Bitcoin Fell Back To Local Support

Economic

Cryptocurrency

Summary:

The crypto market retreated last week and is in no hurry to recover, remaining at $3.31 trillion, roughly where it was 30 days ago.

Market Picture

The crypto market retreated last week and is in no hurry to recover, remaining at $3.31 trillion, roughly where it was 30 days ago. The sharp dip below $3.2 trillion was also quickly bought back, but a full-blown rebound is yet to be seen. Markets continue to digest the Fed’s tougher tone, reinforced by the accumulated urge to lock in profits after a strong year.

The Crypto Market Sentiment Index is in neutral territory, compared to the shuttling between fear and extreme fear in US stocks.

Bitcoin is trading around $95.5K, receiving support near the 50-day moving average on Friday and Monday. While we expected to see the market decline here, it’s too early to say this is the end of the correction. Further declines in the stock market, of which there are many in Bitcoin and Ethereum, could trigger institutional investors, launching a deeper pullback.

Reduced holiday liquidity has the potential to amplify this amplitude. In a potential shock scenario, they see a dip into the $70K area. However, there are more chances that a pullback to $90K in the next couple of weeks will be attractive enough for buyers to stop the sell-off.

News Background

Matrixport expects that the first cryptocurrency could see a strong start in early 2025. Messari predicts that Bitcoin and real-world tokenised assets (RWAs) will be the focus of investor attention in 2025.

The average duration between Bitcoin’s first and last all-time high (ATH) in a cycle is 318 days, K33 Research noted. If the pattern repeats, the next global peak will be reached on 17 January, before the inauguration of US President-elect Donald Trump. Analysts noted an increase in coins available on the market to the highest since 2021 (22% of supply), driven by Mt. Gox proceeds and government sales.

The US SEC approved the first spot ETFs combining Bitcoin and Ethereum, issued by Hashdex and Franklin Templeton.

El Salvador will expand BTC purchases in defiance of the IMF deal. El Salvador’s National Bitcoin Office said the country will continue to buy the first cryptocurrency and possibly at an ‘accelerated pace’.

US mining company MARA has launched a second project in Finland to use the heat generated by cryptocurrency mining for home heating. With this latest initiative, 80,000 residents of the country will be provided with heat generated by mining equipment.

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

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Warren Takunda

Cryptocurrency

Bitcoin starts Christmas week at a bearish crossroads as BTC price support thins and forecasters see a chance of a major dip.

A “bearish engulfing” on weekly timeframes makes traders nervous over the short-term outlook for BTC/USD.

Targets for a possible deeper correction include a return to near old all-time highs of $74,000.US jobs data lead a quiet macro week, but markets are still reeling from last week’s hawkish Fed meeting.

Those looking to gain long-term BTC exposure get their first buy-in opportunity in two months, per data from a dedicated indicator.

Crypto market sentiment is rapidly souring, but “greed” still reigns.

Bitcoin suffers “bear engulfing” on weekly close

After a limp weekly close, Bitcoin is struggling to preserve support in the mid-$90,000 zone as the holiday period looms. BTC Price Risks $20K Crash: 5 Things to Know in Bitcoin This Week_1

BTC Price Risks $20K Crash: 5 Things to Know in Bitcoin This Week_1

BTC/USD 1-hour chart. Source: Cointelegraph/TradingView

Data from Cointelegraph Markets Pro and TradingView paints an uncertain picture for BTC price action, with BTC/USD still down $13,000 from last week’s all-time highs.

“Bitcoin has confirmed a Bearish Engulfing candlestick formation,” popular trader and analyst Rekt Capital wrote in one of his latest posts on X, this time for the weekly chart. BTC Price Risks $20K Crash: 5 Things to Know in Bitcoin This Week_2

BTC Price Risks $20K Crash: 5 Things to Know in Bitcoin This Week_2

BTC/USD 1-week chart. Source: Rekt Capital/X

Rekt Capital warned that BTC/USD had “lost” weekly support, signaling the end of a five-week uptrend.

“Bitcoin is showing increasing signs of transitioning into a multi-week correction,” another post warned.

