Crypto News Today: Bitcoin Faces Geopolitical Pressure as Injective Overhauls Tokenomics

Global cryptocurrency markets experienced significant volatility on Monday, January 27, 2025, as Bitcoin faced substantial selling pressure amid escalating geopolitical tensions between the United States and European Union. Meanwhile, the Injective blockchain community approved a major tokenomics overhaul, and crypto investment products recorded their strongest weekly inflows since October 2024. This comprehensive analysis examines the day’s most impactful developments across digital asset markets, blockchain governance, and regulatory landscapes.

Injective Community Approves Major Tokenomics Overhaul

The Injective protocol community overwhelmingly passed a governance proposal on Monday that fundamentally restructures the network’s economic model. With 99.89% support based on staked voting power, the community approved IIP-617, known as the “Supply Squeeze” proposal. This initiative represents a strategic shift in Injective’s approach to token supply management, combining reduced issuance with an enhanced buyback-and-burn mechanism.

Injective operates as a layer-1 blockchain specifically optimized for decentralized finance applications. The INJ token serves multiple critical functions within this ecosystem, including staking for network security, governance voting rights, and payment for transaction fees. The newly approved changes aim to accelerate the deflationary characteristics of INJ by aligning reduced token issuance with recurring buybacks funded by protocol-generated revenue.

According to network data, Injective has already removed approximately 6.85 million INJ tokens from circulation through previous burn mechanisms. The governance proposal, which went live immediately after the vote, is designed to significantly increase this rate of token removal. An official statement from the Injective team on social media platform X framed the changes as positioning “INJ to become one of the most deflationary assets over time.”

Market Context and Community Response

This governance decision follows a prolonged downturn in INJ’s market performance, with the token experiencing nearly an 80% decline over the past year and falling more than 90% from its all-time high achieved in March 2024. On Monday alone, INJ declined approximately 8%, according to real-time data from CoinGecko.

Community reaction on social media platforms reflected cautious optimism, with most participants characterizing the changes as a structural improvement rather than an immediate market catalyst. Several analysts noted that tokenomics adjustments typically require time to demonstrate measurable impact on market dynamics. Meanwhile, data from DeFi analytics platform DefiLlama shows Injective’s total value locked (TVL) across its DeFi ecosystem currently stands at $18.67 million, representing a significant decline from peaks above $60 million recorded during 2024.

Crypto Investment Products Attract Record Weekly Inflows

Crypto exchange-traded products (ETPs) experienced substantial capital inflows last week, marking the strongest performance of 2025 to date. According to Monday’s report from European crypto asset manager CoinShares, these products attracted $2.17 billion in net inflows during the week ending January 24. This figure represents the largest weekly gain since October 2024 and indicates renewed institutional interest in cryptocurrency exposure.

The distribution of these inflows reveals clear preferences among institutional investors. Bitcoin-dominated products captured the majority of capital, attracting $1.55 billion or more than 71% of total weekly inflows. Ethereum-based products followed with $496 million in net inflows, while XRP and Solana products attracted approximately $70 million and $46 million respectively. Smaller altcoins including Sui and Hedera recorded more modest inflows of $5.7 million and $2.6 million.

Sentiment Shift and Geopolitical Influences

James Butterfill, Head of Research at CoinShares, noted that while most inflows occurred earlier in the week, Friday witnessed a notable sentiment shift with $378 million in outflows. This reversal coincided with escalating geopolitical tensions and renewed concerns about international trade policies. Butterfill specifically highlighted that “sentiment was also weighed down by suggestions that Kevin Hassett, a leading contender for the next US Fed Chair and a well-known policy dove, is likely to remain in his current role.”

The concentration of inflows in Bitcoin products suggests institutional investors continue to view Bitcoin as the primary crypto asset for portfolio allocation. This preference likely stems from several factors:

• Regulatory clarity: Bitcoin enjoys more established regulatory frameworks in major markets
• Market liquidity: Superior trading volume and depth compared to altcoins
• Institutional infrastructure: More developed custody and trading solutions
• Perceived store of value: Continued narrative around digital gold characteristics

Bitcoin Price Volatility Amid Geopolitical Tensions

Bitcoin experienced significant price pressure on Monday as geopolitical developments between the United States and European Union created uncertainty across financial markets. The cryptocurrency fell nearly $3,500 in early trading hours, declining from approximately $95,450 to just below $92,000 on major exchanges including Coinbase. This represented a 3.6% decline within a matter of hours.

