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Welcome to crypto, ladies and gentlemen. And to all crypto natives and degens, a warm welcome home. Like an overdue hangover from Bitcoin's $100K celebrations, the crypto industry has returned to its true form to bring us a very familiar FUD-induced migraine.
Bitcoin dropped below $100,000 for the first time in weeks, sinking by over 5%, marking an 8% decline from recent highs, although the world's leading crypto has since recovered slightly.
Altcoins fared even worse, with Ethereum and Solana losing over 4%, and Dogecoin down 7%. From their respective highs, BTC, ETH, SOL, XRP, DOGE and HYPE are down -8%, -11%, -23%, -13%, -23% and -17%.
Overall, the global crypto market cap fell to as low as $3.42 trillion – a 7.18% decline in 24 hours, per Coinmarketcap data.
Much of this swing can be attributed to our friends at the Federal Reserve. Its latest decision to lower its policy rate to the 4.25-4.5% range also sent shockwaves through financial markets, despite Fed Chair Jerome Powell's attempts at calming sentiments.
"I think we're in a good place, but I think from here it's a new phase and we're going to be cautious about further cuts," he said. The S&P500 closed the day 2.95% lower at 5,872.16 (−178.45), marking its worst single-day performance since 2020, and its worst "Fed day" since 2001.
But with all the negativity there must be some light at the end of the tunnel. Well, crypto ETF inflows have remained steady despite bearish sentiment. Bitcoin saw robust inflows of $275M, while Ethereum, though modest at $2.5M, displayed resilience under pressure.
Depending on your degree of degen, the rotation towards more "serious" tokens could be a good signal too. As BRN analyst Valentin Fournier explains, "The hardest-hit tokens were smaller altcoins, many of which have stagnated recently. This suggests a continued flight to quality, with investors favoring Bitcoin and Ethereum during times of uncertainty."
And strength in Bitcoin and Ethereum is only a positive for the industry, no matter what's fueling it.
Looking slightly ahead, things look even more optimistic. In case you forgot, Donald Trump is due to be sworn in as POTUS in January. This time, Trump 2.0 promises to bring a wave of positivity to the industry.
From a potential national Bitcoin reserve to axing crypto taxes to a rejuvenated Gensler-free SEC, Trump's Presidency is set to bring further prosperity to crypto holders.
Just this week, Ohio House Republican leader Derek Merrin unveiled HB 703 yesterday, titling the bill "Ohio Bitcoin Reserve Act." The bill aims to grant the state treasurer the authority to purchase Bitcoin as part of a broader asset allocation strategy.
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He also believes the Trump administration will establish a national Bitcoin reserve and that HB 703 could serve as a foundation for future legislative action.
And we haven't even begun to talk about the Elon Musk-led Department of Government Efficiency (DOGE). Along with former Republican presidential candidate Vivek Ramaswamy, Musk will steer the department to cut the fat.
The agency’s main goals involve streamlining government operations by removing redundant structures, cutting down on excessive spending, restructuring agencies, and eliminating areas of waste and fraud within the federal budget, which currently stands at $6.5 trillion. Its ultimate goal is to offer more government transparency and support entrepreneurship.
“Together, these two wonderful Americans will pave the way for my Administration to dismantle Government Bureaucracy, slash excess regulations, cut wasteful expenditures, and restructure Federal Agencies,” Trump said in a statement.
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So don't let this little dip scare you too much. 2025 has plenty in store for you. As Fournier foresees, "Despite short-term turbulence, the long-term outlook remains bullish. Maintaining heavy exposure to both Bitcoin and Ethereum continues to be the recommended strategy."
The Federal Reserve announced a 25 bps rate cut yesterday, as widely anticipated. However, chair Jerome Powell’s subsequent speech introduced a hawkish tone, cutting the outlook for 2025 rate reductions from four to just two.
— BRN (Blockhead Research Network) (@thebrn_co) December 19, 2024
Elsewhere
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Blockcast
In this episode, Takatoshi Shibayama sits down with CEO of Future DAO and Ethelo Decisions, Mathew Markman.
Blending Web3 with cutting-edge decision-making tools to empower communities and transform financial and governance systems, Markman has made significant strides in the Web3 space.
Previous episodes of Blockcast can be found on Podpage, with guests like Peter Hui (Moongate), Luca Prosperi (M^0), Charles Hoskinson (Cardano), Aneirin Flynn (Failsafe), and Yat Siu (Animoca Brands) on our most recent shows.
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