“Any relief rally, if at all needed, into these old supports could turn them into new resistance to confirm additional downside continuation.” BTC Price Risks $20K Crash: 5 Things to Know in Bitcoin This Week_3

BTC Price Risks $20K Crash: 5 Things to Know in Bitcoin This Week_3

BTC/USD 1-week chart. Source: Rekt Capital/X

Others entertained the idea of a drop to old all-time highs from March at a now-distant $74,000.

“In past cycles it's been the norm for -30% pullbacks during the bull market,” trader Josh Rager noted in part of an X post on Dec. 23.

“This current price action hasn't been fantastic but it also hasnt been awful. Imagine pulling back to $75k right now for a -30% pullback.” BTC Price Risks $20K Crash: 5 Things to Know in Bitcoin This Week_4

BTC Price Risks $20K Crash: 5 Things to Know in Bitcoin This Week_4

BTC/USD chart fractal. Source: Jelle/X

Fellow trader Jelle eyed comparisons to last year’s BTC price action to predict a return to upside after “a few more weeks of struggle.”

For some short-term hope, meanwhile, Charles Edwards, founder of quantitative Bitcoin and digital asset fund Capriole Investments, revealed that Dec. 26 is traditionally a high-performing calendar day for the S&P 500.

“The 26th is the highest returning day of the year historically,” he told X followers alongside data from Carson.

“X-mas relief bounce coming?”

$80,000 looms as short-term BTC price target

Holiday periods bring new challenges for crypto market participants thanks to extended periods of “out-of-hours” trading.

The absence of the liquidity profile normally available on workdays can exacerbate moves up or down.

Taking a broad view of the liquidity landscape on exchanges, popular trader and commentator Mark Cullen now sees two key levels to watch into 2025. One will be painful for bulls.

“Liquidity is stacked up like presents under the Christmas tree at 115k and at sub 80k,” he summarized on X alongside data from monitoring resource CoinGlass.

“The big question: Which level gets hit first? And will we see a festive swing where both levels get a run?” BTC Price Risks $20K Crash: 5 Things to Know in Bitcoin This Week_5

BTC Price Risks $20K Crash: 5 Things to Know in Bitcoin This Week_5

BTC/USD chart with order book liquidity data. Source: Mark Cullen/X

The accompanying chart shows two areas where liquidations would likely occur en masse should spot price reach them.

A drop to $80,000, meanwhile, would constitute a regular bull market correction compared to previous BTC price cycles.

As Cointelegraph reported, dips of 20% or more have characterized Bitcoin’s march to previous all-time highs, with onchain analytics firm Glassnode revealing that this cycle has been broadly less volatile than in the past.

“The deepest drawdown this cycle was -32% (Aug 5, 2024), with most corrections only -25% below local highs, reflecting spot ETF demand & rising institutional interest,” Glassnode noted in part of an X post this weekend. BTC Price Risks $20K Crash: 5 Things to Know in Bitcoin This Week_6

BTC Price Risks $20K Crash: 5 Things to Know in Bitcoin This Week_6

Bitcoin bull market drawdowns. Source: Glassnode/X

BTC price could drop $20,000 in macro liquidity crunch

With a quiet week ahead for macroeconomic data prints, traders face less risk of snap risk-asset volatility at the hands of inflation surprises.

That said, Dec. 26 will still see US initial jobless claims released — an event that crypto markets have proven especially sensitive to this year.

The macro climate, more broadly, is once again uncertain. Last week, the Federal Reserve lowered interest rates by a predicted 0.25% while conjuring a hawkish stance on 2025.

The result was a risk-asset knockdown which included Bitcoin and altcoins, with markets seeing less chance of further rate cuts going forward in a potential blow to liquidity.

Commenting on the topic, trading resource The Kobeissi Letter saw another liquidity headwind for Bitcoin in particular.

“In the past, Bitcoin prices have followed global money supply with ~10 week lag,” it wrote on X at the weekend.

“As global money supply hit a new record of $108.5 trillion in October, Bitcoin prices reached an all-time high of $108,000. Over the last 2 months, however, money supply has dropped by $4.1 trillion, to $104.4 trillion, the lowest since August.” BTC Price Risks $20K Crash: 5 Things to Know in Bitcoin This Week_7

BTC Price Risks $20K Crash: 5 Things to Know in Bitcoin This Week_7

BTC/USD vs. global M2 money supply. Source: The Kobeissi Letter/X

Kobeissi warned that BTC/USD may “take a pause” in its bull market and even see a heavier correction next.

