Crypto Daybook Americas: Fed Dashes Quiet Christmas Hopes
12/19/2024 21:37
Your day-ahead look for Dec. 19, 2024
If you were looking forward to a quiet Christmas away from your computer, expecting bitcoin to rise steadily through the year-end, forget it. Looks like the Fed has dashed those plans.
First of all, Chair Jerome Powell's comments distancing the central bank from President-elect Donald Trump's potential creation of a strategic bitcoin reserve mean traders hoping for one will need some solid reassurance. Many are likely to sit on the sidelines until the new administration makes good on its promises. That will weaken the market's bid side until Trump takes office on Jan. 20.
The second concern revolves around rate projections. Fed officials are anticipating just two rate cuts in 2025, saying they see the benchmark borrowing cost dropping to 3.9% in 12 months' time from the current 4.25%-4.5% range. That is a 50 basis-point upward revision from an earlier forecast of 3.40%.
The market could quickly question a cut to below 4% should incoming data point to sticky inflation and/or labor market strength. This situation has led to concerns that long-end rates, including the 10-year yield, might be too low, according to ING.
Interestingly, the 10-year yield has just broken out of a 14-month downward trend that characterized bitcoin's bull run to over $100,000 from $30,000. A further rise in yields could bolster the already strong while triggering a broader decline in risk assets, including BTC. Bitcoin dipped below $100,000 overnight and dragged the broader market down along with it.
This yield breakout poses particular concerns for ether, often viewed as an "internet bond" with an annualized staking yield of around 3%, weakening the case for a sustained bounce in the ETH-BTC ratio. The continued decline in risk-sensitive assets like the Australian and New Zealand dollars and emerging-market currencies, partly reflecting worries about the Chinese economy, also signals caution.
Still, pullbacks of 20% or more are typical in crypto bull markets, and the overall outlook remains positive.
"Looking ahead, heightened volatility is on the horizon as markets adjust to the expectations surrounding Donald Trump’s presidency. Although short-term turbulence may occur, the long-term outlook for Bitcoin and Ether remains bullish," said Valentin Fournier, an analyst at BRN.
In this uncertain climate, traders might seek refuge in high-yielding crypto assets like Ethena's USDe, which offers returns of around 12%. Pseudonymous analyst OxJeff suggests these pullbacks could present a golden opportunity to invest in tokens linked to AI-powered systems in the blockchain space. Candidates to watch include AI16Z, ZEREBRO, VIRTUAL, MODE, and DOLOS. Stay alert!
Crypto:
Dec. 19, 12:00 p.m.: Coinbase is delisting BiT Global’s wrapped Bitcoin (wBTC) token, following a decision it announced on Nov. 19 and Wednesday's court ruling.
Dec. 23: MicroStrategy (MSTR) stock will be added to the Nasdaq-100 Index before the market opens, making it part of funds like the Invesco QQQ Trust ETF that track the index.
Dec. 25, 10:00 p.m.: Binance plans to delist the WazirX (WRX) token. Two other tokens being delisted at the same time are Kaon (AKRO) and Bluzelle (BLZ).
Dec. 30: The European Union's Markets in Crypto-Assets (MiCA) Regulation becomes fully effective. The stablecoin provisions came into effect on June 30.
Dec. 31: Crypto exchange Gemini is shutting its operations in Canada. In an email sent out on Sept. 30, it said all customer accounts in Canada would be closed at the end of the year.
Jan 3: Bitcoin Genesis Day. The 16th anniversary of the mining of Bitcoin's first block, or Genesis Block, by the blockchain's pseudonymous inventor Satoshi Nakamoto. This came roughly two months after he published the Bitcoin white paper in an online cryptography mailing list.
Macro
Dec. 19, 7:00 a.m.: The Monetary Policy Committee (MPC) of the Bank of England (BoE) announces its interest-rate decision. Bank Rate Est. 4.75% vs Prev. 4.75%.
Dec. 19, 8:30 a.m.: The U.S. Bureau of Economic Analysis (BEA) releases third-quarter GDP (final).
GDP Growth Rate QoQ Final Est. 2.8% vs Prev. 3.0%.
GDP Price Index QoQ Final Est. 1.9% vs Prev. 2.5%.
Dec. 20, 8:30 a.m.: The U.S. Bureau of Economic Analysis (BEA) releases November's Personal Income and Outlays report.
