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Dollar weakness isn’t just a trend. It is reshaping global asset flows

Dollar weakness isn’t just a trend. It is reshaping global asset flows
Investors are navigating a landscape defined by uncertainty, muted risk appetite, and a growing divergence between headline optimism and underlying fragility. The Federal Reserve’s first policy decision of 2026 looms large, scheduled for 3AM Singapore time on Thursday, and markets have already begun pricing in cautious expectations.
This tension is underscored by a sharp drop in consumer confidence, which tumbled to 84.5 in January from 94.2 in December, the lowest reading since 2014. Such a precipitous decline suggests that households are increasingly wary of economic conditions, possibly anticipating labor market softness or broader financial instability. Compounding this unease is the rising probability of a partial US government shutdown, fueled by political friction in Minnesota, adding another layer of near-term volatility to an already fragile outlook.
Despite these headwinds, the baseline economic forecast remains cautiously optimistic. Real GDP growth for 2026 is projected at 1.7 per cent, supported by a confluence of fiscal stimulus, accommodative monetary settings, and regulatory frameworks designed to cushion against recessionary forces. This resilience appears unevenly distributed. The equity market’s mixed performance on Tuesday, with the Dow Jones down 0.83 per cent while the S&P 500 and Nasdaq rose 0.41 per cent and 0.91 per cent respectively, mirrors this dichotomy. A steep selloff in health insurers offset gains driven by anticipation around megacap earnings, revealing how sector-specific dynamics can override broad market narratives. In this context, overreliance on a narrow set of tech giants becomes a strategic vulnerability. Diversification into the S&P Equal Weighted or Low Volatility Index offers a more balanced exposure, while selective allocations to cyclicals like financials and industrials and defensives such as targeted healthcare segments can hedge against both slowdowns and unexpected rallies.
Fixed income markets reflect similar caution. Treasury yields moved in opposite directions on Tuesday, with the 10-year yield edging up two basis points to 4.23 per cent while the two-year yield dropped more than two basis points to 3.57 per cent. This flattening of the yield curve hints at investor skepticism about near-term growth prospects, even as longer-term inflation expectations remain anchored.
The recommendation to extend duration and accumulate high-quality fixed income, particularly in developed and emerging market investment grade, aligns with a defensive posture that anticipates further monetary easing. With two rate cuts still expected in the second and third quarters of 2026, bond investors are positioning for a pivot that will likely be triggered by labour market deterioration, even if delayed data obscures the full picture for now.
Currency markets tell perhaps the most compelling story of shifting power dynamics. The US Dollar Index plunged 1.28 per cent to close at 95.80, its weakest level in nearly four years. President Trump’s public indifference to the dollar’s slide only reinforced market perceptions that US policymakers may tolerate or even welcome a weaker greenback to support exports and ease debt burdens.
The euro surged to its highest level against the dollar since June 2021, while the yen rallied sharply, closing 1.27 per cent lower against the dollar at 152.19, buoyed by speculation of coordinated rate checks between Washington and Tokyo. This broad-based dollar weakness is not merely a technical development. It reshapes global capital flows and redefines asset attractiveness. For risk assets priced in dollars, including commodities and crypto, a falling DXY lowers entry barriers for foreign investors and amplifies returns when converted back into stronger currencies.
Speaking of commodities, Brent crude jumped 3.02 per cent to 67.57 dollars per barrel following a winter storm that paralyzed US Gulf Coast exports, illustrating oil’s persistent sensitivity to supply shocks. The structural outlook remains cautious, given ample global inventories and tepid demand signals. Gold, meanwhile, soared 2.4 per cent to a record 5,136.47 dollars per ounce, cementing its role as the ultimate hedge amid geopolitical strain and economic ambiguity. The metal’s ascent underscores a flight to safety that extends beyond traditional bonds, especially as correlations between gold and the total crypto market cap reach a striking plus 0.84. This unusual alignment suggests that both assets are increasingly viewed through the same lens, as alternatives to fiat systems perceived as unstable or manipulated.
In Asia, regional equities responded positively to the dollar’s retreat and improved global risk tone. South Korea’s Kospi led with a 2.7 per cent gain, powered by memory chip stocks, while Hong Kong’s Hang Seng and Japan’s Nikkei added 1.4 per cent and 0.8 per cent respectively. These moves highlight how emerging and developed Asian markets benefit disproportionately from dollar depreciation and liquidity expansion.
Against this backdrop, the crypto market’s modest 0.77 per cent rise over the past 24 hours and 0.92 per cent weekly gain appears understated but meaningful. The move is not driven by speculative frenzy but by two converging fundamentals. First, a PayPal survey released on January 28, revealed that 39 per cent of US merchants now accept cryptocurrency, with 84 per cent expecting mainstream adoption within five years. This is not just optimism. It is evidence of infrastructure maturing beyond trading platforms and into real commerce. Second, the dollar’s collapse below 96 creates a historically bullish macro setup for Bitcoin and other digital assets. When the DXY weakens, crypto often thrives, not as a tech stock proxy, but as a non-sovereign store of value.
The surge in perpetuals trading volume by 16.08 per cent and the turn to positive funding rates signal that speculators are returning, but this time with a foundation of utility and macro support. The question now is whether sustained merchant adoption can offset structural pressures like shrinking stablecoin supplies. If real-world usage continues to grow while the dollar remains under pressure, crypto may transition from a volatile satellite asset to a core component of diversified portfolios. The current moment, quiet as it seems, could mark the beginning of that shift.

