Written by Omkar Godbole (all times Eastern Time unless otherwise noted)
Ahead of today's Fed interest rate decision, the virtual currency market is moving toward risk aversion. Everyone is buzzing about the possibility of further interest rate cuts that would stimulate risk-taking in the economy and financial markets.
There's a twist here. The central bank is expected to signal three interest rate cuts in 2025, rather than the four expected in September, and to revise upward its growth and inflation forecasts. No wonder, then, that Bitcoin and Ether are trading down nearly 2%, with losses widening for small-cap tokens. Among them is Pudgy Penguins' PENGU token, which has fallen more than 50% since its airdrop on Tuesday.
Front-end call premiums for both BTC and ETH have already taken a hit, indicating a more cautious atmosphere in the market. Traditional markets are also pricing in hawkish rate cuts.
Now, experienced traders will tell you that when expectations are too biased in one direction, there is always room for disappointment. More simply, if interest rate forecasts remain unchanged, or if Fed Chairman Jerome Powell allays concerns about persistent inflation in his press conference while maintaining a data-driven approach, we could see a significant increase in risk assets, including cryptocurrencies. There is a possibility that it will be seen.
VIRTUAL, the native coin of AI and tokenization platform Virtuals Protocol, could shine in that case, rising 11% in Asian time. “AI in crypto is becoming an attractive trend, especially in social trading, where data-driven insights and automation can empower traders,” said Neil Wen, Head of Global Business Development at Khronos Research. I can do it.''
HyperLiquid’s HYPE token, a leading on-chain perpetual platform, is another contender, trading 4% higher at the time of writing. Social media buzz points to exchange availability and limited token holdings as catalysts for the rally.
However, don't let your guard down. Some observers have noted that the pace of future rate cuts will actually depend on Friday's core PCE data, the Fed's preferred measure of inflation.
BRN analyst Valentin Fournier said: “The Federal Reserve is scheduled to announce a 25 basis point interest rate cut today, the last of the year. Future rate cuts could depend heavily on Friday’s Core PCE report.”Especially Bitcoin has already “We are feeling bearish pressure and lack of upside momentum, so any surprise from higher inflation could spook the market.”
Additionally, the drop in Chinese government bond yields has led Wall Street Journal officials to believe that the world's second-largest economy is facing a prolonged recession marked by a sharp decline in economic growth and rising unemployment. That raises a red flag.
These concerns could easily destabilize global markets, so now is definitely a good time to remain vigilant.
what to see
Code: MacroDec. 2:00 pm on the 18th: The Federal Open Market Committee (FOMC) announces the target range for the federal funds rate (currently 4.50-4.75%). CME's FedWatch tool shows interest rate traders have a 95.4% chance of a 25 basis point cut. The press conference begins at 2:30 p.m. Live stream link. December 18th, 10:00 pm: The Bank of Japan (BOJ) announces interest rate decisions. Compared to before short-term interest rate forecast 0.25% 0.25%.December 19th, 7:00 am: The Monetary Policy Committee (MPC) of the Bank of England (BoE) announces its interest rate decision. Compared to before bank rate estimate 4.75% 4.75%.December 19, 8:30 a.m.: U.S. Bureau of Economic Analysis (BEA) releases third quarter GDP (final). Final forecast for GDP growth rate compared to the previous quarter. 2.8% 3.0% compared to before. GDP Price Index QoQ Final Estimate Compared to previous estimate 1.9% 2.5%.December 20, 8:30 a.m.: The U.S. Bureau of Economic Analysis (BEA) releases the Personal Income and Expenditure Report for November. PCE price index year-on-year forecast. 2.5% 2.3% compared to before. Core PCE price index year-on-year change compared to previous forecast 2.9% 2.8%.At 1:00 pm on December 24th, the Federal Reserve announced the H.6 (money stock index) report for November. Money supply before M2 was 23.31 trillion dollars.
token event
Governance Voting and Calling Venus Protocol is officially extended to Base. VIP-408 will pass the governance vote and users will be able to access Venus on Base on December 19th.
Unlocking Metars Genesis unlocks 11.87% of MRS's circulating supply, worth $11 million at current prices.
Conference:
token talk
Written by Shaurya Marwa
PENGU's early buyers have learned the hard way about the dangers of low liquidity.
The Pudgy Penguins Ecosystem Token token debuted to massive hype on Tuesday. Its appeal was its association with already popular NFT collections, sparking a buying frenzy in hopes of quick profits. However, the token had gained the necessary liquidity at the time of launch. This means that early and enthusiastic buyers purchased the token at a market cap of $5 trillion.
Liquidity is the ability to buy and sell an asset without causing significant price fluctuations. In the case of PENGU, the initial liquidity pool was shallow, meaning there were not enough buyers and sellers to stabilize the price.
One unlucky trader lost a lot of money on an airdrop, turning $10,000 into less than $5 in seconds. Just before the official airdrop, they exchanged 45 wrapped Solana for PENGU, but due to a glitch in Jupiter's decentralized exchange they only got 78 tokens. Trades were sent to Raydium's illiquid pool, and the token's price ballooned to an unrealistic $14 trillion market cap. This accident is caused by a drop in liquidity, and even small trades can cause large price fluctuations.
The PENGU token was created weeks before launch, leading to premature trading and significant losses for those who jumped in too early without checking the market cap.
Positioning of derivatives
Positions in BTC futures are heating up, with open interest approaching the November high of 663.71,000 BTC. Meanwhile, ETH open interest reached a record of over 339,000 ETH. Permanent interest funding rates associated with major coins are stable at around 10% per annum, which is in the middle of the -200% to 200% range, which are the extremes. Front-end BTC and ETH puts are trading at a premium to calls, highlighting the need for downside protection ahead of the Fed's interest rate decision. The BTC block trade includes a bear call spread with calls at strikes of $104,000 and $105,000, and an isolated long position of a $95,000 put expiring on January 3rd.