PCE Price Index YoY Est. 2.5% vs Prev. 2.3%.
Core PCE Price Index YoY Est. 2.9% vs Prev. 2.8%.
Dec. 24, 1:00 p.m. The Fed releases November’s H.6 (Money Stock Measures) report. Money Supply M2 Prev. $23.31T.
Governance votes & calls
Lido floats Aragon Vote 182, including proposed limits, treasury swaps (Lido Stonks) limit, and reward address change. The vote is live.
Airdrops
Tron memecoin SUNDOG to airdrop TRX holders on Trust Wallet, based on holdings.
Jan. 13-24: Swiss WEB3FEST Winter Edition 2025 (Zug, Zurich, St. Moritz, Davos)
Jan. 17: Unchained: Blockchain Business Forum 2025 (Los Angeles)
Jan. 18: BitcoinDay (Naples, Florida)
Jan. 20-24: World Economic Forum Annual Meeting (Davos-Klosters, Switzerland)
Jan. 21: Frankfurt Tokenization Conference 2025
Jan 30-31: Plan B Forum (San Salvador, El Salvador)
Feb. 3: Digital Assets Forum (London)
Feb. 18-20: Consensus Hong Kong
By Shaurya Malwa Memecoins and AI tokens lead Binance users' trading activity.
AI tokens are predicted to be the stars of 2025, with nearly 24% of respondents in a survey of 27,000 Binance users saying they'll lead market growth next year. Memecoins are not far behind, with 19% saying they expect them to rise next year. The tokens are fun, popular and currently the most held crypto assets, with 16% of Binance users owning them. That's even more than bitcoin, at 14%.
The survey found that 45% of participants were new to the scene, joining only in 2024 and saying they were "still learning" their way across the market. Over 40% have been around for one to five years. Most aren't betting the farm on crypto, with 44% of respondents having less than 10% of their money exposed to it. Trading, however, is common, with almost a third trading daily.
It is not all fun and games, though. Many respondents said they expect to see more maturity and real-world relevance in the crypto industry in the coming year. A notable 19% of the sample said they expect increased crypto regulations over the next 12 months, and 16% anticipate greater participation from traditional financial institutions and institutional investors. In addition, 17% foresee wider implementation of blockchain technology in real-world applications.
The panic from the overnight sell-off has faded, and BTC and ETH calls expiring on Dec. 27 and beyond are back to trading at a premium relative to puts. However, the overall bias is still considerably weaker than it was earlier this month.
BTC flows have been mixed, with large bull call spread, involving $105K and $100K strikes alongside a long straddle at $100K strike options expiring on Jan. 31 and notable buying in $102K and $100K puts. (Source: Amberdata)
A large put spread involving strikes $3.7K and $3.4K has been lifted
Perpetual futures open interest has dropped in most major coins, including ETH, in the last 24 hours, a sign the decline has been led by the unwinding of bullish bets rather than fresh longs. BTC's open interest has increased 3% in 24 hours, with cumulative volume delta indicating dominance of sellers.
BTC is up 1.5% from 4 p.m. ET Wednesday to $102,532.08 (24hrs: -2.59%%)
ETH is up 0.49% at $3,711.07 (24hrs: -4.64%)
CoinDesk 20 is up 1% to 3,683.74 (24hrs: -4.39%)
Ether staking yield is down 6 bps to 3.12%
BTC funding rate is at 0.01% (10.95% annualized) on Binance
DXY is down 0.11% at 107.91
Gold is unchanged at $2,638.3/oz
Silver is down 1.12% to $30.07/oz
Nikkei 225 closed -0.69% at 38,813.58
Hang Seng closed -0.56% at 19,752.51
FTSE is down 1.37% at 8,086.92
Euro Stoxx 50 is down 1.69% at 4,873.36
DJIA closed on Wednesday -2.58% to 42,326.87
S&P 500 closed -2.95% at 5,872.16
Nasdaq closed -3.56% at 19,392.69
S&P/TSX Composite Index closed -2.24% at 24,557.00
S&P 40 Latin America closed -4.44% at 2,179.31
U.S. 10-year Treasury was is up 0.02% at 4.54%
E-mini S&P 500 futures are up 0.43% to 5,897.5
E-mini Nasdaq-100 futures are up 1.66% to 21,570.75
E-mini Dow Jones Industrial Average Index futures are down 0.39% at 42,486.00
BTC Dominance: 58.33% (24hrs: +0.14%)
Ethereum to bitcoin ratio: 0.036 (24hrs: -0.14%)
Hashrate (seven-day moving average): 784 EH/s
Hashprice (spot): $60.55
Total Fees: $1.4M
CME Futures Open Interest: 212,620 BTC
BTC priced in gold: 38.7 oz
BTC vs gold market cap: 11.02%
Bitcoin sitting in over-the-counter desk balances: 409,600 BTC
BTC's daily chart shows the broader outlook remains constructive despite Wednesday's drop, as 50-, 100- and 200-day simple moving averages remain stacked one above the other, trending north.
