On Friday, U.S. data showed that the annual PCE price index for November was 2.4%, lower than the expected value of 2.50% and higher than the previous value of 2.30%; the core PCE price index for November was 2.8%, lower than the expectation of 2.90% and unchanged from the previous value of 2.80%. The monthly PCE price index for November was 0.1%, and the core PCE price index for November was also 0.1%, both lower than previous and expected values. The preliminary one-year inflation rate expectation for December is 2.8%, lower than the previous value of 2.90%. The PCE inflation favored by the Federal Reserve unexpectedly cooled down across the board, and U.S. stock indices and the cryptocurrency market rebounded, with the market continuing to bet that the Federal Reserve will pause interest rate cuts in January and increase bets on rate cuts in March.
Returning to the main topic:
The International Monetary Fund (IMF) official Kozak stated when asked about the currency status of BTC in El Salvador: 'The use of BTC in El Salvador will be voluntary, and the agreement reached between the IMF and El Salvador aims to reduce potential BTC risks based on the IMF policy framework.' Additionally, Kozak declined to comment on Trump's U.S. BTC reserve plan, stating that a comprehensive assessment will be conducted when the policy is implemented. Over the past year, the ETH Foundation sold 4,466 ETH (approximately $12.6 million) across 32 transactions. On December 20, El Salvador's address increased its BTC reserves by 11 BTC worth $1.07 million. Mining company MARA increased its holdings by 15,574 BTC in November and December, worth approximately $1.53 billion, with an average price of $98,529. Mining company Hut 8 increased its holdings by approximately 990 BTC at an average price of $101,710, worth about $100 million. On December 20, MtGox sent 719.568 BTC to two new addresses. Analyst Adam from Greekslive stated that after failing to break through $110,000 this week, BTC entered a correction, which is clearing out the aggressive leveraged longs established after stabilizing above $100,000. Meanwhile, the adjustment of altcoins has lasted nearly a month. Based on past bull market experience, a significant correction in BTC will lead to a season of altcoins, but the intensity of BTC's current correction is still uncertain. FTX announced that it will start implementing its compensation plan on January 3, 2025, aimed at repaying customers harmed in the bankruptcy process, with the first round of distributions starting within 60 days after the effective date. FTX CEO John Ray III stated that over the past two years, a professional team has successfully recovered billions of dollars in assets.
On December 20, CZ posted: 'Waiting for new headlines, BTC hits a new high again.' Previously, on December 17, 2020, CZ had posted: 'Waiting for new headlines: BTC dropped from $101,000 to $85,000, save this post.' On December 19, the net outflow of the U.S. spot BTC ETF was $671.9 million. The net outflow of the U.S. spot ETH ETF was $60.5 million. K33 Research reported that institutional investors increased their holdings by a total of 859,454 BTC in 2024, accounting for approximately 4.3% of the total circulating supply, equivalent to 8 years' worth of BTC issuance. Among them, the spot ETF cumulatively increased its holdings by 561,781 BTC, and the total management scale of U.S. ETFs has reached 1.4 million BTC, of which BlackRock's IBIT holds 542,653 BTC, valued at about $54 billion; regarding U.S. listed companies, they collectively increased their holdings by 297,673 BTC in 2024, with MicroStrategy increasing nearly 250,000 BTC, bringing its total holdings to 439,000 BTC. The U.S. Securities and Exchange Commission (SEC) approved the listing of Hashdex's Nasdaq BTC and ETH composite crypto index ETF in the U.S. In the early hours of Thursday, the Federal Reserve cut interest rates by 25 basis points but reduced its rate cut expectations for 2025 from four times to two. U.S. stock indices, gold, and the cryptocurrency market generally fell. Federal Reserve Chairman Powell stated: 'It is frustrating that the progress in reducing inflation has been slower than expected; when considering rate cuts, we focus on the progress of inflation; after inflation rose, it returned to normal in November, and we need to maintain patience and make cautious assessments; it is clear that we have avoided an economic recession, and from now on we will enter a new phase, taking a cautious attitude towards further rate cuts, and we expect another good year next year; we moved quickly to this point, and in the future, we will move more slowly.'
On Friday, U.S. data showed that the annual PCE price index for November was 2.4%, lower than the expected value of 2.50% and higher than the previous value of 2.30%; the core PCE price index for November was 2.8%, lower than the expectation of 2.90% and unchanged from the previous value of 2.80%. The monthly PCE price index for November was 0.1%, and the core PCE price index for November was also 0.1%, both lower than previous and expected values (market focus on monthly growth rates). The preliminary one-year inflation rate expectation for December is 2.8%, lower than the previous value of 2.90%. After the inflation data was released, U.S. stock indices and the cryptocurrency market rebounded, with the Nasdaq rising 1.35% during the session, the S&P 500 rising 1.4%, and the Dow Jones rising 1.5%. The PCE inflation favored by the Federal Reserve unexpectedly cooled down across the board, and this data should help alleviate the concerns of Federal Reserve members regarding the inflation outlook. The market continues to bet that the Federal Reserve will pause interest rate cuts in January and increase bets on rate cuts in March. Citigroup stated that due to the core PCE inflation rising 0.1% month-on-month in November, price increases are slowing down, and the final rate cut by the Federal Reserve may exceed current expectations. The stagnation in employment and the slowdown in inflation are sufficient reasons for rate cuts at every meeting at least beyond January. Federal Reserve member Goolsbee stated that more inflation data similar to what was released today is expected, and the inflation rate is still expected to reach 2%. Today's data shows that the recent inflation strength is just a 'bump', and his personal prediction is that the interest rate path for 2025 will be slightly lower, with a significant decrease in interest rates possible in the next 12 to 18 months, and the long-term neutral rate is far below the current rate.
The old man believes that there will be no rate cuts in January, and the market will speculate on a rate cut by the Federal Reserve in March. After a wave of increases in the cryptocurrency market, it underwent adjustments and is now preparing for the next wave of increases. The Federal Reserve was decisive in its earlier rate cuts, obscured in the middle, and accelerated later, eventually returning to a long-term neutral rate around 3.0%, with the current rate at 4.25-4.5%. The bull market is undergoing a phase adjustment, not a bear market. On the eve of the Federal Reserve's meeting, the Nasdaq soared to a historic high of 20,204 points (the low point of this cycle was 10,088 points), and Bitcoin also reached a new high of $108,000. The bull market in U.S. stock indices since 2012 occurred against the backdrop of the Federal Reserve tightening monetary policy more than expected. In 2025, the Federal Reserve will be loosening monetary policy, and the fundamentals do not support the logic of opening a bull market, which is similar in the cryptocurrency market. The recent declines have been without any reaction. Like many others, the old man believes that based on past bull market experience, a significant correction in BTC will lead to a season of altcoins, and this time is no different. For altcoins, MEME was dominant in October-November, even hitting new highs; in November-December, AI and RWA and mainstream were dominant, even reaching new highs; bull markets require proactive effort to find quality hotspots. After this adjustment, I hope there will be a new wave to ride upward. (The old man still favors AI and RWA, and ETH also needs to catch up.)