Tag Archives: december

December’s make-or-break moment for crypto’s liquidity crisis

December’s make-or-break moment for crypto’s liquidity crisis

Equities and fixed income have rallied on mounting confidence that the Federal Reserve will deliver a 25 basis point rate cut at its December FOMC meeting. This expectation is reinforced not only by softening consumption data and declining consumer confidence but also by the accelerating political momentum behind Kevin Hassett as the leading candidate to assume the Fed chairmanship. Markets interpret Hassett’s likely appointment as a signal of a more responsive, disinflation-conscious policy framework, thereby pricing in an earlier and potentially deeper easing cycle than previously anticipated.

This macro recalibration is evident across multiple asset classes. US Treasury yields have declined modestly yet meaningfully, with the 10-year yield settling at 4.004 per cent, reflecting a repricing of terminal rate expectations. Concurrently, the US dollar has weakened, providing tailwinds for Asian currencies, which have strengthened amid a narrowing interest rate differential between the US and regional central banks, stable onshore Chinese liquidity conditions, and reduced geopolitical friction following the Xi-Trump dialogue. Chinese equities, particularly in the technology and AI sectors, have rallied in response, indicating that risk capital is already rotating toward markets perceived to offer both valuation support and policy tailwinds.

Despite this broad-based improvement in traditional risk sentiment, digital asset markets remain entrenched in a state of acute pessimism. The CMC Fear and Greed Index stands at 15 out of 100, categorically Extreme Fear, unchanged over the past 24 hours and only marginally above its yearly nadir of 10 recorded on November 22. This persistent fear is notable not for its intensity alone but for its durability in the face of improving macro fundamentals elsewhere.

The total crypto market capitalisation of 3.03 trillion dollars remains below both its 7-day 2.97 trillion dollars and 30-day 3.34 trillion dollars simple moving averages, confirming a technically bearish posture. The 14-day Relative Strength Index has plunged to 27.4, the lowest level since April 2025, signalling exhaustion in the prevailing downtrend. Historical precedent suggests that such oversold conditions, particularly when coinciding with shifts in macro liquidity, often precede short-term mean-reversion rallies.

Complicating the interpretation of this dislocation is the anomalous behaviour in crypto derivatives markets. Over the past 24 hours, perpetual futures volume surged 25.5 per cent to 1.3 trillion dollars, while spot volume contracted by 14.1 per cent to 268 billion dollars. This divergence typically indicates heightened speculative activity absent genuine conviction in directional price movement.

Supporting this interpretation, open interest in perpetual contracts declined by 1.89 per cent to 785 billion dollars, and funding rates collapsed by over 5,000 per cent to a negligible 0.0013 per cent. These metrics collectively suggest that traders are engaging in low-leverage, short-duration positioning rather than establishing sustained long or short exposure. The derivatives market is active, but it is not committed.

The central constraint on crypto market performance remains liquidity. Bitcoin ETFs have recorded net outflows of 28 billion dollars this month, draining a critical source of structural demand precisely when macro liquidity conditions are most fragile. Until these flows stabilise or reverse, or until the Federal Reserve explicitly shifts to a more accommodative stance, crypto markets are likely to remain range-bound and sentiment-constrained.

The three trillion dollar market cap threshold has emerged as a key psychological and technical support level. A sustained breach below this mark could trigger algorithmic and leveraged liquidations, exacerbating downside pressure. A hold above this floor in conjunction with a dovish Fed decision could catalyse a significant liquidity-driven relief rally.

Kevin Hassett’s emergence as the presumptive next Fed Chair amplifies the probability of such an outcome. As Director of the National Economic Council since early 2025, Hassett has consistently advocated for a monetary policy that responds proactively to weakening demand indicators. His potential leadership signals a pivot toward a more traditional Taylor-rule-oriented framework, which would likely accelerate the pace of rate cuts in the event of further softening in labour or consumption data. For digital asset markets, which historically exhibit high beta to shifts in global liquidity conditions, this scenario represents a pivotal inflexion point.

