Market Updates - brought to you by the BCB Trading Team

Markets across the board felt the shock following strong US December NFP figures on Friday, coming in at +256k vs the expected +164k, leaving traders pricing in decreasing likelihood and severity of subsequent FED rate cuts.

• Bitcoin started the European session off this morning in the red – down 7% over the past week.
• ETH also performed poorly, down 14% in the same timeframe.
• In stark contrast, XRP continues to perform well, the trading desk is watching keenly early this week as we’re seeing healthy flow since the turn of the year.

FTX is set to distribute over $1.2billion in repayments to users of the now bankrupt exchange

All users owed up the amount of $50,000 equivalent in digital assets have a deadline of 20th January to meet the repayment requirements.

A large share of this is expected to be reinvested into crypto, given the optimistic outlook for the digital asset market in the coming year.

‘Tis the season for alts

It’s an exciting week in the altcoin space, with approximately $3 billion worth of unlocks on the horizon, ONDO taking the spotlight. 

Key industry players are closely monitoring the market to assess whether a rotation from majors will unfold, potentially marking the start of alt-season.

USD – Sentiments remain bullish against expectations for a buoyant economy

GBP continues to struggle against the dollar with options markets seeing an influx of traders positioning for GBP/USD to fall through $1.20 and beyond. 

Sterling optionality is more in demand now than back in the throws of the Brexit referendum and the 2022 Truss Budget Calamity (via Bloomberg).

And finally…

Supply threat pushes oil up as Russia faces new sanctions from the US.

Similarly, incoming trade tariffs that loom as the US welcomes their new president-elect to office later this month, offer furthering doubt for GBP and EUR, among others.

Brought to you by the BCB Trading Team

The information contained in this document should not be relied upon by investors or any other persons to make financial decisions. It is gathered from various sources and should not be construed as guidance. The information contained herein is for informational purposes only and should not be construed as an offer, solicitation of an offer, or an inducement to buy or sell digital assets or any equivalents or any security or investment product of any kind either generally or in any jurisdiction where the offer or sale is not permitted. The views expressed in this document about the markets, market participants and/or digital assets accurately reflect the views of BCB Group. While opinions stated are honestly held, they are not guarantees, should not be relied on and are subject to change. The information or opinions provided should not be taken as specific advice on the merits of any investment decision. This document may contain statements about expected or anticipated future events and financial results that are forward-looking in nature and, as a result, are subject to certain risks and uncertainties, such as general economic, market and business conditions, new legislation and regulatory actions, competitive and general economic factors and conditions and the occurrence of unexpected events. Past performance of the digital asset markets or markets in their derivative instruments is not a viable indication of future performance with actual results possibly differing materially from those stated herein. We will not be responsible for any losses incurred by a client as a result of decisions made based on any information provided.

As Bitcoin cools, ETH is being tipped as the next target for buyers. But with global events delivering more shocks, the future remains highly unpredictable.

In the space of a few days Bitcoin (BTC) broke through the $100k level, retraced down to $92k, and is now trading range-bound between $98-$100k.

The key question now is where the action will move. Ethereum has lagged behind BTC over the last year and was off its highs last week, but speculation is growing that ETH will be the next currency to benefit from an investment wave.

Powerful gains in the DeFi space over the past week were spurred by incoming president Trump naming Davis Sacks as America’s first AI and crypto Tsar. Sacks has been a long-standing ally of Elon Musk and his appointment compounds expectations of a highly crypto-friendly Trump administration.

The pro-crypto atmosphere is also making waves in traditional finance, notably at Amazon where a group of shareholders tabled a motion calling for the investment of 5% of its treasury assets in BTC, in a fresh sign of crypto adoption advances in traditional institutional finance.

Central Banks readying seasonal announcements

FX market attention this week will be focused on US inflation data due on Wednesday, which will be crucial for the following week’s interest rate decision by the Federal Reserve. Most money is on a further rate cut.

Europe too is awaiting the final interest rate decision of the year by the European Central Bank on Thursday. With the weakened state of the Eurozone economies expected to prompt a cut, most observers expect the Euro to soften against the US dollar.

Another important theme for the coming months is the state of the Japanese Yen, which has been one of the most fascinating FX markets recently. The Bank of Japan (BoJ)’s deputy Governor, Ryozo Himino, is due to make a speech to local business leaders on 14th January. The unusual move – coming ahead of the Bank’s first rate decision of 2025 – is being seen as a chance for the BoJ to set the scene for 2025 and get on the front foot with global markets.

Whatever emerges in January, we expect the USD/JPY rate to be one of the more active and unpredictable FX markets over the coming 12 months.

Geopolitical turmoil coming thick and fast

Global politics also continues to be unpredictable, with the Romanian Supreme Court annulling election results last week amid claims of Russian interference in the vote, which saw a strong result for the country’s right-wing, anti-NATO and Putin-friendly politician Calin Georgescu.

On top of the Romania situation came the lightning-fast overthrow of Syrian dictator Bashar Al-Assad. While widely welcomed – not least by Syrian victims of Assad’s regime – the overthrow leaves a power vacuum. Former Al-Qaeda member and leader of Hayat Tahrir al-Sham, Abu Mohamed Al Jolani, has become a figurehead of the revolt, but other factions have also played a significant role and there is no clarity about the future shape of Syrian government.