“If the relationship still holds, this suggests that Bitcoin prices could fall as much as $20,000 over the next few weeks,” it continued.

On the topic of risk assets in general, Kobeissi added that it expected volatility to “carry over” into the coming week.

As Cointelegraph reported, others also see January potentially sparking a major BTC price retracement.

Bitcoin DCA signal flashes after two-months

After a two-month absence, BTC price action has returned to levels that a dedicated buying indicator says will be profitable.

The so-called Smart DCA tool from onchain analytics platform CryptoQuant highlights when BTC/USD is trading below its short-term realized price.

Realized price refers to the aggregate price at which the supply last moved. Smart DCA uses transactions occurring between a week and a month prior to the date of observation to determine comparatively lower price levels and, thus, potentially lucrative buying opportunities.

DCA refers to dollar-cost averaging — the practice of buying BTC with a set amount of capital at regular intervals.

At $95,000, BTC/USD is now in a “favorable zone for implementing a DCA strategy,” CryptoQuant contributor Darkfost wrote in one of its Quicktake blog posts this weekend.

“Employing a DCA strategy helps mitigate the impact of volatility and reduce associated risks, making it a prudent approach depending on market conditions,” he explained.

“This tool, when used alongside an understanding of broader market trends and sentiment, can deliver valuable insights for making informed investment decisions.” BTC Price Risks $20K Crash: 5 Things to Know in Bitcoin This Week_8

BTC Price Risks $20K Crash: 5 Things to Know in Bitcoin This Week_8

Bitcoin Smart DCA chart (screenshot). Source: CryptoQuant

Earlier, Cointelegraph reported on another indicator that conversely tells hodlers to sell BTC when supply profitability reaches a certain level.

“Severe FUD” impacts sentiment

Bitcoin sentiment arguably took an even greater beating than the price during last week’s liquidity flush — but research argues that that could ultimately benefit bulls.

In an X post on Dec. 22, research firm Santiment revealed what it described as the “highest FUD spiral of the year” among social media users.

Analyzing commentary across X, Reddit, Telegram and 4Chan, Santiment calculated that for every four positive market comments, there were five negative ones.

“Crypto's further flush has sent Bitcoin's crowd sentiment down to its most negative statistical point of the year,” it wrote in accompanying commentary.

“Vocal traders are now showing severe FUD, and that's good news for contrarians who know markets move the opposite direction of retail's expectations.” BTC Price Risks $20K Crash: 5 Things to Know in Bitcoin This Week_9

BTC Price Risks $20K Crash: 5 Things to Know in Bitcoin This Week_9

Bitcoin social media sentiment data. Source: Santiment/X

A chart highlighted similar situations in 2024, all coinciding with market rebounds.

Meanwhile, the Crypto Fear & Greed Index, which takes data from a range of sources to calculate the mood among traders, remains in “greed” territory.

The Index peaked at 94/100 on Nov. 22, marking a level historically known for downward market reversals. On that day, BTC/USD closed at around $99,000.

The last time that “greed” was so prevalent among traders was in February 2021. BTC Price Risks $20K Crash: 5 Things to Know in Bitcoin This Week_10

Crypto Fear & Greed Index (screenshot). Source: Alternative.me

Source: Cointelegraph

Risk Warnings and Disclaimers

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Warren Takunda

Stocks

March S&P 500 E-Mini futures are up +0.16%, and March Nasdaq 100 E-Mini futures are up +0.28% this morning, extending Friday’s solid gains after muted U.S. inflation data helped reignite Federal Reserve rate cut bets, while investors also awaited a fresh batch of U.S. economic data this week.

The U.S. Senate voted 85 to 11 on Saturday to approve a spending bill that will fund the government until mid-March and prevent a shutdown. The deal provides for spending until March 14th, extends the farm bill, grants extra aid to farmers, and delivers disaster relief to victims of hurricanes. U.S. President Joe Biden signed the legislation into law on Saturday morning.