In conclusion, the current market environment reflects a transitional regime characterised by divergent sentiment across asset classes. Traditional markets have already priced in near-term Fed easing, supported by both data and institutional expectations. Crypto markets, by contrast, remain mired in extreme fear despite being technically oversold and exhibiting heightened but uncommitted speculative activity. The critical variable bridging this gap is liquidity, which hinges on two near-term catalysts: the Fed’s December policy decision and the trajectory of Bitcoin ETF flows.

Should the Fed deliver a dovish pivot, particularly under Hassett’s anticipated stewardship, it would likely resolve the current sentiment dislocation and re-anchor crypto valuations to a more favourable macro liquidity regime. Until then, tactical positioning should emphasise monitoring these liquidity signals rather than assuming directional conviction.

 

Source: https://e27.co/decembers-make-or-break-moment-for-cryptos-liquidity-crisis-20251126/

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j

December Fed cut countdown: The 25 basis point move that will reshape every asset class

December Fed cut countdown: The 25 basis point move that will reshape every asset class

Financial markets stand at a pivotal intersection where technical pressures, valuation concerns, and shifting monetary policy expectations converge to create both opportunity and risk. The S&P 500 index recently breached key moving averages, though the 200-day moving average remains a robust support level. This technical development suggests short-term volatility remains likely, yet it does not warrant abandoning core equity positions.

Instead, prudent risk management through strategic hedging becomes essential as markets digest mixed signals. Professional fund managers currently maintain exceptionally low cash levels, while exchange-traded funds drive the majority of market flows, creating a paradoxical environment of high liquidity and stretched positioning that could amplify any sudden market reversals.

The concentration of market leadership within the Magnificent Seven technology stocks has begun to show signs of fragmentation, with valuations now trading below 30 times earnings and performance dispersion widening significantly. This development marks a crucial transition point where passive indexing strategies may underperform active stock selection.

Investors must avoid crowded trades and instead focus on selective exposure to genuine outperformers within the technology sector. The recent relief rally across US equities on Friday, with the Dow Jones Industrial Average climbing 1.1 per cent, the S&P 500 gaining one per cent, and the Nasdaq Composite rising 0.9 per cent, reflected improving risk sentiment driven by growing expectations of Federal Reserve rate cuts.

Market participants now price in a 62 per cent probability of a December rate cut, with UOB economists maintaining their expectation for a 25 basis point reduction at the upcoming Federal Open Market Committee meeting. The Fed will enter its mandatory blackout period from November 29 to December 12, 2025, limiting official communication during this critical decision window.

Fixed income markets responded to these shifting expectations with Treasury yields edging downward, the 10-year note settling at 4.063 per cent, and the 2-year note at 3.507 per cent. This movement signals growing defensive positioning among institutional investors, supporting the strategic case for maintaining duration exposure in the four to five year range. The spread between equity and bond valuations has widened sufficiently to make quality fixed income increasingly attractive as a portfolio diversifier ahead of anticipated Fed easing.

Simultaneously, currency markets exhibited nuanced behaviour with the US dollar gaining strength for the week while the Japanese yen rose sharply on Friday following Japan’s strongest warning yet regarding recent currency weakness. This intervention risk near the 160 yen per dollar level requires close monitoring as currency volatility could spill over into broader market stability.

Commodity markets reflected geopolitical sensitivity with Brent crude oil dipping on prospects of a potential Russia-Ukraine peace deal, while gold maintained its position above the psychologically significant US$4,000 level. Gold’s resilience underscores its continued role as a defensive hedge against market uncertainty, while oil prices remain acutely sensitive to geopolitical developments that could disrupt supply chains.

