With the end of the dual-holiday period, U.S. stock indices opened with a rebound. On Friday, the Nasdaq rose by 1.3% during the session, the S&P 500 index rose by 0.9%, and the Dow Jones index rose by 0.56%. A key factor determining whether the Fed continues to reduce its balance sheet is that reserves in the U.S. banking system have fallen below $3 trillion to $2.89 trillion. Wall Street strategists believe the Fed's minimum comfortable reserve level is between $3 trillion and $3.25 trillion. A survey by the New York Fed shows that two-thirds of respondents expect the reduction of the balance sheet (QT) to end in the first or second quarter of 2025.
Returning to the topic:
The IRS has delayed the implementation of cryptocurrency tax reporting rules until December 31, 2025, giving brokers more time to adapt to different accounting methods in the face of legal and regulatory challenges. The regulation will take effect on January 1, 2025, requiring a first-in, first-out (FIFO) accounting method for cryptocurrency assets, unless a preferred method like highest-in, first-out (HIFO) or SpecID is chosen. Bloomberg's Marcus Ashworth and Mark Gilbert indicate that a key piece of information for 2025 is: it will be a rollercoaster ride, with the recent surge in BTC prices having at least one identifiable catalyst: hope that Trump will take a more lenient approach to cryptocurrency. This expectation is likely to be realized in the work of incoming SEC chief Paul Atkins, who is believed to have a friendlier attitude toward the crypto market than his predecessor, and the regulatory environment is almost certain to become less daunting. Security firm CertiK has released its (Hack3d: 2024 Annual Security Report). The report shows that total losses in the Web3.0 sector due to security incidents in 2024 exceeded $2.363 billion, representing a year-on-year increase of 31.61%. A total of 760 security incidents occurred throughout the year. On January 3, Trump's second son Eric Trump stated that he met Michael Saylor at Mar-a-Lago and said: "Two friends, one shared passion: BTC." THE INFORMATION reported that Morgan Stanley's E-Trade is exploring offering cryptocurrency trading.
On January 2, there was a net outflow of $247.8 million from the U.S. spot BTC ETF, with a net outflow of $330 million from BlackRock's BTC spot ETF, marking the highest net outflow record since the ETF's inception; the U.S. spot ETH ETF saw a net outflow of $77.5 million. The U.S. dollar index (DXY) touched up to 109, setting a new high since November 2022. Analyst Omkar Godbole indicated that BTC set a historic high of over $108,000 in December 2024, closing below $94,000 at the end of the month, primarily driven by the Fed's recent hawkish signals, rising U.S. Treasury yields, and a stronger dollar index. Nonetheless, analysts remain confident that the Fed will retract its recent hints of reducing interest rate cuts in 2025, ensuring the continued bullish trend for BTC and risk assets overall. Cointelegraph reported that analyst Ryan Lee stated that BlackRock's BTC ETF is expected to attract more institutions to adopt BTC in 2025 by simplifying investment channels for large investors. New ETF milestones and BlackRock's growing funds could push BTC to $200,000, but BTC's trajectory will be influenced by regulatory developments, market dynamics, and broader economic conditions. BTC has marked its 16th anniversary, as Satoshi Nakamoto recorded the headline of The Times on January 3, 2009, in the genesis block data: "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks."
The U.S. Securities and Exchange Commission (SEC) received a large number of BTC-related ETF filings for novel products by the end of 2024, including an ETF from ProShares that calculates S&P 500 index returns based on BTC, among others. BlackRock's ETF saw inflows of over $37 billion throughout the year, ranking third among all funds. Trump's stance will help further the development of the cryptocurrency sector. Strategist Todd Sohn states: When there is demand, Wall Street is always good at creating supply, the evolution of cryptocurrency ETFs: futures, spot, thematic, and now convertible. Nate Geraci, president of The ETF Store, outlines the top five predictions for cryptocurrency ETFs in 2025: a combination of spot BTC and ETH ETFs being launched, spot ETH ETF options, spot BTC and ETH ETFs achieving physical creation/redemption, spot ETH ETFs supporting staking, and spot SOL ETFs being approved. A Goldman Sachs report indicates that the Federal Reserve's forecast for interest rate cuts this year has been reduced from 100 basis points to 75 basis points. Core PCE inflation saw an annual increase of 2.5% from September to November last year, slightly higher than the 2.3% from the previous three months, but lower than the annual increase of 2.8%, still aligning with a continuous decline. A key factor determining whether the Fed continues to reduce its balance sheet is that reserves in the U.S. banking system have fallen below $3 trillion to $2.89 trillion, marking a new low since October 2020. Wall Street strategists believe the Fed's minimum comfortable reserve level is between $3 trillion and $3.25 trillion.
A survey by the New York Fed shows that two-thirds of respondents expect the reduction of the balance sheet (QT) to end in the first or second quarter of 2025. Coinglass data shows that historically, BTC has performed well in the first quarter (Q1) of the second year after halving: Q1 2013: 539.96%; Q1 2017: 11.89%; Q1 2021: 103.17%. Major institutions forecast BTC prices for 2025: Maple Finance: $180,000 to $200,000, BitMining: $180,000 to $190,000, Galaxy Digital: $150,000 to $185,000, Matrixport: $160,000, VanEck: $180,000, CoinShares: $150,000, Galaxy Research: $150,000 in the first half, Blockware: $150,000, Standard Chartered: $200,000. With the end of the dual-holiday period, U.S. stocks opened, and the cryptocurrency market generally rebounded, with funds starting to flow back into the market. After BTC fell below $92,000 at the end of the year, it has since rebounded to $98,000, while ETH rose to around $3,600, improving market sentiment and reviving altcoins. On Friday, the Nasdaq rose by 1.3%, the S&P 500 index rose by 0.9%, the Dow Jones index rose by 0.56%, BTC rose by 1.2%, and ETH rose by 3.0%. Nvidia surged over 4%, reaching a nearly one-month high. In 2025, compared to the previous increase range of $15,000 to $100,000, institutions are optimistically predicting a 50-100% increase in BTC this year, with the potential for other coins to catch up in price increase this year, similar to previous bull market cycles. Previously, the Fed's expectation for interest rate cuts in 2025 had already dropped to a low (two times), and both U.S. stock indices and cryptocurrency markets experienced pullbacks. After the data for January and the conclusion of the interest rate meeting, the Fed's expectations for rate cuts are also likely to increase, adding momentum for a rebound in the first quarter.