New BTC All-Time High, Post-FOMC Dump & MSTR Added To The Nasdaq 100

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This Week’s Top Stories

“Breaking: MicroStrategy (MSTR) has been added to the Nasdaq 100 Index.” – Friday, 13 December 2024

• Last Friday after the bell, it was announced that MicroStrategy, alongside Palantir Technologies and Axon Enterprise, will be joining the Nasdaq 100 this coming Monday, December 23. The Nasdaq adjusts the composition of the Nasdaq 100 index annually.
• Companies selected for inclusion are primarily chosen based on market capitalization rankings as of the last trading day in November. The respective stocks must also meet eligibility requirements related to liquidity and the free float percentage of their shares.

“Bitcoin ETFs flip gold ETFs in assets under management. “ – Tuesday, 17 December 2024

• On Monday, Bitcoin ETFs surpassed gold ETFs for the first time in history, within the first year of the launch of the U.S. Bitcoin spot ETFs. The total assets under management (AUM) of all Bitcoin ETF products (spot, futures, leveraged) reached $129 billion, surpassing gold ETFs, which hold $128 billion in AUM as of Monday, December 16, 2024.
• Eric Balchunas noted that if you only consider spot ETF products, Bitcoin spot ETFs are sitting at $120 billion compared to $125 billion for gold. This is also historic, as Bitcoin products have been on the market for roughly one year.

“Fed lowers rates but sees fewer cuts next year due to stubbornly high inflation.” – Wednesday, 18 December 2024

• On Wednesday evening CET, the Federal Reserve announced an expected 25-basis-point interest rate cut to the 4.25–4.50 percent range. While this interest rate decision was no surprise to the market, the FOMC statement and the subsequent press conference by Fed Chair Jerome Powell caught the market off guard.
• The Fed’s interest rate projection for 2025 indicates that the forecast for rate cuts has been reduced from four to two for next year. Powell stated that future rate adjustments can be made more cautiously and emphasized that the path forward will depend on further progress in reducing inflation, which has remained stubbornly high in recent months.

A Quick Crypto Overview: Hawkish FOMC Triggered Sharp Selloff Across Risk Assets

Following the FOMC meeting and interest rate decision by the Federal Reserve on Wednesday evening CET, risk assets across the board experienced a sharp selloff. While there was already some risk-off price action beforehand, the selling really began during Jerome Powell’s press conference. The S&P 500 closed Wednesday down almost 3 percent, marking its worst day since August 5, 2024. The Nasdaq dropped 3.5 percent as well.

At the time of writing, Bitcoin is trading at $94,500, Ethereum at $3,250, and Solana at $181. It seems yesterday’s selloff might not have been the end, as most major cryptocurrencies are currently trading below yesterday’s lows.

The total cryptocurrency market capitalization has dropped 15 percent since hitting its new all-time high on Tuesday, currently sitting at $3.15 trillion, down from $3.73 trillion on Wednesday.

Looking back to December 2020, the total market capitalization also experienced a 13 percent correction just before Christmas, as shown in the chart below. History shows that such corrections are quite normal, even in bullish markets. Following December 2020, the total crypto market cap experienced a large increase in valuation over the subsequent months. While history does not repeat itself, it’s important to put such movements into perspective, and looking at the past can certainly help in doing so.

Chart of the Week: A Couple Rough Weeks For Memecoins

While we have mentioned memecoins various times during periods of positive price movements, over the last couple of weeks, memecoin traders have gone through a period of muted price action, with some of the most popular memecoins taking a significant hit this week during the broader market selloff.

The VanEck Memecoin Index highlights the price action of some of the largest memecoins by market capitalization. As is the case with everything else, the smaller coins took an even larger hit.

WIF is down 61 percent from its November high, PEPE is down 45 percent from its December high, and even Dogecoin is down 41 percent from its high on December 8, just a couple of weeks ago.

What’s Happening On-Chain? PENGU Launched & Deutsche Bank with Rollup on Ethereum

In the world of NFTs, Pudgy Penguins launched their highly anticipated PENGU memecoin on Tuesday this week. PENGU reached a total market capitalization of roughly $4.5 billion within the first few minutes of trading but has since been correcting to the downside alongside the crypto market, now sitting at a market cap of $1.5 billion at the time of writing.