 

Source: https://e27.co/dollar-weakness-isnt-just-a-trend-it-is-reshaping-global-asset-flows-20260128/

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

RWA isn’t decentralised: It’s TradFi wearing a blockchain costume

RWA isn’t decentralised: It’s TradFi wearing a blockchain costume

Real World Asset (RWA) tokenisation has emerged as one of the most talked-about frontiers in the blockchain and web3 space, promising to unlock trillions of dollars of otherwise illiquid value by bringing tangible assets like real estate, bonds, commodities, and even art onto the blockchain. Proponents often tout RWA as the missing link that will finally bring institutional capital into decentralised ecosystems while democratising access to high-value investment opportunities.

A growing chorus of sceptics warns that RWA may not represent a true web3 innovation at all, but rather a repackaging of traditional finance wrapped in digital form, still tethered to centralised institutions, legacy legal frameworks, and regulatory dependencies that contradict the core tenets of decentralisation, trustlessness, and permissionless access.

At the heart of this critique lies a fundamental truth: the token itself is not the asset. Instead, it functions as a digital proxy, a claim or receipt, whose validity depends entirely on off-chain realities that the blockchain cannot enforce. When you tokenise a commercial building in Manhattan or a US Treasury bond, the blockchain records a cryptographic representation of ownership, but the legal title, physical custody, and enforceability of that claim remain firmly outside the ledger.

That disconnection forces RWA systems to rely on third parties, lawyers, custodians, courts, and regulators to verify, manage, and defend the value the token purports to represent. In doing so, RWA reintroduces the very intermediaries that web3 was designed to disintermediate.

One of the most pressing structural flaws is regulatory uncertainty. Unlike purely digital assets such as Bitcoin or Ethereum, which operate in a grey zone but are increasingly recognised as commodities, tokenised RWAs often fall squarely within the definition of securities under existing financial laws. This triggers a cascade of compliance obligations, registration, prospectus disclosures, and investor accreditation checks that vary wildly across jurisdictions.

A token representing a German mortgage-backed security may be treated as a regulated investment product in the EU, an unregistered security in the US, and something entirely different in Singapore or the UAE. The absence of global regulatory harmonisation means that RWA projects must either limit their operations to a narrow geography or bear the immense cost of multi-jurisdictional legal compliance. This not only stifles innovation but also limits participation to well-capitalised institutions, effectively pricing out the average retail investor that web3 claims to empower.

