Tag Archives: markets

Markets rally on Fed easing bets: Here’s why Crypto’s move is different

Markets rally on Fed easing bets: Here’s why Crypto’s move is different

The market rally propelled by persistent expectations of a Federal Reserve rate cut underscores a delicate inflexion point in global macro sentiment. Investors continue to price in a high probability of monetary easing despite lingering inflation concerns and geopolitical uncertainties. This optimism has spilt over into equities, bonds, currencies, and notably, digital assets. Beneath the surface of this coordinated advance lies a complex interplay of mechanical market dynamics, institutional positioning, and technical thresholds, particularly in crypto, that suggests caution even amid apparent strength.

Equity markets reflected this cautious confidence, with US indices posting modest gains led by technology shares. The S&P 500 rose 0.3 per cent, the Dow added 0.4 per cent, and the Nasdaq climbed 0.6 per cent, indicating that risk appetite remains concentrated in sectors most sensitive to lower discount rates. At the same time, the yield curve tells a nuanced story.

While the 10-year Treasury yield held steady at 4.086 per cent, the two-year yield dropped by 2.2 basis points to 3.508 per cent, steepening the curve slightly. This signals that traders are front-running an imminent policy pivot, expecting near-term cuts without a full repricing of long-term inflation expectations. The dollar softened in response, though USD/JPY held ground as markets digested fading speculation around a December Bank of Japan rate hike. The directional bias still points toward yen appreciation as yield differentials narrow, adding further pressure on the greenback.

In this macro backdrop, the crypto market’s 6.29 per cent surge over 24 hours appears less anomalous and more like a logical extension of the broader risk-on shift. The drivers differ substantially from traditional assets. Unlike equities, which respond directly to discounted cash flows and rate expectations, crypto’s rebound was largely mechanical, fuelled by the forced unwinding of overextended short positions.

More than US$156 million in leveraged shorts were liquidated in a single day, the most since October’s volatility spike. This cascade began when Bitcoin briefly dipped to US$84,000, testing the psychological and technical floor at the 100-week simple moving average of US$86,000. That level held, triggering a classic short squeeze as traders scrambled to cover positions. The resulting vacuum sucked in fresh bids, pushing perpetual futures funding rates into positive territory at plus 0.0036 per cent, a clear signal of renewed speculative appetite.

Simultaneously, institutional activity provided a more structural underpinning to the rally, particularly in the form of XRP spot ETF inflows. On December 2 alone, US-based XRP ETFs recorded a net US$67.7 million inflow, with Grayscale’s GXRP accounting for US$45.8 million of that total. This stands out against a broader trend of altcoin outflows and persistent regulatory ambiguity surrounding Ripple’s legal standing.

The fact that institutional capital continues to accumulate XRP despite these headwinds suggests a strategic bet on eventual regulatory clarity or a broader diversification away from Bitcoin-dominant exposure. Such targeted demand helped stabilise the altcoin ecosystem during a period when broader sentiment remained fragile, as evidenced by a Fear and Greed Index reading of just 22, deep in fear territory.

Bitcoin’s price action itself warrants careful interpretation. Reclaiming the US$86,000 to US$88,000 range is significant not just because of its historical role as support, tested more than 60 times since July, but also because of what it represents structurally. It is a convergence zone where long-term holders, miners, and institutional treasuries often anchor their cost basis.

The relative strength index at 39.05, while still in oversold territory, has begun turning upward, and the MACD histogram has flipped green with a US$29 billion reading, hinting at accumulating momentum. The rally remains incomplete. A daily close above US$95,000 would be required to confirm a true reversal of the recent downtrend. Absent that, the market risks sliding back toward the US$72,000 level, where deeper liquidation clusters and lower on-chain support reside.

What is especially telling is that this rally emerged not from fresh macro catalysts or regulatory breakthroughs, but from internal market mechanics. The short squeeze cleared out weak hands, ETF inflows injected selective confidence, and technical support held just long enough to reignite speculative interest.