The price movement coincided with escalating trade tensions between the US and European nations. Over the weekend, US President Donald Trump announced plans to impose 10% tariffs starting February 1 on imports from several European countries, including Denmark, Sweden, France, Germany, the Netherlands, and Finland. These measures are reportedly tied to ongoing negotiations concerning Greenland, with the tariff rate potentially rising to 25% by June if no agreement is reached.

European officials responded by preparing potential countermeasures, including previously delayed retaliatory tariffs totaling up to €93 billion. The European Union also indicated it might deploy its Anti-Coercion Instrument, colloquially known as a “trade bazooka,” should US duties proceed as announced. This escalation created uncertainty across global markets, with risk assets including cryptocurrencies experiencing selling pressure.

Market Impact and Liquidations

The rapid Bitcoin price decline triggered substantial liquidations in derivatives markets. According to data from Coinglass, approximately $750 million in long positions were liquidated within a four-hour period, bringing total 24-hour liquidations to over $860 million. These liquidations typically occur when leveraged positions are automatically closed due to insufficient collateral, often exacerbating price movements in volatile conditions.

By Monday afternoon, Bitcoin had partially recovered from its weekly low, trading around $92,580 at time of writing. This recovery suggests some market participants viewed the decline as a buying opportunity, though trading volumes remained elevated compared to recent averages. The simultaneous rise in gold futures during this period highlighted the traditional safe-haven flows that often accompany geopolitical uncertainty, creating an interesting divergence between traditional and digital asset responses to risk events.

Broader Market Context and Regulatory Developments

Today’s developments occur within a broader context of evolving cryptocurrency regulation and institutional adoption. Several key trends are shaping current market dynamics:

Regulatory frameworks continue to mature across major jurisdictions, with clearer guidelines emerging for cryptocurrency custody, trading, and reporting requirements. The European Union’s Markets in Crypto-Assets (MiCA) regulation, now fully implemented, provides comprehensive rules for crypto asset service providers operating within EU member states.

Institutional participation is expanding beyond simple Bitcoin exposure, with growing interest in Ethereum-based products following the approval of spot Ethereum ETFs in late 2024. Major financial institutions are developing more sophisticated cryptocurrency offerings, including structured products and yield-generating strategies.

Technological innovation persists despite market volatility, with layer-2 scaling solutions, zero-knowledge proofs, and decentralized identity systems advancing rapidly. These developments address longstanding challenges around scalability, privacy, and interoperability that have historically limited blockchain adoption.

Conclusion

Monday’s cryptocurrency developments highlight the complex interplay between technological innovation, market dynamics, and geopolitical factors that increasingly characterize digital asset markets. The Injective tokenomics overhaul demonstrates how blockchain communities are proactively addressing economic model challenges, while record crypto ETP inflows indicate sustained institutional interest despite market volatility. Bitcoin’s price reaction to geopolitical tensions underscores the asset’s growing sensitivity to macro-economic developments, reflecting its maturation within global financial markets. As regulatory frameworks continue to evolve and technological innovation advances, market participants must navigate an increasingly sophisticated landscape where blockchain governance decisions, institutional capital flows, and international relations collectively shape cryptocurrency valuations and adoption trajectories.

FAQs

Q1: What changes did the Injective community approve?
The Injective community approved IIP-617, a governance proposal that reduces new token issuance while maintaining the network’s buyback-and-burn program. This “Supply Squeeze” initiative aims to accelerate token removal from circulation by aligning reduced issuance with recurring buybacks funded by protocol revenue.

Q2: How much did crypto ETPs attract in inflows last week?
Crypto exchange-traded products attracted $2.17 billion in net inflows during the week ending January 24, 2025, marking the strongest weekly performance of 2025 to date and the largest gains since October 2024.

Q3: Why did Bitcoin prices decline on Monday?
Bitcoin prices fell nearly $3,500 amid escalating trade tensions between the United States and European Union. The decline coincided with announced US tariffs on European imports and potential EU countermeasures, creating uncertainty across risk assets.

Q4: What percentage of crypto ETP inflows went to Bitcoin products?
Bitcoin-dominated products captured $1.55 billion or more than 71% of total weekly crypto ETP inflows, demonstrating continued institutional preference for Bitcoin exposure over other digital assets.

Q5: How has INJ token performed recently?
The INJ token has declined approximately 80% over the past year and fallen more than 90% from its all-time high in March 2024. On Monday alone, INJ declined about 8% amid broader market volatility.