MARKETS week ahead: December 18 – 24
Last week in the news
Both the FED and the ECB left the rates unchanged during the previous week. The US Treasury yields slipped further in expectation of rate cuts, while US equities finished another week in green. The USD lost some in value, while Gold gained on a weaker dollar. The crypto market eased during the previous week, where Bitcoin slipped toward $ 42K, from 45K week before.
The FOMC members left rates unchanged on December`s meeting. The rhetoric of Fed Chair Powell in after-the-meeting statement was finally aligned with the market, and estimation that there will be no more rate hikes. The Fed acknowledged that the inflation has eased, without a significant drop in employment. However, the FOMC estimate is that the inflation is still high, and that further effort is needed in order to bring it down to the targeted 2%. The economic activity in the US has slowed down substantially in Q4, so the Fed is expecting GDP growth rate to reach 2.5% in 2023, as a result of strong consumer demand. FOMC members are projecting that the inflation will clearly reach level of 2% in year 2026. Although Powell did not exclude possibility for further rate increases if necessary, the FOMC members continue to perceive Fed's funds rate at 4.6% at the end of 2024, and its further decline during the consecutive years. As per CME Group`s FedWatch tool, the market is currently pricing a 25 bps rate cut in March, with expectations for current Fed funds rate to be lower by around 150 bps by the end of year 2024.
The European Central Bank also held a policy meeting during the previous week, leaving the rates unchanged. Although their US colleagues are at least mentioning expectations of rate cuts in 2024, the ECB diverged from such a scenario, mentioning that the rates will stay sufficiently higher for as long as necessary. The most recent inflation reading in November for the Euro Zone, shows that the inflation has eased to the level of 2.4% on a yearly basis. Still, considering Europe’s dependence on energy, analysts are noting the possibility for prices to swiftly move to higher grounds. On the other side are economists, which are projecting first ECB`s rate cut in June 2024.
During the year 2022 Coinbase submitted a request to the Securities and Exchange Commission with a petition for the establishment of the crypto regulation. The SEC finally provided an answer to the petition noting that there is no need for such a course of action as “the existing securities regime appropriately governs crypto asset securities”.
The US Financial Stability Oversight Council met during the previous week, issuing a report on risks coming from the crypto assets. The same report was issued also as of the end of the previous year, while the latest report did not add almost anything new to last year`s topics. The risks that should be overseen and regulated continues to be the volatility of the crypto assets, a high amount of leverage, the cyber security and risks for investors and potentially financial markets.
Crypto market cap
The Fed has finally aligned with the market. Although Fed is still not excluding the option of further increase of interest rates, still, Powell noted that majority of FOMC members are perceiving rates at 4.6% as of the end of the next year. Such rhetoric stands in line with the market expectation on further easing of inflation and Fed`s cut of interest rates by 25 basis points in March 2024. Market reacted positively to Powell's speech, and brought US equities to higher grounds, while Treasury yields fell sharply on the news. Still, the crypto market reacted in a negative manner to news that the SEC does not have plans to introduce new regulation which will cover specifically crypto assets. Instead, SEC Chair Gensler is of the opinion that current regulation in the US is sufficient to cover all regulatory aspects of crypto currencies.
Total crypto market capitalization modestly dropped during the previous week by 2,4%, losing around 39B. On a positive side that daily trading volumes remained at higher level, moving around 94B on a daily basis, a bit lower from 121B traded a week before. Total crypto market capitalization increase since the beginning of this year currently stands at 107%, where it has added total 810B to the market cap.
A drop in total market capitalization during the previous week was mostly driven by major coins, BTC and ETH. Bitcoin dropped around 3.4%, losing $ 29B in market capitalization. ETH lagged a bit behind the BTC, with a drop in value of 4.6% or above 13B. XRP was also in a group of significant losers with a weekly drop of more than 9% or 3.5B. Other altcoins were mostly on a weekly losing side, except a few which managed to finish the week in green. Among higher losers on a weekly basis were, ZCash, Link and Bitcoin Cash which dropped by more than 10% each. Algorand and Maker decreased their value by more than 9%. Litecoin, Stellar and EOS were down by more than 7%. Among several coins which managed to gain during the previous week were OMG Network, with a gain around 10% in value, while Filecoin increased its market cap by almost 3.5% w/w.
There has been some increased activity with circulating coins, where Polygon managed to add 2.9% of new coins into circulation and was followed by LINK, which made an increase of 2.0%. Within a group of higher weekly gainers of coins are Uniswap, with an increase of 1.7% and Filecoin whose coins on the market surged by 0.8%. For several weeks Tether continues to build the number of coins on the market, increasing it by an additional 0.6% during the previous week.
Crypto futures market
After three weeks of strong push to the upside, crypto futures eased during the previous week, in line with developments on the spot market. However, it is important to note that long term ones are managing to hold at elevated levels, despite the modest drop.
BTC short term futures were traded more than 5% lower from the week before. Futures maturing in December this year were last traded down by 5.73% on a weekly basis, still ending the week at level of $42.450. Longer term futures dropped a bit less, around 4.5%, with December 2024 ending the week at price $46.500, which is 5.18% lower from the week before. March 2025 is still holding above the 47K level.
ETH short term futures dropped by more than 5%, while longer term once had a drop of more than 2%. December 2024 closed the week at $2.257, or 5.84% lower on a weekly basis. Futures maturing in December 2024 were down by 2.3%, closing the week at level of $2.433. March 2025 is still holding above 2.4K level, despite the drop of 2.26% w/w.