The confluence of the 50-day SMA and Dec. 5's swing low between $90,000 and $91,500 is the key area to watch out in case the pullback deepens.
MicroStrategy (MSTR): closed on Wednesday at $349.64 (-9.52%), up 4.95% at $366.95 in pre-market.
Coinbase Global (COIN): closed at $279.86 (-10.2%), up 3.42% at $289.44 in pre-market.
Galaxy Digital Holdings (GLXY): closed at C$26.31 (-8.23%)
MARA Holdings (MARA): closed at $21.61 (-12.15%), up 3.66% at $22.40 in pre-market.
Riot Platforms (RIOT): closed at $11.95 (-14.46%), up 3.93% at $12.42 in pre-market.
Core Scientific (CORZ): closed at $14.45 (-9.86%), up 1.87% at $14.72 in pre-market.
CleanSpark (CLSK): closed at $11.32 (-8.41%), up 4.95% at $11.88 in pre-market.
CoinShares Valkyrie Bitcoin Miners ETF (WGMI): closed at $25.89 (-10.85%), up 6.14% at $27.48 in pre-market.
Semler Scientific (SMLR): closed at $65.02 (-12.99%), up 7.64% at $69.99 in pre-market.
Exodus Movement (EXOD): closed at $53.10 (+36.3%), unchanged in pre-market.
Spot BTC ETFs:
Daily net inflow: $275.3 million
Cumulative net inflows: $36.98 billion
Total BTC holdings ~ 1.141 million.
Spot ETH ETFs
Daily net inflow: $2.5 million
Cumulative net inflows: $2.46 billion
Total ETH holdings ~ 3.563 million.
Source: Farside Investors
The yield on the U.S. 10-year Treasury note looks to have broken out above a 14-month channel.
More gains might weigh over risk assets.
Hawkish Fed Has Bitcoin Market Feeling Most Fearful in 3 Months (CoinDesk): Demand for bitcoin weekly put options surged Wednesday, with traders pricing in greater downside protection costs after the Fed signaled caution, driving puts to their highest relative value since September.
Bitcoin's Nosedive to Under $100K Shaves $700M Crypto Longs, XRP Drops 5% (CoinDesk): Bitcoin’s crash below $100,000 following yesterday’s FOMC press conference triggered over $700 million in liquidations across crypto futures, with XRP and DOGE derivatives hit particularly hard.
How IMF’s $1.4B Deal With El Salvador, If Approved, Could Jeopardize Bitcoin’s Role as Legal Tender (CryptoGlobe): The IMF’s staff-level loan agreement with El Salvador, if approved, would sharply reduce bitcoin's role in the economy by ending mandatory business acceptance, requiring taxes to be paid in dollars and curbing government involvement.
Trump Says He Opposes Stopgap Government Funding Bill (Bloomberg): President-elect Trump opposed a proposed federal funding bill on Wednesday, demanding debt ceiling provisions and threatening Republicans who disagree. His stance heightens the risk of a government shutdown as the funding deadline approaches.
The Next Big Fed Debate: Has the Era of Very Low Rates Ended? (The Wall Street Journal): Fed Chair Jerome Powell signaled Wednesday that future rate cuts may slow amid uncertainty over the neutral rate, now estimated higher post-pandemic, with some Fed officials seeing it near current interest levels.
Bank of Japan Holds Rates at 0.25%, Yen Weakens to One-Month Low (CNBC): The BOJ’s split 8-1 decision to hold rates at 0.25% aligns with a poll where 13 of 24 economists expected no change in December but anticipated a rate hike in January.