This combination speaks to a market in transition, one that remains highly sensitive to leverage dynamics and sentiment shifts, yet increasingly influenced by institutional flows that operate on longer time horizons. It also highlights a growing divergence. While traditional markets lean on Fed expectations as their primary narrative, crypto markets are beginning to develop their own internal logic, where on-chain activity, derivatives positioning, and ETF flows carry equal or greater weight.

Looking ahead, sustainability hinges on two factors. First, whether open interest in derivatives rebounds without reintroducing dangerous levels of leverage that could trigger another violent unwind. Second, whether ETF inflows, particularly into non-Bitcoin assets like XRP, broaden into a consistent trend rather than a one-off event. If both conditions hold, the current bounce could evolve into a more durable uptrend. If not, the market may face another round of consolidation or downside discovery, especially if the Fed’s anticipated cut fails to materialise or comes with hawkish caveats.

In conclusion, the rally across asset classes reflects a market tentatively stepping out from under the shadow of restrictive monetary policy. In crypto, the story is more intricate, a blend of technical resilience, leveraged feedback loops, and quiet institutional accumulation.

For now, the path of least resistance appears upward, but the terrain remains treacherous. Traders would do well to monitor not just price, but the underlying structure of liquidity, positioning, and capital flows that will ultimately determine whether this rally marks a turning point or merely a reprieve.

 

Source: https://e27.co/markets-rally-on-fed-easing-bets-heres-why-cryptos-move-is-different-20251203/

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

Crypto rebounds as labour data calms markets but is the rally sustainable?

Crypto rebounds as labour data calms markets but is the rally sustainable?

At first glance, the improvement in global risk appetite appears to stem from a stabilising US labour market, a critical pillar in the Federal Reserve’s dual mandate framework. The ADP employment report for October delivered a modest but symbolically important reversal, showing a net addition of 42,000 private-sector jobs after September’s sharply revised contraction of 29,000, itself an improvement from the initially reported 32,000 decline. This sequential recovery, however slight, offers a glimmer of resilience against the backdrop of persistent inflation concerns and lingering uncertainty around the terminal interest rate.

Equity markets responded with measured enthusiasm. On Wednesday, the S&P 500 gained 0.4 per cent, the Dow Jones climbed 0.5 per cent, and the Nasdaq led the charge with a 0.7 per cent advance. This rebound followed a tech-heavy selloff that had tested investor resolve, and the bounce suggests the presence of committed dip buyers willing to step in at lower levels. The market’s fragility remains evident in the movement of US Treasury yields, which edged higher across the curve.

The two-year yield rose by 5.4 basis points to close at 3.629 per cent, while the 10-year yield jumped 7.4 basis points to 4.159 per cent. Higher yields typically signal either expectations of stronger growth or stickier inflation, both of which could complicate the Fed’s path toward rate cuts in early 2026. Meanwhile, the US Dollar Index held steady at 100.17, reflecting a balanced tug-of-war between softening safe-haven demand and the dollar’s relative yield advantage.

In commodities, gold advanced 1.2 per cent to settle at US$3979 per ounce, benefiting from the dollar’s temporary flatlining and ongoing geopolitical tensions that continue to underpin safe-haven demand. Crude oil told a different story. Brent crude dropped 1.4 per cent to US$63.52 per barrel after the Energy Information Administration reported the largest weekly build in US crude stockpiles since July. This inventory surge underscores weakening near-term demand expectations, possibly tied to China’s tepid economic recovery and Europe’s stagnation, and adds downward pressure on energy markets already grappling with oversupply concerns.

Turning to Asia, equity markets closed mixed on Wednesday but opened higher in early Thursday trading, reflecting spillover optimism from the US session. US equity index futures now point to a lower open, hinting at profit-taking or renewed caution as traders digest the week’s data flow and await the Bank of England’s policy decision. The BOE is widely expected to hold its benchmark interest rate at 4.0 per cent, a move that would align with the central bank’s recent dovish tilt amid cooling UK inflation and fragile growth.