Both the FED and the ECB left the rates unchanged during the previous week. The US Treasury yields slipped further in expectation of rate cuts, while US equities finished another week in green. The USD lost some in value, while Gold gained on a weaker dollar. The crypto market eased during the previous week, where Bitcoin slipped toward $ 42K, from 45K week before.
The FOMC members left rates unchanged on December`s meeting. The rhetoric of Fed Chair Powell in after-the-meeting statement was finally aligned with the market, and estimation that there will be no more rate hikes. The Fed acknowledged that the inflation has eased, without a significant drop in employment. However, the FOMC estimate is that the inflation is still high, and that further effort is needed in order to bring it down to the targeted 2%. The economic activity in the US has slowed down substantially in Q4, so the Fed is expecting GDP growth rate to reach 2.5% in 2023, as a result of strong consumer demand. FOMC members are projecting that the inflation will clearly reach level of 2% in year 2026. Although Powell did not exclude possibility for further rate increases if necessary, the FOMC members continue to perceive Fed's funds rate at 4.6% at the end of 2024, and its further decline during the consecutive years. As per CME Group`s FedWatch tool, the market is currently pricing a 25 bps rate cut in March, with expectations for current Fed funds rate to be lower by around 150 bps by the end of year 2024.
The European Central Bank also held a policy meeting during the previous week, leaving the rates unchanged. Although their US colleagues are at least mentioning expectations of rate cuts in 2024, the ECB diverged from such a scenario, mentioning that the rates will stay sufficiently higher for as long as necessary. The most recent inflation reading in November for the Euro Zone, shows that the inflation has eased to the level of 2.4% on a yearly basis. Still, considering Europe’s dependence on energy, analysts are noting the possibility for prices to swiftly move to higher grounds. On the other side are economists, which are projecting first ECB`s rate cut in June 2024.
During the year 2022 Coinbase submitted a request to the Securities and Exchange Commission with a petition for the establishment of the crypto regulation. The SEC finally provided an answer to the petition noting that there is no need for such a course of action as “the existing securities regime appropriately governs crypto asset securities”.
The US Financial Stability Oversight Council met during the previous week, issuing a report on risks coming from the crypto assets. The same report was issued also as of the end of the previous year, while the latest report did not add almost anything new to last year`s topics. The risks that should be overseen and regulated continues to be the volatility of the crypto assets, a high amount of leverage, the cyber security and risks for investors and potentially financial markets.
Crypto market cap
The Fed has finally aligned with the market. Although Fed is still not excluding the option of further increase of interest rates, still, Powell noted that majority of FOMC members are perceiving rates at 4.6% as of the end of the next year. Such rhetoric stands in line with the market expectation on further easing of inflation and Fed`s cut of interest rates by 25 basis points in March 2024. Market reacted positively to Powell's speech, and brought US equities to higher grounds, while Treasury yields fell sharply on the news. Still, the crypto market reacted in a negative manner to news that the SEC does not have plans to introduce new regulation which will cover specifically crypto assets. Instead, SEC Chair Gensler is of the opinion that current regulation in the US is sufficient to cover all regulatory aspects of crypto currencies.
Total crypto market capitalization modestly dropped during the previous week by 2,4%, losing around 39B. On a positive side that daily trading volumes remained at higher level, moving around 94B on a daily basis, a bit lower from 121B traded a week before. Total crypto market capitalization increase since the beginning of this year currently stands at 107%, where it has added total 810B to the market cap.
A drop in total market capitalization during the previous week was mostly driven by major coins, BTC and ETH. Bitcoin dropped around 3.4%, losing $ 29B in market capitalization. ETH lagged a bit behind the BTC, with a drop in value of 4.6% or above 13B. XRP was also in a group of significant losers with a weekly drop of more than 9% or 3.5B. Other altcoins were mostly on a weekly losing side, except a few which managed to finish the week in green. Among higher losers on a weekly basis were, ZCash, Link and Bitcoin Cash which dropped by more than 10% each. Algorand and Maker decreased their value by more than 9%. Litecoin, Stellar and EOS were down by more than 7%. Among several coins which managed to gain during the previous week were OMG Network, with a gain around 10% in value, while Filecoin increased its market cap by almost 3.5% w/w.
There has been some increased activity with circulating coins, where Polygon managed to add 2.9% of new coins into circulation and was followed by LINK, which made an increase of 2.0%. Within a group of higher weekly gainers of coins are Uniswap, with an increase of 1.7% and Filecoin whose coins on the market surged by 0.8%. For several weeks Tether continues to build the number of coins on the market, increasing it by an additional 0.6% during the previous week.
Crypto futures market
After three weeks of strong push to the upside, crypto futures eased during the previous week, in line with developments on the spot market. However, it is important to note that long term ones are managing to hold at elevated levels, despite the modest drop.
BTC short term futures were traded more than 5% lower from the week before. Futures maturing in December this year were last traded down by 5.73% on a weekly basis, still ending the week at level of $42.450. Longer term futures dropped a bit less, around 4.5%, with December 2024 ending the week at price $46.500, which is 5.18% lower from the week before. March 2025 is still holding above the 47K level.
ETH short term futures dropped by more than 5%, while longer term once had a drop of more than 2%. December 2024 closed the week at $2.257, or 5.84% lower on a weekly basis. Futures maturing in December 2024 were down by 2.3%, closing the week at level of $2.433. March 2025 is still holding above 2.4K level, despite the drop of 2.26% w/w.
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