Crypto News: Market Update December 2024
The month of December marked a highly volatile period for the financial markets, with both traditional and digital assets showing significant movements. Bitcoin reached $100,000 for the first time, fueled by President-elect Donald Trump’s appointment of a crypto-friendly individual, further bolstering confidence in digital currencies. At the same time, we saw positive developments in the U.S. economy, such as rising consumer spending and moderate inflation, highlighting the economy’s resilience. All of this took place against the backdrop of key policy decisions, including interest rate cuts by the Federal Reserve and record inflows into Ethereum ETFs.
December 5: Bitcoin Surges Above $100,000 Due to Trump 2.0 and Crypto Euphoria
Bitcoin reaches $100,000 for the first time, a milestone even critics acknowledge as a sign of maturity for digital currencies. The surge was driven by the appointment of Paul Atkins, a crypto-friendly individual, as head of the U.S. Securities and Exchange Commission (SEC) by President-elect Donald Trump. Bitcoin has more than doubled in value this year, and the total cryptocurrency market has grown to over $3.8 trillion. Trump, a vocal supporter of crypto, celebrates the achievement, while crypto-related stocks have also experienced a significant rise. Market conditions appear favorable for the further adoption of cryptocurrencies in the financial world, bolstered by Trump’s electoral victory and the presence of pro-crypto lawmakers. (Source: Reuters)
December 9: Amazon Shareholders Push for a Minimum 5% Bitcoin Allocation
Amazon shareholders are urging the company to invest a portion of its reserves in Bitcoin (BTC), similar to the strategy of MicroStrategy (MSTR). The proposal suggests that Amazon should hold at least 5% of its assets in Bitcoin to enhance long-term shareholder value, despite the volatility of the cryptocurrency market. Bitcoin has risen 134% this year and reached the $100,000 mark, making it an attractive alternative to traditional investments. Shareholders point to the significant rise in MicroStrategy’s stock and the adoption of Bitcoin by other companies like Tesla and Block. They argue that Amazon should diversify its portfolio to protect value, as the current assets do not adequately safeguard against inflation and market fluctuations. (Source: CoinDesk)
December 11: Inflation Accelerates to 2.7% in November, Fed Anticipates Rate Cut
Annual inflation in the U.S. accelerated to 2.7% in November, as expected, following a monthly increase of 0.3%, according to the Consumer Price Index (CPI). Core inflation, which excludes food and energy, stood at 3.3% year-on-year, unchanged from October. The figures aligned with analysts’ expectations and reinforced the anticipation that the Federal Reserve will cut interest rates by a quarter percentage point on December 18. Despite the decline in inflation compared to the 2022 record, it remains above the Fed’s 2% target, driven primarily by rising housing costs and certain other categories, such as used vehicles. The Fed is expected to lower rates further in 2025, although some policymakers are concerned about the persistence of inflation. (Source: CNBC)
December 12: U.S. Producer Prices Remained Unchanged in November Due to Decline in Energy Prices
U.S. producer prices remained unexpectedly unchanged in November, largely due to cheaper energy products. Overall inflationary pressure at factories was moderate, reinforcing the expectation that inflation will continue to decrease, providing room for interest rate cuts by the Federal Reserve in 2024. The prices of goods remained stable, with a 1.2% decline in energy prices offset by a 0.6% increase in food prices. Energy prices specifically fell due to a 4.1% drop in gasoline prices, while food prices rose due to higher wholesale prices for eggs, caused by avian flu. The core producer price index (PPI) rose by 0.1% and 2.5% year-on-year, signaling further stability in inflation. (Source: Reuters)
December 18: Federal Reserve Cuts Interest Rates by 0.25% and Warns of Fewer Rate Cuts in 2025
The Federal Reserve lowered interest rates by 0.25 percentage points, marking the third consecutive cut, bringing rates to the level seen in December 2022. Despite the decrease, the Fed indicated that further rate cuts will likely be more limited, with only two cuts expected in 2025. The Fed emphasized that the economy and employment are in good shape, but inflation remains above the 2% target. The outlook for the U.S. economy was revised upwards, with expected growth of 2.5% in 2024, while unemployment is expected to be 4.2%. Markets responded with a sharp sell-off of stocks and rising yields on government bonds, indicating that investors are skeptical of further aggressive rate cuts. Fed Chairman Jerome Powell stated that the current rate cuts are intended to normalize policy, with a more moderate approach in the future. (Source: CNBC)
December 20: U.S. Consumer Spending Strong in November; Inflation Shows Progress
U.S. consumer spending increased by 0.4% in November, driven by strong demand for various goods and services, highlighting the resilience of the economy. At the same time, there was good news on inflation, with a moderate rise in prices and the smallest increase in core inflation in six months. However, annual core inflation, excluding food and energy, remains well above the Federal Reserve’s 2% target. The rise in consumer spending was mainly driven by demand for new motor vehicles, partly due to replacements following hurricanes. This signals strong demand, although concerns remain about the inflationary effects of the economic policies of the incoming administration. (Source: Reuters)
December 31: Ethereum Prepares for Rally in 2025 After Doubling of Ether ETF Inflows
In December, Ethereum exchange-traded funds (ETFs) reached a new monthly record with over $2.1 billion in inflows, nearly double that of November. Despite the record inflows, the Ether price remains stuck below the $3,500 resistance level. A breakout above this level could trigger the liquidation of over $1 billion in short positions. Analysts are optimistic about Ether’s price development, with VanEck predicting a peak of $6,000 in 2025. Technical analyses suggest a potential rally to $4,400 in the first quarter of 2025, provided the price stays above $2,914. (Source: CoinTelegraph)
Conclusion
The markets end the year with a mix of optimism and caution, with Bitcoin settling above $100,000 and Ethereum taking a strong position due to record ETF inflows. The Federal Reserve seems further along in normalizing interest rate policy, which brings both opportunities and risks for investors. The outlook for the U.S. economy remains relatively strong, but concerns about inflation and the effectiveness of policies from the incoming administration persist. As for the cryptocurrency markets, developments are promising, with clear preparations for a potential rally in 2025.