Even if regulatory hurdles were overcome, RWA tokenisation remains vulnerable to counterparty and custodial risk. Most RWA protocols do not hold physical assets directly on-chain. They cannot, because a blockchain cannot store a deed or a warehouse full of gold. Instead, the underlying asset is held by a legal entity, often a Special Purpose Vehicle (SPV), which issues tokens backed by that asset. This arrangement creates a single point of failure. If the SPV is mismanaged, becomes insolvent, or engages in fraudulent activity, token holders may find their digital claims backed by nothing more than empty promises.

Unlike in a truly decentralised system, where code and consensus govern outcomes, RWA token holders must place faith in the honesty and solvency of a centralised custodian. This dependency fundamentally undermines the trustless ethos of web3. When a smart contract cannot guarantee the redemption of a token for its underlying value without invoking human intermediaries, the promise of self-sovereign ownership rings hollow.

Moreover, many RWA implementations contradict the foundational principles of permissionless and open access. Because of regulatory pressures and risk management concerns, most RWA platforms require users to undergo Know Your Customer (KYC) and Anti-Money Laundering (AML) verification before they can buy, sell, or hold tokens. Some even deploy their tokens on permissioned blockchains, where validators are pre-approved institutions rather than open participants.

These design choices may make sense from a compliance standpoint, but they erode the open, borderless, and censorship-resistant nature of public blockchains. Instead of creating a new financial paradigm, such systems replicate the gated, hierarchical structures of traditional finance, merely digitising the gatekeeping rather than dismantling it.

Liquidity, often cited as the chief benefit of tokenisation, also proves more illusory than real in practice. While fractional ownership theoretically enables smaller investors to participate in high-value assets, the secondary markets for RWA tokens remain thin and fragmented. Without deep pools of buyers and sellers, accurate price discovery becomes difficult. This leads to wide bid-ask spreads, susceptibility to manipulation, and the need for professional market makers, who again reintroduce centralised actors into the ecosystem.

More critically, the liquidity of the token is not the same as the liquidity of the underlying asset. A token representing shares in a private commercial building may trade freely on a decentralised exchange, but if the building itself cannot be sold quickly or at fair market value, the token’s price may decouple from reality, creating systemic fragility.

Perhaps the most philosophically damning argument is that enforcement of RWA ownership ultimately depends on traditional legal systems. Smart contracts can automate payments or transfers of tokens, but they cannot compel a physical handover of property or enforce rights against a defaulting counterparty in the real world.

If a dispute arises, say, the custodian refuses to honour redemptions or a third party challenges the legal title, the resolution must occur in a court of law, not on a blockchain. This means that the finality promised by decentralised ledgers is conditional, contingent on off-chain institutions that operate outside the protocol’s control. In such a model, the blockchain becomes little more than a glorified database, recording claims that derive their enforceability from the very centralised systems web3 seeks to replace.

Critics, therefore, argue that RWA tokenisation is not a revolution but a bridge, one that may facilitate the onboarding of institutional capital into crypto ecosystems, but at the cost of ideological purity. Rather than reimagining property rights, ownership, and value transfer from first principles, RWA grafts blockchain technology onto the existing scaffolding of TradFi.

It digitises paperwork but does not eliminate the need for paperwork. It tokenises trust but does not render trust obsolete. In doing so, it risks creating a hybrid system that inherits the inefficiencies of both worlds, the rigidity of legacy finance and the volatility of crypto, without delivering the autonomy or resilience that true decentralisation promises.

This is not to say that RWA has no utility. For certain use cases, such as streamlining syndication in private credit or enabling faster settlement in bond markets, it may offer genuine efficiency gains. But those gains come within the confines of a system that remains fundamentally centralised in its legal and economic underpinnings. As such, RWA should be understood not as the future of web3, but as an on-ramp from the old world to the new, an interim solution that may accelerate adoption but does not embody the transformative potential that defines the web3 vision.

Until the legal, custodial, and enforcement layers can be fully encoded and executed on-chain, a feat that may require not just technological innovation but societal and legal paradigm shifts, RWA will remain a digital shadow of the physical world, not a self-contained sovereign alternative.

 

Source: https://e27.co/rwa-isnt-decentralised-its-tradfi-wearing-a-blockchain-costume-20260105/

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