Against this macro backdrop, the cryptocurrency market staged a modest but notable recovery, rising 2.15 per cent over the past 24 hours. This bounce comes after a punishing weekly decline of 7.8 per cent and a steep monthly drop of 18.25 per cent, suggesting that the asset class may have reached a point of technical and psychological exhaustion. Three interlocking forces appear to be driving this rebound: regulatory reprieve, ETF-related optimism, and a classic technical reset in overextended short positions.

The most immediate catalyst emerged from an unexpected source: the US government shutdown. This administrative pause has temporarily halted the Securities and Exchange Commission’s aggressive probe into the crypto treasury holdings of over 200 publicly traded companies. While shutdowns rarely produce positive market outcomes, this one inadvertently created a window of regulatory calm.

Traders seized on the pause as a signal that enforcement actions, particularly those targeting corporate crypto adoption, would be delayed, if not softened. The psychological relief was enough to lift risk appetite across the board, allowing Bitcoin and key altcoins to claw back from multi-week lows. This respite remains contingent. Once the shutdown ends and the SEC resumes operations, the threat of renewed scrutiny could quickly resurface, potentially triggering another wave of volatility.

A second, more structural driver lies in the evolving landscape of crypto exchange-traded funds. Franklin Templeton’s recent filing of an updated XRP ETF application, utilising the auto-effective S-1 mechanism previously deployed by Bitwise and Canary Capital, marks a significant, if cautious, step toward broader institutional acceptance. The move signals that major asset managers continue to explore avenues to offer crypto exposure through regulated vehicles, even for assets entangled in legal ambiguity. XRP’s unique situation casts a long shadow.

The unresolved SEC versus Ripple case continues to deter full-scale institutional endorsement, and while XRP itself rose 2.3 per cent in response to the ETF news, outpacing Bitcoin’s 1.9 per cent gain, the market’s reaction remained measured. Investors recognise that without a definitive legal resolution, any ETF approval for XRP would face heightened regulatory resistance, limiting its near-term upside potential.

Finally, the rally gained momentum from technical factors rooted in market structure. The total crypto market capitalisation, now at US$3.44 trillion, bounced precisely off the 78.6 per cent Fibonacci retracement level of its recent decline, which sat at US$3.37 trillion, a confluence that often attracts algorithmic and discretionary buyers alike. Simultaneously, the 14-day Relative Strength Index (RSI) climbed to 35.87, exiting deeply oversold territory and signalling a reduction in bearish momentum. This technical rebound was amplified by forced short-covering.

As prices began to rise, leveraged short positions faced liquidation, creating a feedback loop that accelerated the upward move. Open interest in perpetual futures contracts increased by 3.11 per cent, indicating fresh capital entering the market. Scepticism lingers: funding rates remain negative at -0.0035 per cent, suggesting that traders are still reluctant to pay a premium to maintain long positions, preferring instead to collect fees from overextended shorts.

Looking ahead, the sustainability of this rally hinges on two competing forces. On one side, the near-perfect correlation between crypto and the Nasdaq, currently at 0.96, ties Bitcoin’s fate to the broader tech sector’s performance. Any stumble in US equities, particularly among mega-cap tech stocks, will likely drag crypto lower. Compounding this vulnerability, US spot Bitcoin ETFs have seen net outflows of US$1.3 billion over the past week, reflecting institutional caution amid macro uncertainty.

On the other side, the potential resumption of ETF approvals, especially for Ethereum or other major assets, could reignite bullish momentum. Similarly, a prolonged regulatory lull might allow the market to rebuild positioning without the spectre of enforcement actions.

For now, traders must watch key levels. Bitcoin faces formidable resistance near US$104,000, a psychological and technical barrier that has repelled previous rallies. Meanwhile, shifts in altcoin liquidity, particularly in assets like XRP, Solana, and Ethereum, will offer clues about whether this bounce evolves into a broader market rotation or remains a fleeting technical correction.

The macro environment offers neither clear tailwinds nor unambiguous headwinds. Instead, it presents a narrow corridor of opportunity, flanked by regulatory uncertainty, monetary policy crosscurrents, and fragile sentiment. Navigating this terrain will require precision, patience, and a keen eye on both data and discretion.

 

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