In Friday’s trading session, Wall Street’s major equity averages closed in the green. Enphase Energy climbed over +8% and was the top percentage gainer on the S&P 500 after OTR Global upgraded its view on the stock to Mixed from Negative. Also, chip stocks gained ground, with Micron Technology and Nvidia advancing more than +3%. In addition, Mission Produce soared over +17% after the company reported better-than-expected FQ4 results. On the bearish side, U.S. Steel slumped about -5% after cutting its Q4 adjusted EBITDA guidance.

Data from the U.S. Department of Commerce released on Friday showed that the core PCE price index, a key inflation gauge monitored by the Fed, came in at +0.1% m/m and +2.8% y/y in November, weaker than expectations of +0.2% m/m and +2.9% y/y. Also, U.S. November personal spending rose +0.4% m/m, weaker than expectations of +0.5% m/m, while personal income grew +0.3% m/m, weaker than expectations of +0.4% m/m. In addition, the University of Michigan’s U.S. December consumer sentiment index was left unrevised at an 8-month high of 74.0, weaker than expectations of 74.1.

“I don’t know why we always have to be reminded that the Fed not cutting rates - or not cutting rates as fast - is actually good news if it’s driven by stronger economic data, and that’s exactly what the Fed is telling us,” said Art Hogan, chief market strategist at B. Riley Wealth.

San Francisco Fed President Mary Daly stated on Friday that the U.S. central bank’s decision to cut interest rates by a quarter percentage point at the December meeting was a “close call.” Daly noted she is “very comfortable” with policymakers’ median forecast of two interest rate cuts next year, highlighting that the Fed can adopt a more measured pace. “My projection is that it will take many fewer rate cuts next year than we thought but I’ll watch the economy and see if that works out,” Daly said.

U.S. rate futures have priced in a 91.4% probability of no rate change and an 8.6% chance of a 25 basis point rate cut at January’s monetary policy meeting.

Meanwhile, the U.S. stock markets will close early at 1 p.m. Eastern Time on Tuesday for Christmas Eve and remain closed on Wednesday for Christmas Day.

In this holiday-shortened week, investors will be monitoring several economic data releases, including U.S. Durable Goods Orders, Core Durable Goods Orders, Building Permits, New Home Sales, the Richmond Manufacturing Index, Initial Jobless Claims, Crude Oil Inventories, the S&P/CS HPI Composite - 20 n.s.a., and Wholesale Inventories (preliminary).

Today, investors will focus on the U.S. Conference Board’s Consumer Confidence Index, which is set to be released in a couple of hours. Economists, on average, forecast that the December CB Consumer Confidence index will stand at 112.9, compared to last month’s figure of 111.7.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.536%, up +0.29%.

The Euro Stoxx 50 futures are down -0.25% this morning, starting a holiday-shortened week on a negative note. Travel and leisure as well as media stocks led the declines on Monday. Final data from the Office for National Statistics released Monday showed that the U.K. economy stagnated in the third quarter, a reduction from the initial estimate of a 0.1% increase. Separately, final data from the National Statistics Institute confirmed that Spain’s quarterly gross domestic product grew 0.8% in the third quarter.

Meanwhile, market participants continued to assess the monetary policy outlook in the region. European Central Bank President Christine Lagarde said in an FT podcast released Monday, “We’re getting very close to that stage when we can declare that we have sustainably brought inflation to our medium-term 2%.” In corporate news, Novo Nordisk A/S surged over +9% after the U.S. Food and Drug Administration approved the drugmaker’s bleeding disorder drug Alhemo.

U.K.’s GDP and Spain’s GDP data were released today.

U.K. GDP has been reported at 0.0% q/q and +0.9% y/y in the third quarter, weaker than expectations of +0.1% q/q and +1.0% y/y.

The Spanish GDP arrived at +0.8% q/q and +3.3% y/y in the third quarter, compared to expectations of +0.8% q/q and +3.4% y/y.

Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed down -0.50% and Japan’s Nikkei 225 Stock Index (NIK) closed up +1.19%.

