Weekly Market Recap: Crypto Milestones, Macro Resilience, and Investment Opportunities
Crypto Developments
Ripple's $XRP surpassed $2, flipping Solana and USDT to become the third-largest cryptocurrency by market capitalization. Spot-based Ethereum ETFs saw record inflows, outpacing Bitcoin ETFs for the week. Meanwhile, Michael Saylor met with Microsoft’s board to discuss Bitcoin adoption.
Hong Kong proposed tax exemptions on crypto gains for private equity funds, hedge funds, and high-net-worth investment vehicles. Morocco reversed its 2017 ban on cryptocurrencies, the UK announced plans to regulate crypto by 2026, and Brazil's Chamber of Deputies introduced a bill to establish a Bitcoin reserve.
The SEC filed for the “Bitwise 10 Crypto Index ETF,” covering BTC, ETH, SOL, XRP, ADA, AVAX, LINK, BCH, DOT, and UNI. President-elect Trump’s team is reportedly considering Paul Atkins, a pro-crypto former SEC commissioner, as a potential replacement for Gary Gensler as SEC Chair.
In DeFi, Uniswap recorded its highest-ever monthly trading volume of $38 billion across Ethereum Layer 2 platforms like Base, Arbitrum, and Polygon, signaling renewed demand.
Key Macro and Market Trends
BTCUSD: Bitcoin showed resilience, pushing towards highs near $97,000 after a brief dip. Strong real-money buying interest has been noted, with possible involvement from corporates, institutions, and sovereign entities. El Salvador’s Bitcoin holdings have reached a valuation of $500 million, while Bhutan’s holdings, at $1.1 billion, represent one-third of its GDP.
Technically, a pullback to $73,000 is possible, though significant spot buying above $90,000 might limit downside risk. Broader risks include geopolitical tensions in the Middle East and Ukraine, which could escalate market volatility.
ETHBTC: Ethereum rebounded, hinting at mean reversion in the ETH/BTC ratio. With Bitcoin’s dominance normalizing, Ethereum's USD value could target $3,950. Nonetheless, Bitcoin remains favored by institutional and sovereign buyers, likely attracting a significant portion of retirement fund allocations in the coming years.
Trading Desk Insights
Spot Markets: Bitcoin consolidated between $90,000 and $97,000, with profit-taking dominating trading activity. Altcoins like NEAR, ENA, HBAR, and CORE saw increased buying, while selling pressure weighed on INJ, ETH, and AVAX. The desk emphasized its commitment to seamless T+0 settlement and competitive rates across major cryptocurrencies and altcoins.
Derivatives: The BTC-ETH implied volatility spread narrowed but remains elevated. A suggested trade involved a BTC binary call option with a $22 premium, offering a potential 4.54x return if Bitcoin reaches $110,000 by December 27.
Economic Highlights
U.S. Economy: Data reinforced expectations of a resilient U.S. economy. GDP growth for Q4 is projected at 3.3%, supported by strong consumer spending, robust labor markets, and expanding service sectors. Wage growth has consistently outpaced inflation, bolstering consumer confidence. Manufacturing, while lagging, showed signs of stabilization.
Macro Overview: The likelihood of a 25-basis-point rate cut in December increased to 65%, as U.S. economic indicators showed robust growth. Gold held above trendline support, while the DXY index remained range-bound. Nonfarm payroll data outperformed expectations, bolstering sentiment for a U.S. economic "soft landing."
International Developments:
#1. Australia’s October CPI rose 2.1% YoY, below forecasts but aligned with the Reserve Bank’s target.
#2. The Bank of Japan remains undecided on rate hikes, with futures pricing a 35% likelihood.
#3. France’s political instability led to wider OAT/Bund spreads, reflecting elevated risk premiums.
Investment Strategies
Equities: U.S. large- and mid-cap stocks remain attractive, with diversification across growth and value sectors recommended. Mega-cap technology continues to lead but sector rotation is expected to drive future gains.
Fixed Income: Short-duration bonds are favorable in the current environment, though intermediate maturities offer opportunities to lock in higher yields. The potential for rate cuts supports gradual deployment of excess cash into strategic allocations in bonds and equities.
Key Takeaways
#1. The U.S. economy remains on track for a soft landing, with no immediate recession risks.
#2. Wage growth, low unemployment, and consumer spending underpin economic strength.
#3. Manufacturing could stabilize in 2025, complementing a robust services sector.
#4. Policy uncertainty and market volatility may create opportunities for investors, particularly during pullbacks.
Upcoming Events
Key economic data to watch includes Australian retail sales (Monday), U.S. ISM manufacturing (Monday), and nonfarm payrolls (Friday), alongside GDP figures from Australia (Wednesday) and U.S. average hourly earnings (Friday).