Overview

Crypto Daybook Americas will pause for two weeks beginning Monday, returning on January 7 with insights from the overnight market and upcoming events. We wish everyone a joyful holiday season!

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Current Market Situation

Keeping an eye on developments in the Far East is crucial. Recently, China's one-year government bond yield dropped below 1% for the first time since the Great Financial Crisis, indicating serious economic challenges. In addition, the 10-year benchmark yield fell to 1.7%.

Economic Implications

This situation raises concerns about risk assets, including Bitcoin, which has seen a decline overnight. The continued drop in yields suggests that China’s government might need to implement more aggressive stimulus measures than previously observed this year.

Jeroen Blokland from the Blokland Smart Multi-Asset Fund remarked, "This indicates that China's economic troubles are far from over, and the government will do what aging economies often do: increase spending and pursue higher debt levels while lowering interest rates."

Global Effects

The economic situation in China could affect global inflation metrics, including those in the U.S., as deflationary pressures may cap PPI and CPI growth worldwide. BNP Paribas highlighted that China’s economic stance has contributed to a decline in core inflation across the eurozone and the U.S. by approximately 0.1 percentage points.

Fed Concerns

Powell's recent alarm regarding interest rate levels has raised questions about his outlook for 2025 as many believe there might be additional rate cuts beyond the two suggested. Dan Tapiero, CEO of 10T Holdings, stated, "Fed concerns on inflation are misguided. Interest rates are still too high in the U.S., and liquidity is about to increase, driving Bitcoin higher."

Markets Response

Currently, the markets seem to be overlooking this optimistic perspective. Bitcoin has slipped below $95,000, while Ethereum has dropped to $3,200. All major cryptocurrencies are witnessing declines. Investors should remain vigilant as upcoming economic indicators might sway market sentiment.

Key Upcoming Events

Crypto:

• Dec. 23: MicroStrategy to be added to Nasdaq-100 Index.
• Dec. 25: Binance plans to delist several tokens, including the WazirX token.
• Dec. 30: MiCA regulation comes fully into effect within the EU.
• Jan. 3: Celebrating Bitcoin Genesis Day.

Macro:

• Dec. 20: PCE Price Index report by the U.S. Bureau of Economic Analysis.

Stay alert for market reactions!