China’s Shanghai Composite Index gave up earlier gains and closed lower today. Semiconductor and technology stocks weighed on the index on Monday. At the same time, energy stocks outperformed. Investor sentiment stayed cautious in anticipation of the People’s Bank of China’s decision on the one-year Medium-Term Lending Facility rate later this week.

Meanwhile, Goldman Sachs strategists noted that Chinese stocks are likely to see limited downside next year, given that trade tension risks have been priced in and domestic stimulus measures provide a buffer against any additional selloff. Earlier this month, Chinese policymakers indicated a transition to a “moderately loose” monetary policy next year, marking a shift from the current “prudent” stance.

Investors are also looking for hints of additional stimulus measures before year-end, though the likelihood remains low. In corporate news, CNOOC gained more than +3% following news that its Suizhong 36-2 oilfield block development project had started production.

Japan’s Nikkei 225 Stock Index closed higher today, buoyed by a rally on Wall Street on Friday as softer-than-expected U.S. inflation data fueled optimism for further Fed rate cuts next year. Automobile and electronics stocks led the gains on Monday.

Meanwhile, Japan’s 10-year government bond yield rose on Monday, while the yen hovered near a 5-month low as investors continued to evaluate the Bank of Japan’s monetary policy outlook.

BOJ Governor Kazuo Ueda signaled last week that the central bank would monitor Japanese wage trends and U.S. President-elect Donald Trump’s policies before making a decision on an interest rate hike. In other news, Masayuki Kichikawa, chief macro strategist at Sumitomo Mitsui DS Asset Management, stated that the conditions are favorable for the Nikkei to reach 40,500 by the end of March and close 2025 at 45,400.

In corporate news, Honda Motor rose over +3%, and Nissan Motor gained more than +1% after Japanese media reported that the two companies are aiming to finalize a merger agreement as soon as June and may combine in 2026. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -5.78% to 21.84.

Pre-Market U.S. Stock Movers

Rumble spiked about 46% in pre-market trading after announcing a strategic investment of $775 million from Tether.

Palantir Technologies rose more than +2% in pre-market trading following a Financial Times report that the data analytics firm and defense tech company Anduril Industries are in discussions with around a dozen competitors to create a consortium that will jointly bid for U.S. government contracts.

Source: Barchart

Risk Warnings and Disclaimers

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Warren Takunda

Economic

The UK economy had zero growth between July and September and is expected to have stagnated over the entire second half of 2024, undermining Keir Starmer’s promise to reboot growth.

In an unexpected downgrade as Labour comes under pressure over its economic management since taking power in July, figures from the Office for National Statistics showed growth in the third quarter was revised down to zero, below an initial estimate of 0.1% made last month.

Growth in the second quarter was also downgraded, from 0.5% to 0.4%.

A construction worker outside a shop window that is adverting a saleSharp fall in UK business activity forecast as economic gloom deepensRead moreThe ONS said the downgrade was driven by bars and restaurants, legal firms and advertising performing less well than it first expected.

UK Economy Stagnates as GDP Figures Revised Down_1

The latest snapshot suggests the UK is on course for two consecutive quarters of flatlining activity. This follows a slump in business and consumer confidence amid gloomy rhetoric from the new government alongside £40bn of tax increases in the autumn budget.

The Bank of England last week warned UK growth would stagnate in the final three months of the year. Although falling short of the technical definition of a recession – regarded as two quarters of negative growth – the downgrade will come as a blow to the government after it made reviving growth its number one priority.

Labour has faced a challenging start in government, coming under intense scrutiny over its downbeat assessment of the economy after blaming the Conservatives for a dire inheritance that left no choice but to raise taxes.

After the growth revision the chancellor, Rachel Reeves, defended her budget measures while arguing that the government was focused on driving up “sustainable long-term growth” by reforming the economy.

“The challenge we face to fix our economy and properly fund our public finances after 15 years of neglect is huge,” she said.

Business leaders have warned growth and jobs will be put at risk by £40bn of tax increases Reeves announced in her autumn budget, with the bulk raised through a £25bn rise in employer national insurance contributions from April.

The CBI lobby group warned on Monday that the UK economy was “headed for the worst of all worlds” as firms came under pressure, with activity set for a “steep” decline in the first three months of 2025.