Such ongoing uncertainty will be a factor in FX markets over the months ahead and such unease may push investors towards a risk-off strategy, which in turn might be expected to knock crypto. In recent months the geopolitical turmoil factor has however been overshadowed by the Trump election.

The question is whether global tensions and uncertainty will eventually take their toll on crypto, or can the Trump-rally continue?

More bananas spending?

Certain investors, however, seem unfazed. Fresh from eating a $6.2 million banana (a piece of conceptual art apparently) TRON blockchain founder Justin Sun has bought $30 million worth of tokens from the Trump-backed World Liberty Financial.

After eating his piece of fruit-cum-work of art Sun declared: “It’s much better than other bananas.” Time will tell whether he feels the same about his latest investment.

Brought to you by the BCB Trading Team

The information contained in this document should not be relied upon by investors or any other persons to make financial decisions. It is gathered from various sources and should not be construed as guidance. The information contained herein is for informational purposes only and should not be construed as an offer, solicitation of an offer, or an inducement to buy or sell digital assets or any equivalents or any security or investment product of any kind either generally or in any jurisdiction where the offer or sale is not permitted. The views expressed in this document about the markets, market participants and/or digital assets accurately reflect the views of BCB Group. While opinions stated are honestly held, they are not guarantees, should not be relied on and are subject to change. The information or opinions provided should not be taken as specific advice on the merits of any investment decision. This document may contain statements about expected or anticipated future events and financial results that are forward-looking in nature and, as a result, are subject to certain risks and uncertainties, such as general economic, market and business conditions, new legislation and regulatory actions, competitive and general economic factors and conditions and the occurrence of unexpected events. Past performance of the digital asset markets or markets in their derivative instruments is not a viable indication of future performance with actual results possibly differing materially from those stated herein. We will not be responsible for any losses incurred by a client as a result of decisions made based on any information provided.

XRP overtakes Solana to join crypto leaders

Crypto markets appear to be cycling across the leading currencies, with attention switching from one to another amid the ongoing rally across the market.

Over the last few days, the action has been with Ripple (XRP), which surged almost 30% over the weekend. As of early today (2 December) XRP stood at around $2.30.

The rise has compounded a rally that has been underway since early November, and which has seen XRP overtake Solana to become the third largest non-stablecoin cryptocurrency behind Bitcoin and Ethereum.

The weekend also saw strong rallies by Hedera (HBAR), Stellar, (XLM) and Cardano (ADA), though all three dropped back in early trading today.

While BTC’s rally appears to have stalled, at around $95k it remains close to its highs and many observers believe the $100k mark is still within reach before the year end.

FX markets eye US jobs data

Fiat currency markets will be dominated by US economic data this week, most importantly the latest non-farm payrolls data due on Friday, which will be key to the Fed’s next interest rate decision due next week. Market consensus is for an extra 200,000 jobs, but a surprise on the upside or downside could hit interest rate expectations with knock-on effects to the dollar. 

Meanwhile in Europe, the budget battle in the French parliament is being watched closely for its effect on French government yields and even speculation it could prompt a fresh political crisis. France’s economy is the second largest in the Eurozone, and fiscal or political crisis would doubtless add to softness in the Euro.

The prospect of peace in the Middle East was shattered over the weekend as Syrian rebel fighters entered Syria’s second city of Aleppo reigniting a frozen conflict and throwing the region into further turmoil. Government forces loyal to President Assad withdrew from the city with reports that Iranian backed militias have entered the country to support the government. The news quickly follows the announcement that Hezbollah and Israel agreed to a ceasefire late last week. Elsewhere, the US treasury has sanctioned several crypto wallets associated with non-state actors in the region as it grapples with attempts to circumvent previous sanction packages.

Fresh crypto eruption

Meanwhile, the crypto industry is hotting up in central America, where El Salvador’s president, Nayib Bukele, posted on X suggesting the country could ‘rent out’ its volcanoes to commercial crypto mining operators.

The country already uses geo-thermal power for bitcoin mining, but renting out a volcano would be something of a first. It’s hard to know how seriously Bukele intended to be, but after El Salvador became the first country to declare BTC to be legal tender in 2021 and continues to surprise investors with its crypto initiatives, it might be rash to rule anything out.

Brought to you by the BCB Trading Team

The information contained in this document should not be relied upon by investors or any other persons to make financial decisions. It is gathered from various sources and should not be construed as guidance. The information contained herein is for informational purposes only and should not be construed as an offer, solicitation of an offer, or an inducement to buy or sell digital assets or any equivalents or any security or investment product of any kind either generally or in any jurisdiction where the offer or sale is not permitted. The views expressed in this document about the markets, market participants and/or digital assets accurately reflect the views of BCB Group. While opinions stated are honestly held, they are not guarantees, should not be relied on and are subject to change. The information or opinions provided should not be taken as specific advice on the merits of any investment decision. This document may contain statements about expected or anticipated future events and financial results that are forward-looking in nature and, as a result, are subject to certain risks and uncertainties, such as general economic, market and business conditions, new legislation and regulatory actions, competitive and general economic factors and conditions and the occurrence of unexpected events. Past performance of the digital asset markets or markets in their derivative instruments is not a viable indication of future performance with actual results possibly differing materially from those stated herein. We will not be responsible for any losses incurred by a client as a result of decisions made based on any information provided.