Asian equity markets declined on Friday as concerns over stretched artificial intelligence valuations weighed on investor sentiment, though US futures pointed higher at the start of the new week. Within regional allocations, technology exposure combined with dividend-paying stocks appears preferable for maintaining Asian market participation while managing valuation risks.

The cryptocurrency market experienced a modest 1.36 per cent gain over the last 24 hours, rebounding from extreme fear sentiment and oversold technical conditions. However, this recovery appears fragile when viewed against a 6.62 per cent weekly decline and a substantial 19.44 per cent monthly drop. The Relative Strength Index reached an extremely oversold reading of 18.98 before the recent bounce, suggesting technical exhaustion rather than fundamental conviction.

Regulatory developments provided temporary support as Grayscale’s Dogecoin and XRP exchange-traded funds received approval for NYSE Arca listing, scheduled to begin trading on November 24. These approvals, alongside Franklin Templeton’s XRP ETF launch and BlackRock’s staked Ethereum ETF filing, signal institutional demand and regulatory progress that temporarily offset broader market anxiety. XRP and Dogecoin outperformed Bitcoin during this period, with XRP gaining 1.58 per cent compared to Bitcoin’s 1.36 per cent rise, though early trading volumes for the new ETF products will determine whether this optimism sustains.

Binance continued to demonstrate ecosystem strength, maintaining its position as the world’s leading cryptocurrency exchange with over US$2 trillion in monthly trading volume, representing 41.1 per cent of global crypto trades. BNB token rose 1.35 per cent, supported by ecosystem updates including the CMC20 index token launch on BNB Chain. While Binance’s liquidity depth provides price stability benefits, derivatives trading volume fell 52 per cent over 24 hours, indicating cautious leverage usage among sophisticated traders. This mixed signal highlights the market’s transitional nature, where retail enthusiasm meets institutional caution.

From a global asset allocation perspective, US equities appear relatively expensive compared to international value-oriented strategies that have begun showing strong relative performance. This valuation disparity creates a compelling case for strategic diversification beyond US borders while maintaining exposure to high-quality American companies.

Selective non-US value investments and mid-cap strategies offer opportunities to generate alpha as market leadership broadens beyond the narrow technology concentration that dominated recent years. The combination of reasonable valuations in international markets and attractive entry points in quality fixed income creates a unique opportunity for portfolio rebalancing.

My perspective on this market juncture emphasises cautious optimism tempered by rigorous risk management. The technical breakdown in major indices, combined with stretched positioning metrics, suggests near-term volatility will persist, yet the fundamental case for equities remains intact, given anticipated monetary policy easing.

The widening dispersion within technology stocks represents not a warning sign but rather a healthy maturation of the market cycle where stock selection matters more than sector allocation. The approval of cryptocurrency ETFs marks genuine institutional acceptance, though the asset class remains highly speculative and should represent only a small portfolio allocation for most investors.

The most critical factor for investors remains maintaining discipline amid conflicting signals. The 200-day moving average’s resilience as support for the S&P 500 provides a valuable technical anchor, while the 62 per cent probability of December rate cuts offers fundamental justification for maintaining equity exposure.

However, the extremely low cash levels among professional managers and the dominance of ETF flows create vulnerability to sharp reversals that could test even the strongest support levels. Bond markets offer increasingly attractive risk-reward characteristics as yields remain elevated relative to expected inflation and growth trajectories.

Geopolitical risks continue to influence commodity markets disproportionately, with oil prices sensitive to peace negotiations while gold maintains its safe-haven appeal. Currency markets require particular attention as central bank policies diverge, with the yen’s intervention risk near 160 representing a potential flashpoint for global volatility. Asian markets face the dual challenge of high technology valuations and economic growth concerns, making selective exposure to dividend-paying stocks and established technology leaders more prudent than broad regional bets.