Enter your email addressSign upPrivacy Notice: Newsletters may contain info about charities, online ads, and content funded by outside parties. For more information see our Privacy Policy. We use Google reCaptcha to protect our website and the Google Privacy Policy and Terms of Service apply.after newsletter promotionIn its latest growth indicator survey, it found that private sector firms expect to cut down on hiring, reduce output and raise prices in the first quarter. Andrew Griffith, the shadow business secretary, said this signalled a recession “seems increasingly likely”.

He said Labour was “literally killing businesses and jobs” through its policies and rhetoric, and added: “Since taking office, the chancellor has made this country a hostile climate for aspiration, for investment and for growth.”

The latest figures from the ONS showed no growth in living standards and that households had dipped into their savings. Early estimates also show that real GDP a head fell by 0.2% in the third quarter, and was 0.2% lower compared with the same period a year earlier.

Paul Dales, the chief UK economist at the consultancy Capital Economics, said the downward headline revision appeared to be mainly due to external influences rather than the domestic economy. This was partly due to a bigger fall in exports and investment in dwellings than originally estimated. Consumer spending and business investment was revised up.

“This leaves plenty of scope for a lively debate with the family over the festive period about whether or not the economy is heading for a recession,” he said.

“Our hunch is that 2025 will be a better year for the economy than 2024. But more recent data suggest the economy doesn’t have much momentum as the year comes to a close.”

Source: TheGuardian

To stay updated on all economic events of today, please check out our Economic calendar

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ACY

Economic

Forex

The Dollar’s Dominance A Testament to Economic Resilience

The U.S. dollar remains a formidable force in the FX market, buoyed by an economy that has consistently defied expectations. Revised GDP figures for the third quarter showcased robust growth, driven by resilient consumer spending and sustained business investments. This strength has been underpinned by the Federal Reserve’s steadfast approach to monetary policy, with Chair Jerome Powell reiterating the central bank’s commitment to taming inflation.

The USA Can’t be Resilient Forever, How does the USD have Left on the Bullish Trend?_1

The Fed’s preferred inflation gauge, the core Personal Consumption Expenditures (PCE) deflator, has shown modest but persistent increases, reinforcing the need for vigilance. Coupled with a historically tight labor market and solid wage growth, these factors have enhanced the greenback’s appeal to investors seeking stability. The dollar has particularly outperformed against commodity-linked currencies like the Australian and Canadian dollars, as well as lower-yielding counterparts such as the euro.

The USA Can’t be Resilient Forever, How does the USD have Left on the Bullish Trend?_2

However, questions remain about how long the dollar can sustain its dominance. The potential for a policy pivot by the Fed in 2025, alongside a global shift in risk sentiment, could test the greenback’s resilience in the months ahead.

The USA Can’t be Resilient Forever, How does the USD have Left on the Bullish Trend?_3

The British Pound: Caught in the Crosswinds of Economic Uncertainty

The British pound faces significant headwinds as the UK economy grapples with a fragile recovery. Persistent inflationary pressures have weighed heavily on households, with retail sales and consumer confidence indicators painting a bleak picture. High borrowing costs, a byproduct of the Bank of England’s earlier rate hikes, have further constrained economic activity.

The USA Can’t be Resilient Forever, How does the USD have Left on the Bullish Trend?_4

Amid this backdrop, policymakers are increasingly divided. While some advocate maintaining higher interest rates to combat inflation, others argue for easing monetary policy to stimulate growth. The latter camp has gained traction as wage growth moderates and energy prices stabilize, reducing inflationary pressures. This policy indecision has amplified the pound’s vulnerability, leaving it susceptible to sharp fluctuations driven by data releases and geopolitical developments.

Brexit-related uncertainties continue to add to the pound’s woes, particularly as trade negotiations with the European Union remain fraught with challenges. With the UK economy teetering on the edge of stagnation, the pound’s outlook for 2025 appears precarious at best.

