Monetary Policy

The Central Bank of Malaysia has launched three initiatives to test the "Ringgit stablecoin" and "tokenized deposits," focusing on wholesale payments and settlements, paving the way for policies in 2026. These initiatives will be conducted in a controlled environment and will assess their impact on financial stability.

It is expected that in January, the overall US CPI will increase by 2.5% year-on-year, with core CPI also falling back to 2.5%. Analysts point out that the slowdown in housing cost increases may suppress service prices, but tariffs and price hikes could still support inflation. Despite the cooling data, the market believes there is a higher probability that the Federal Reserve will keep interest rates unchanged in the short term.

The NY Fed has linked tariffs imposed on imports to inflation. Crypto prices are down, possibly in speculation of the upcoming inflation report. The US is working on deals to balance the tariffs effect. The Federal Reserve Bank of New York, or NY Fed, has published a report establishing a

CFTC Chairman Michael Selig appoints a 35-member advisory committee of senior executives from the crypto industry to provide guidance on the regulation of breakthrough technologies such as AI and blockchain, with market founder Shayne Coplan of Polymarket predicted to be selected. Traditional financial giants including CME, DTCC, and Nasdaq representatives.

XRP follows the overall cryptocurrency market downward, currently at $1.36. However, in terms of capital flow, the XRP ETF has experienced zero outflows for eight consecutive days, while BTC has seen outflows of $276 million. Unemployment claims have decreased to 227,000, and the Federal Reserve's probability of cutting interest rates in March has risen to 7.8%, with a 63.9% chance in June. Looking ahead, Friday's CPI data release will be a key factor.

Standard Chartered Bank predicts that Bitcoin may drop to $50,000 in the short term, and Ethereum could fall to $1,400, mainly due to ETF capital outflows and poor economic conditions. Although the target prices have been significantly lowered to $100,000 for Bitcoin and $4,000 for Ethereum by the end of the year, the long-term outlook remains optimistic. Compared to previous cycles, this bear market has not been accompanied by major platform failures, indicating increased market resilience.

February 12 News, the U.S. Commodity Futures Trading Commission (CFTC) took a significant step in the ongoing debate over the structure of the crypto market by officially inviting several senior executives from the crypto industry to join its Innovation Advisory Committee (IAC). This move is seen as an important signal of regulatory authorities accelerating dialogue with the digital asset industry and also introduces new variables to the U.S. cryptocurrency regulatory landscape. The invited members come from well-known companies and financial institutions, including Uniswap Labs, Ripple, Robinhood, CME Group, and Nasdaq. For the CFTC, which currently only regulates crypto derivatives and has not directly covered the spot market, such a concentrated introduction of industry expertise is uncommon. The committee was established last month with the goal of providing regulatory agencies with cutting-edge advice on blockchain, artificial intelligence, and new financial infrastructure.

The Federal Reserve released new analytical recommendations on Wednesday, suggesting that cryptocurrencies be classified as a unique asset class used in "non-cleared" derivative markets (including OTC and other transactions not cleared through centralized clearinghouses) for initial margin requirements. The working paper notes that this is because cryptocurrencies are more volatile than traditional asset classes and do not fit into the asset class risk categories outlined in the standardized initial margin model (SIMM).

JPMorgan estimates the Bitcoin production cost has dropped to $77,000 due to recent declines in network hash rate and mining difficulty. The analyst team states that the decrease in mining difficulty alleviates pressure on remaining miners, but the rebound in hash rate indicates that difficulty and costs may rise during the next adjustment. JPMorgan remains optimistic about the crypto market in 2026, expecting institutional capital inflows to rebound, and the passage of the CLARITY bill will promote this trend.

Bitcoin drops to around $66,000, with US Bitcoin ETFs experiencing outflows of over $3.2 billion in the past 30 days. Data released on Wednesday shows that the US labor market in 2026 started stronger than expected, with non-farm payrolls increasing by 130,000 in January, well above expectations, and the unemployment rate decreasing from 4.4% to 4.3%. The January CPI release on Friday will be the next key point, with expectations of a 0.3% increase in both overall and core CPI month-over-month.

ChainCatcher News: Federal Reserve Board Member Milan stated that monetary policy has been passively tightened.

The Federal Reserve's new report recommends treating cryptocurrencies as a separate asset class, highlighting their differences in volatility compared to traditional assets, proposing separate risk weights, and simulating market behavior through benchmark indices to support initial margin requirements for the derivatives market.

ChainCatcher News, according to Jinshi reports, CME “Federal Reserve Watch” shows that the probability of the Federal Reserve maintaining interest rates unchanged until March is 92.2%, and the probability of a 25 basis point rate cut is 7.8%. By April, the probability of a total 25 basis point rate cut is 25.3%, the probability of keeping rates unchanged is 73.1%, and the probability of a total 50 basis point cut is 1.6%. By June, the probability of a total 25 basis point rate cut is 49.9%.

After Kevin Warsh was nominated as the Chairman of the Federal Reserve, the market overreacted, believing he is a hawkish hardliner. However, Evercore ISI analyst Krishna Guha pointed out that Warsh is closer to a pragmatic conservative, supporting balance sheet reduction but not a sharp tightening, and emphasizing the sources of inflation and economic changes. The Federal Reserve's consensus decision-making remains central.

SBF posted on X stating that during Biden's era, companies are forced to relocate overseas, while Trump attracts companies back to the U.S. Democratic Party increases corporate taxes and tightens regulations, leading to capital outflows. Now, the U.S. Department of Justice is no longer prosecuting broadly, and the crypto market is gradually opening up to Americans.

Evercore ISI's Krishna Guhar believes that Kevin Walsh's tough stance on inflation has been exaggerated; Walsh is more of a pragmatic conservative who can distinguish between supply-driven and demand-driven inflation, and his policies may be more flexible. In a tense political environment, the Fed's consensus policy will still face pressure.

The crypto market faces extreme panic this week, with the Fear Index dropping to 9. The total market capitalization is $2.29 trillion, with major cryptocurrencies BTC and ETH remaining weak and consolidating. ETF funds continue to flow out, and the derivatives market is de-leveraging. Despite industry compliance and technological advancements, short-term market sentiment remains subdued. Investors should watch for support levels stabilizing and signs of capital inflow.

Malaysia's central bank has initiated three sandbox programs to test ringgit-pegged stablecoins for institutional payments. Collaborating with major banks, these pilots aim to enhance transaction efficiency while ensuring strict risk management. Successful trials could increase stablecoin adoption in Southeast Asia.

The Digital Asset Innovation Center of Bank Negara Malaysia launched three major projects this year to test the applications of the "Ringgit stablecoin" and "tokenized deposits." Participating institutions include Standard Chartered Bank, Maybank, and United Overseas Bank Group. The tests will be conducted in a controlled environment to assess their impact on financial stability, with plans to provide clear guidelines by the end of 2026.

Recently, China has once again tightened cryptocurrency regulations, banning the issuance of RMB-pegged stablecoins by overseas entities and cracking down on the development of Hong Kong as a digital asset hub. The market response has been tepid, with funds accelerating their withdrawal, and the crypto industry returning to a pragmatic development approach. The contradiction between capital controls and crypto innovation is becoming increasingly apparent.