Market movements:
BTC is down 1.72% to $104,593.98 (24 hours: -1.96%) since 4:00 PM ET on Tuesday ETH is down 1.44% to $3,876.29 (24 hours: -2.89%) CoinDesk 20 is down 3.03% to $3,830.21 (24 hours: +3.4%) Ether staking yield increased by 2 bps 3.18% BTC funding rate is 0.01% on Binance (10.95% annual rate)
DXY unchanged at $106.90 Gold up 0.76% to $2,664.40/oz Silver up 1.08% to $30.90/oz Nikkei Stock Average ended -0.72% at 39,081.71 Hang Seng ended +0.83% at 19,864.55 FTSE up 0.23% to 8,214.42 euros Stoxx 50 up 0.32% to 4,958.35DJIA Tuesday close -0.61% to 43,449.9S&P 500 Close -0.39% 6,050.61 Nasdaq Close -0.32% 20,109.06 S&P/TSX Composite Index Close -0.11% 25,119.7 S&P 40 Latin America Close +0.16% 2,280.58 US 10-Year Treasury Bonds unchanged 4.4% E-mini S&P 500 futures rose 0.25% to 6,069.00 E-mini NASDAQ 100 futures rose 1.58% to 22,363.25E-mini Dow Jones Industrial Average futures rose 0.2% to 43,563.00
Bitcoin statistics:
BTC Dominance: 57.78% (24 hours: -0.33%) Ethereum to Bitcoin ratio: 0.037 (24 hours: +1.04%) Hashrate (7-day moving average): 776 EH/s Hash Price (Spot): $63.4 Total Fee: $1.4M/ 12.7 BTCCME futures open interest: 212,635 BTCBTC Gold price: 39.4ozBTC vs Gold market cap: 11.22% Bitcoin in store balance: 406,700 BTC
basketball performance
technical analysis
BTC’s dominance has recovered from 55% to nearly 58% in two weeks, regaining its year-to-date bullish trend line. This is a sign that investors are once again favoring Bitcoin over altcoins.
crypto assets
MicroStrategy (MSTR): Tuesday's close was $386.42 (-5.41%), up 0.45% on the previous market at $388.15. Coinbase Global (COIN): 311.64 (-1.16%), closed 0.98% lower at $308.60 in the previous market. .Galaxy Digital Holdings (GLXY): Closed at CAD 28.67 (-3.01%). MARA Holdings (MARA): Down 1.5% pre-market at $24.23 to end at $24.60 (+0.16%). Riot Platforms (RIOT): fell 1.36% pre-market to end at $13.97 (-0.43%). Pre-market: $13.78. Core Scientific (CORZ): Closed at $16.03. (-3.2%), closing 1.19% lower at $15.84 pre-market. Clean Spark (CLSK): 0.49% lower at $12.30 in pre-market trading, closing at $12.36 (-0.96%). CoinShares Valkyrie Bitcoin Miners ETF (WGMI): Closed at $29.04 (-1.89%), down 0.48% to $28.90. Semler Scientific (SMLR): Up 2.97% to $76.93 to end at $74.73 (+0.31%).
ETF flow
Spot BTC ETF:
Daily net inflow: $493.9 million Cumulative net inflow: $36.7 billion Total BTC holdings ~ $1.136 million.
Spot ETH ETF
Daily net inflow: $144.7 million Cumulative net inflow: $2.46 billion Total ETH holdings ~ 3.53 million.
Source: Farside Investors
night flow
today's chart
This graph shows the explosive growth of the memecoin subsector, whose market value is now over $100 billion. This proves how the speculative appeal and success of social media strategies can drive investors to take risks.
while you were sleeping
Bitcoin takes a breather after Doge Candle on cautious pre-Fed risk aversion (CoinDesk): Cryptocurrency markets slumped after Bitcoin hit an all-time high of over $108,000 on Tuesday morning (Eastern Time). It has shifted to a more risk-off mood ahead of the Fed's risk aversion. A 25 basis point rate cut is expected later today.
Dollar holds firm against peers as Fed rate cut looms (Reuters): The US dollar held firm on Wednesday as the market awaited the Fed's rate decision and outlook for 2025, with the DXY index up from recent highs to 106.89. It fell.
Incoming Senate Banking Chairman calls cryptocurrencies the world's 'next wonder' (CoinDesk): Incoming Senate Banking Chairman Tim Scott on Tuesday praised cryptocurrency innovation and called for swift legislation, while incoming House Financial Services Committee Chairman French Hill predicted that bipartisan virtual currency legislation could be passed in 2025 with support from the Senate.
South Korea's Yun skips interrogation, increasing risk of arrest (Bloomberg): South Korean President Yun Seok-yeol, who was impeached on Saturday, was arrested after skipping an interrogation scheduled for Wednesday morning by a joint investigation team. The risk has increased.
Risk of Brazilian currency collapse worsens unless President Lula implements fiscal reform (Financial Times): Rising debt and growing fiscal concerns under President Lula's administration call for interest rate hikes and credible reforms to stabilize the currency On Tuesday, the Brazilian real hit an all-time low of 6.21 reais to the dollar. .
Coinbase says it has removed wBTC because Justin Sun posed an 'unacceptable risk' (CoinDesk): On Tuesday, Coinbase announced that it has removed wBTC from the list in December due to risks associated with Justin Sun's alleged involvement. On the 19th, it defended its decision to delist and rejected BiT Global's claims of facilitation in its lawsuit. Competing Unique Assets.
in the ether