The cryptocurrency market’s fragile recovery underscores the importance of distinguishing between regulatory progress and fundamental value. While ETF approvals represent significant milestones, the 19.44 per cent monthly decline and extremely oversold technical conditions suggest caution remains warranted. Binance’s ecosystem strength provides stability, but the 52 per cent drop in derivatives volume reveals underlying caution that contradicts surface-level price gains.

Looking ahead, the Federal Reserve’s December meeting will likely serve as the next major catalyst, with markets already pricing in significant easing. This expectation creates both opportunity and risk, as any deviation from anticipated policy could trigger substantial volatility.

Investors should focus on quality across all asset classes, maintaining core equity exposure while strategically adding high-grade fixed income as yields remain attractive. International diversification offers valuable valuation benefits, particularly in value-oriented strategies that have underperformed during the recent technology-driven rally.

The crossroads markets face today require neither panic nor complacency, but rather thoughtful adaptation to changing conditions. Technical support levels, valuation disparities, and monetary policy expectations all point to a transitional period in which active management and risk-aware positioning will outperform passive approaches.

By maintaining core exposures while hedging downside risks, selectively participating in institutional adoption trends like cryptocurrency ETFs, and diversifying globally toward more attractive valuations, investors can navigate this complex environment while positioning for long-term success. The path forward demands patience and discipline, recognising that market leadership transitions rarely occur smoothly but ultimately create stronger, more sustainable growth foundations.

 

Source: https://e27.co/december-fed-cut-countdown-the-25-basis-point-move-that-will-reshape-every-asset-class-20251124/

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j

43 per cent chance of a Fed rate cut isn’t enough: Markets brace for a volatile December

43 per cent chance of a Fed rate cut isn’t enough: Markets brace for a volatile December

We are caught between the surging optimism of the AI revolution and the sobering reality of a Federal Reserve that shows no immediate signs of pivoting toward monetary easing. The dominant narrative of the past six months, a powerful rally in US equities that saw the S&P 500 climb a robust 21 per cent from April through October, has now run into a wall of technical resistance and macroeconomic uncertainty. This creates a delicate and precarious balance for investors, who must navigate a market that is technically stretched, fundamentally challenged by a lack of broad-based participation, and now facing its first major test of conviction since the rally began.

The S&P 500’s impressive run, which brought its year-to-date return to over 30 per cent by mid-November, has been almost exclusively driven by the so-called Magnificent Seven technology giants. Their valuations, trading at more than 30 times earnings, are a clear signal that the market’s gains have been concentrated in a narrow cohort of AI beneficiaries. This dynamic echoes the excesses of the dotcom era.

This concentration creates a fragile foundation. The index now struggles at its 50-day moving average, a key technical level that often acts as a barometer of short-term sentiment. A failure to break through this resistance, especially after such a strong run, suggests that much of the easy money has been made and that further upside will be limited and hard-fought. Historical seasonal trends support this cautious view, as the final two months of the year typically offer only marginal gains following such a powerful rally.

The single most important event for the market’s immediate trajectory will be Nvidia’s earnings report on November 19. As the undisputed leader in AI chips, Nvidia has become the canary in the coal mine for the entire AI investment thesis. Its guidance on future demand, data center growth, and gross margins will be scrutinised for any sign of a slowdown in the frenzied spending by hyperscalers and tech firms. A strong beat and bullish outlook could provide a final burst of momentum to push the S&P 500 to new highs before year-end. Conversely, any hint of a demand deceleration or a more challenging competitive landscape would likely trigger a broad-based selloff, as it would call into question the core engine of the market’s gains over the past year.

Compounding this technical and earnings-driven anxiety is the shifting landscape of monetary policy. The Federal Reserve’s stance has become a primary source of near-term worry. Markets had been pricing in a high probability of a rate cut at the December meeting, but recent strong economic data, particularly in the labour market, have forced a dramatic reassessment. The odds of a December rate cut have now fallen to just 43 per cent, a coin flip at best. This sudden withdrawal of expected liquidity is a major headwind for risk assets. The implications are clear in the bond market, where the 10-year Treasury yield has climbed to 4.148 per cent, and in the foreign exchange market, where the US Dollar Index has strengthened to 99.299. A strong dollar and high yields are a toxic combination for global growth and for expensive, long-duration assets like technology stocks.