The USA Can’t be Resilient Forever, How does the USD have Left on the Bullish Trend?_5

The Japanese Yen: Balancing Act Between Policy and Market Forces

In Asia, the Japanese yen has been a focal point of volatility, driven by a unique set of domestic and international factors. Inflation in Japan has exceeded the Bank of Japan’s (BOJ) target for several months, yet the central bank has resisted aggressive rate hikes, prioritizing long-term wage growth and economic stability over short-term inflation control.

The USA Can’t be Resilient Forever, How does the USD have Left on the Bullish Trend?_6

This dovish stance has left the yen vulnerable to depreciation, particularly against the dollar. The situation has been exacerbated by speculative activity in the FX market, prompting Japanese authorities to issue warnings and consider direct interventions. Such measures are likely to come into play during the low-liquidity conditions of the holiday season, where market distortions are more pronounced.

The USA Can’t be Resilient Forever, How does the USD have Left on the Bullish Trend?_7

Despite these challenges, I see potential for the yen to recover in 2025, particularly if global growth slows and demand for safe-haven assets increases. However, much will depend on the BOJ’s ability to strike a delicate balance between supporting the domestic economy and stabilizing the yen.

What’s next for 2025?

As we head into 2025, several themes are expected to dominate the narrative. Central banks around the world are recalibrating their strategies in response to shifting inflationary pressures, uneven growth trajectories, and evolving geopolitical dynamics. These adjustments will likely fuel heightened volatility, creating both opportunities and risks for market participants.

The interplay of economic data, fiscal policies, and external shocks—such as energy price fluctuations or geopolitical tensions—will be critical in shaping currency trends. Investors will need to adopt a nuanced approach, balancing short-term tactical plays with a focus on long-term structural shifts.

Moreover, emerging market currencies are poised to take centre stage as global capital flows react to changing interest rate differentials and risk appetites. Countries with sound fiscal positions and proactive monetary policies could attract inflows, while those grappling with high debt burdens or political instability may face currency depreciation.

To stay updated on all economic events of today, please check out our Economic calendar

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SAXO

Economic

Top Performers of 2024

Artificial Intelligence Leads the Charge: AI continues to dominate as one of the most significant investment themes, propelling stocks like NVIDIA and Palantir to the top.

NVIDIA: Built on its 2023 gains, fueled by unprecedented demand for AI chips.

Palantir: Benefited from its enterprise AI solutions, filling unique technology niches.

Broadcom: Benefited from expectations of robust AI revenue growth given its differentiated chip design capabilities for high-performance networking and computing that is making it take market share from Nvidia.

Energy and Utilities Shine: The push for renewable energy and nuclear power has created immense value in the utility sector.

Vistra: Thrived on strong cash flow and renewable energy investments.

GE Vernova: Benefited from the renewed focus on nuclear energy as part of the clean energy transition.

Defense and Security Make a Comeback: Geopolitical tensions and rising defense budgets boosted stocks in the defense sector.

Axon Enterprise: Leveraged higher demand for public safety technology, including TASERs and body cameras.

Howmet Aerospace: Played a pivotal role in supplying critical components for military aircraft.

Oil and Gas Expansion: Traditional energy had a resurgence, especially in regions like the Permian Basin.

Targa Resources and Texas Pacific Land: Both saw strong growth from expanding oil and gas production under the “drill baby drill” narrative. S&P 500: 2024 Stars, Flops, and What's Hot for 2025!_1

S&P 500: 2024 Stars, Flops, and What's Hot for 2025!_1

Worst Performers of 2024

Not all sectors participated in the rally, as challenges in healthcare, retail, and semiconductors weighed on several stocks.

Healthcare Sector Struggles: The healthcare industry faced significant headwinds, with regulatory changes and shifting market dynamics impacting major players.

Walgreens Boots Alliance: Struggled with declining foot traffic and increased competition from online pharmacies, leading to a substantial drop in stock value.

Moderna: Faced challenges in sustaining growth after the initial success of its COVID-19 vaccines, leading to a significant stock decrease.

CVS Health: Faced challenges in adapting to new healthcare models and competitive pressures, resulting in a notable decline in its stock performance.

Humana: Experienced a downturn due to increased competition and regulatory uncertainties affecting its healthcare services.

Retail Sector Challenges: Economic uncertainties and changing consumer behaviors have taken a toll on retail giants.