On the institutional side, Deutsche Bank announced plans to deploy an L2 solution on SKsync’s Elastic Chain stack to address compliance challenges associated with using public blockchains in regulated finance. The L2 solution aims to improve transaction efficiency and ensure regulatory safeguards, integrating directly with Ethereum. It will be a permissioned L2 network that prioritizes regulatory compliance over the kinds of financial degeneracy replete elsewhere on public blockchains.

If you read our Crypto Outlook 2025, you know what this means: we nailed our first prediction, as we foresaw that a financial giant would launch an institutional rollup on Ethereum.

Digital Asset Fund Flows: Large Inflows Last Week & First Net Outflow Day Of The Month

While digital asset investment products saw a continuation of inflows last week, with a total of $3.2 billion flowing into digital asset products, the U.S. Bitcoin and Ethereum spot ETFs experienced their first net outflow day of the month yesterday, with $670 million flowing out of the Bitcoin spot ETFs and $60 million flowing out of the Ether products.

As we mentioned earlier, the Bitcoin ETFs have overtaken gold ETFs in terms of assets under management, and 2024 has been a tremendous year for the digital asset space in terms of institutional adoption. While we know there will be hiccups along the way, such as unexpected hawkishness by the U.S. Fed, we can look back on a very successful year. The outlook remains bright, as we have outlined in our Crypto Outlook 2025, which you can read here.

Market Sentiment: Crypto Markets in Greed, Stock Market in Extreme Fear

The crypto fear and greed index is currently sitting at 74, in greed territory. While the funding rates for the major cryptocurrencies have been muted since the December 9 selloff and liquidation event, the index shows that there could still be some pain left in the coming days or weeks. This could mean more downward price action but might also hint at a boring, sideways bottom-finding process for the crypto market.

The stock market, on the other hand, is already in extreme fear territory, as the CNN index suggests. The last time the index was this low was on August 5. The stock market thereafter found its bottom and continued to trade to the upside.

Other Relevant News

• Japanese lawmaker Satoshi Hamada proposed that the government set up a national bitcoin reserve and convert part of its foreign exchange reserves into bitcoin. – Link
• Thaksin Shinawatra, the former prime minister of Thailand and the father of the current prime minister, said that his friends believe that Bitcoin will reach $850’000, and the Thai people should learn and stay informed. – Link
• MicroStrategy has acquired 15’350 BTC for $1.5 billion at $100’386 per bitcoin. – Link
• Ripple launched the U.S. dollar stablecoin RLUSD on December 17. – Link
• Bybit announced that it will terminate withdrawal and custody services in France starting January 8, 2025. – Link
• MetaMask announced on December 19 that it would launch a limited pilot program for MetaMask Card in the United States, allowing users to spend their crypto assets through MetaMask Mastercards. – Link
• Grayscale announced that it has opened Grayscale SUI Trust to qualified investors. – Link

Looking Ahead: Enjoy Christmas and Come Back in January

The current price action before Christmas suggests that a Christmas rally is likely out of the picture. Such large moves to the downside often need time to play out, and it is likely that the process of building a bottom will take a couple of days, if not weeks.

While the situation now seems dark, the funding rates suggest that there is not a lot of leverage in the market anymore, as recent liquidation events show large liquidations, including the largest altcoin liquidation event since 2021, which occurred on December 9 last week.

When looking at the history of the crypto market, the situation in December 2020 painted a similar picture as now, with the total crypto market cap decreasing by almost 13 percent just before Christmas, before the crypto market really took off in January of 2021.

Time will tell how this year’s bull market will continue. If you want to hear our thoughts on the next year, we highly recommend reading our Crypto Outlook 2025, here.

Below, you can find some of the key data releases and events to watch out for next week.

Tuesday, 24 December 2024

• Christmas, early market close in the U.S.

Wednesday, 25 December 2024

• Christmas Day, U.S. markets are closed

Thursday, 26 December 2024

• U.S. – Markets are open
• U.S. – Initial Jobless Claims
• Japan – Unemployment Rate