisticated tools to navigate the crypto ecosystem safely. As institutional adoption increases, so does the need for robust anti-money laundering (AML) and counter-terrorist financing (CTF) capabilities. TRM Labs’ valuation reflects the market’s assessment that compliance and security are not optional features but foundational requirements for the next phase of blockchain integration into the global economy. This sector is likely to see continued growth and investment.

Ethereum Sees Surge in Stablecoin Dusting Attacks Post-Fusaka

New on-chain data from analytics firm Coin Metrics has uncovered a significant rise in address-poisoning activity on the Ethereum network. Following the successful implementation of the Fusaka upgrade, which substantially reduced transaction fees, so-called ‘dusting attacks’ involving stablecoins have tripled. These attacks now account for an estimated 11% of all Ethereum transactions.

Coin Metrics analyzed over 227 million balance updates for USDC and USDT on Ethereum from November 2025 through January 2026. The analysis revealed that 43% of these updates involved transfers of less than $1, and 38% were for less than one cent. These minuscule transfers, often called ‘dust,’ serve little economic purpose other than ‘wallet seeding’—sending tiny amounts to a large number of addresses to link them together for analysis or phishing campaigns.

• Pre-Fusaka: Stablecoin dust comprised 3-5% of transactions and 15-20% of active addresses.
• Post-Fusaka: These figures jumped to 10-15% of transactions and 25-35% of active addresses on a typical day.

The report noted a sharp increase in addresses holding ‘dust’ balances—greater than zero but less than 1 ETH. However, it also provided crucial context: 57% of stablecoin balance updates involved transfers above $1, suggesting the majority of activity remains organic and economically meaningful.

Understanding the Fusaka Upgrade’s Dual Impact

The Fusaka upgrade was designed to enhance Ethereum’s scalability and user experience by lowering gas costs. While it has succeeded—evidenced by average daily transactions surpassing 2 million—it also inadvertently reduced the cost of malicious activities like dusting. Attackers can now spam thousands of addresses for a fraction of the previous cost. This presents a new challenge for network hygiene and user security. Wallet providers and users must become more vigilant, as these tiny transactions can be used to create confusion for phishing attempts or to deanonymize clusters of addresses through chain analysis.

Conclusion

Today’s developments paint a multifaceted picture of the cryptocurrency sector’s current state. The U.S. Treasury’s definitive rejection of bailouts reinforces the high-risk, high-reward paradigm of crypto investing, shifting the onus of stability onto the market itself. Simultaneously, TRM Labs’ billion-dollar valuation demonstrates vigorous investor confidence in the infrastructure that builds trust and security within that market. Finally, the spike in Ethereum dusting attacks post-Fusaka serves as a reminder that technological progress often introduces new complexities, requiring continuous adaptation from developers and users alike. Together, these stories highlight a market maturing through the pressures of regulation, institutional investment, and the constant evolution of its underlying technology.

FAQs

Q1: What did the U.S. Treasury Secretary say about Bitcoin?
U.S. Treasury Secretary Scott Bessent testified that the government does not have the authority and will not bail out Bitcoin or the broader cryptocurrency market during a downturn, emphasizing that investors bear full responsibility for their risks.

Q2: What is a ‘crypto unicorn’ and which company just became one?
A ‘crypto unicorn’ is a privately-held blockchain company valued at over $1 billion. Blockchain intelligence firm TRM Labs achieved this status after closing a $70 million Series C funding round led by Blockchain Capital.

Q3: What are ‘dusting attacks’ on Ethereum?
Dusting attacks involve sending tiny, negligible amounts of cryptocurrency (like USDC or USDT) to a large number of wallet addresses. This ‘dust’ is often used to track or link addresses for phishing, scam attempts, or chain analysis to compromise privacy.

Q4: Why have Ethereum dusting attacks increased?
Attacks have surged following the Fusaka network upgrade, which significantly reduced transaction fees (gas costs). This made it much cheaper for bad actors to execute large-scale dusting campaigns.

Q5: Does the increase in dusting transactions mean most Ethereum activity is malicious?
No. While dusting attacks now comprise an estimated 11% of transactions, data shows that 57% of stablecoin transfers are for amounts over $1, indicating the majority of network activity remains legitimate and economically purposeful.