Dollar Tree: Encountered difficulties in maintaining profitability amidst rising operational costs and shifting consumer preferences.

Dollar General: Suffered from economic pressures and a decrease in consumer spending, leading to a significant drop in stock value.

Estee Lauder Companies: Faced supply chain disruptions and changing consumer habits, impacting its stock performance negatively.

Technology Competition: Some tech firms like Intel struggled to maintain momentum post-pandemic due to the technological shifts in the semiconductor industry, resulting in a steep decline.

Energy Transition: High interest rates continued to make the operating environment difficult for renewable energy companies like Enphase Energy.

Broader Economic Slowdown: Weakness in auto and industrial sector demand weighed on Celanese.

S&P 500: 2024 Stars, Flops, and What's Hot for 2025!_2

Investment Themes and Takeaways for 2025

AI Remains a Megatrend: The AI boom is far from over. High valuations in NVIDIA and Palantir reflect investor expectations for sustained growth.Subthemes such as increased energy needs for data centers will drive opportunities in utilities and clean energy.NVIDIA thrived due to AI-driven demand, while Intel (-62%) struggled amid reduced consumer electronics sales and competition from companies like Apple making their own chips. This divergence reflects the “elimination race” in the semiconductor space.

Clean Energy & Utilities Are Crucial: The transition to renewables and nuclear energy continues to drive significant returns.Companies like Vistra and GE Vernova highlight a derived sub-theme—AI’s energy-intensive infrastructure is boosting utilities, particularly those invested in nuclear power.

Defense Spending on the Rise: Global geopolitical tensions make defense and security a critical investment area.

Energy Expansion Is Back: Traditional energy remains vital, with oil and gas companies capitalizing on expanded production opportunities. The “drill baby drill” narrative and US energy independence push suggest ongoing opportunities in traditional energy.

Healthcare May Be Poised for Recovery: Despite current pressures from rising costs and regulatory risks, healthcare remains ripe for growth through defensive strategies and innovations in AI, obesity, and cancer therapies, offering long-term investment opportunities.

Consumer Sector Divergence: The US consumer market is experiencing a shift, with trading down trends becoming more prevalent. This divergence in retail trends presents both challenges and opportunities, as some retailers adapt to changing consumer preferences while others struggle to maintain market share.

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EU officials played down today Donald Trump’s latest tariff threat, after the US president-elect warned of dire consequences unless the bloc ramps up its purchases of American oil and gas.

Trump posted today on his Truth Social social media platform: “I told the European Union that they must make up their tremendous deficit with the United States by the large scale purchase of our oil and gas. Otherwise, it is TARIFFS all the way!!!”

Quizzed by reporters at a daily press briefing in Brussels, the European Commission’s trade spokesman Olof Gill responded to what he described as “frequent comments from the president-elect” on EU-US trade matters.

“[T]he EU has a substantial trade in goods surplus with the US, whereas the US has a substantial trade in services surplus vis-á-vis the EU, and that is not always reflected in some of the types of posts you're referencing,” Gill said.

“So what we want to get across, and what we have said on numerous occasions, including from the top level President von der Leyen down, is that we are ready to discuss with President-elect Trump how we can further strengthen an already strong relationship, including by discussing our common interests in the energy sector,” the spokesman added.

Europe has significantly ramped up imports of liquefied natural gas (LNG) from the US over the past three years as Brussels seeks to diversify sources of supply away from Russia amid president Vladimir Putin’s undeclared war on Ukraine.

According to official EU figures, the US was the single largest source of both petroleum and non-pipeline gas in the third quarter of this year, supplying just over 15% of oil and almost 38% of the bloc’s LNG imports.

In terms of total gas imports, LNG and pipeline combined, US exports covered a fifth of the EU demand last year, second only to the 30% that came from neighbouring Norway, which is linked by several pipelines.

EU officials declined to confirm whether Trump – as implied in his social media post – had delivered his ultimatum to Brussels via any official channels.

“I can only confirm that we have seen the tweets, the basis on which you have raised your questions,” the Commission’s deputy chief spokesperson Stefan de Keersmaecker said, underlining once again “the importance of further strengthening an already strong relationship”.

Source: Euronews

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