This environment of Fed uncertainty makes a barbell investment strategy particularly prudent. On one end, investors should retain exposure to high-quality, large-cap growth companies that are genuine AI leaders with strong balance sheets and clear paths to monetisation. On the other end, they should anchor their portfolios with resilient, high-quality dividend payers. These companies, often found in sectors like consumer staples and utilities, provide a steady income stream and act as a ballast during periods of market volatility and economic doubt. This dual approach allows investors to participate in the ongoing AI narrative while simultaneously protecting their capital from the potential fallout of a hawkish Fed.

The contrast between the US and emerging markets is also becoming more stark. While US valuations are stretched and corporate profit margins are at or near peak levels, many emerging markets offer a more compelling long-term risk-reward profile. Within this group, China remains a complex and challenging investment case, plagued by issues of capital misallocation and intense domestic competition. However, a selective approach is warranted. Chinese technology firms with a strong international footprint and a capacity for overseas expansion present a unique opportunity, as do high-quality dividend-paying stocks that can provide stability in an otherwise volatile market. The key is to avoid broad, passive exposure and instead focus on specific, well-managed companies that can navigate the domestic headwinds and capitalise on global opportunities.

The cryptocurrency market, deeply intertwined with the Nasdaq and broader risk sentiment, has been a stark reflection of this growing macro anxiety. Over the past 24 hours, the market has fallen 0.62 per cent, continuing a brutal 12 per cent monthly decline. The sentiment, as measured by the Fear & Greed Index, has plunged into the zone of “Extreme Fear,” registering a level of 17. A cascade of forced selling has amplified this fear.

In just four hours, over US$200 million in leveraged long positions were liquidated, creating a vicious feedback loop where falling prices triggered more margin calls, which in turn forced more selling. The unwinding of excessive leverage has left the market technically in a state of disrepair. The total crypto market cap has now fallen below its 200-day exponential moving average of US$3.63 trillion, confirming a bearish market structure.

The primary catalyst for this crypto selloff has been the same macro uncertainty plaguing traditional markets: the fading hope for imminent Fed rate cuts. As the odds for a December cut dropped to 44 per cent, the correlation between Bitcoin and the Nasdaq surged to 0.86, confirming that crypto is once again being traded as a high-beta risk asset. This has been compounded by a significant outflow of institutional capital, with Bitcoin ETFs experiencing US$1.1 billion in weekly outflows and a sharp 33 per cent monthly decline in stablecoin reserves, indicating a severe contraction in available trading liquidity. The market’s fragility was further exposed by a piece of news from Japan, where a proposal to slash the punitive crypto tax rate from 55 per cent to a more reasonable 20 per cent actually triggered short-term profit-taking. Investors, wary of any regulatory change, used the news as an excuse to exit positions, demonstrating how any event can become a catalyst for selling in such a risk-averse environment.

The key question now for the cryptocurrency market is whether a major technical support zone can hold. Analysts are closely watching the US$88,000 to US$90,000 range for Bitcoin. A decisive break below this level could unleash a wave of further liquidations, potentially totaling US$5.5 billion in short-term positions.

The market’s fate, much like that of the S&P 500, is now hostage to the same macro forces. Until there is greater clarity on the Fed’s path or a major, definitive catalyst, both traditional and digital asset markets are likely to remain range-bound and volatile, caught in a tense stalemate between the powerful promise of a new technological era and the immediate, sobering reality of a central bank determined to keep a tight grip on its monetary policy.

 

Source: https://e27.co/43-per-cent-chance-of-a-fed-rate-cut-isnt-enough-markets-brace-for-a-volatile-december-20251117/

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j