Last week was the Thanksgiving holiday in the United States, and the market trading volume was light, maintaining a sideways pattern overall. The US stock market is about to set a new record, and 2024 is expected to be one of the best performing years in history, with returns reaching double digits in 5 out of the past 6 years.
The market breadth remains supportive, with the 52-week new high-new low differential still looking healthy, the uptrend is intact, the volatility index (VIX) is trending downward, and after Trump announced that Scott Bessent will be appointed as Treasury Secretary, the US bond market has calmed down, with the 10-year yield falling nearly 35 basis points from its October high.
In addition to his "pro-crypto" stance, Bessent is also a fiscal hawk and a supporter of an independent Federal Reserve. His proposed "3-3-3" plan (reducing the fiscal deficit to 3% of GDP, raising real GDP growth to 3%, and increasing daily energy production by 3 million barrels) has brought some relief to the US fixed income market, and the yield curve premium has remained stable since his nomination.
Although his core views are still questionable, journalists found in their research of his early speeches that he is "bullish on gold" in the long run due to the central bank's continued accumulation, which could have spillover effects on Bitcoin, especially in the recent discussions about strategic reserve composition. At least, the next 4 years will undoubtedly be very interesting.
Traders will return to a busy week, welcoming the release of the last non-farm employment data of the year. Although concerns about a resurgence in inflation have just emerged, the market still expects a 65% chance of rate cuts, but given the strong economic conditions, the long-term rate cut expectations for 2025-2027 have already been significantly reduced. In terms of employment data, the market expects overall employment to rebound to around +160,000, with the unemployment rate remaining around 4.3%. Given the recent softness in PMI surveys and high-frequency employment data, the final data results may also come in below expectations, but unless there is an extremely surprising result, the risk sentiment is likely to remain positive.
The optimistic sentiment in the cryptocurrency market remains widespread, but the focus this week is on Ripple, which has surged an astonishing 73% on expectations that the government will drop its long-standing lawsuit, helping XRP surpass USDT to become the third-largest cryptocurrency by market capitalization. In anticipation of this development, whales have been actively buying (and are now selling) XRP over the past month.
The current rally is mainly concentrated in the mainstream coins (excluding ETH), with BTC leading the way, while altcoins are still struggling to return to their January highs. Although the recent successes of L2 and protocol-transforming blockchains (such as Hyperliquid) have dominated the attention of the cryptocurrency market, we have seen some signs of life in Ethereum through inflows into ETH ETFs, with over $330 million flowing in last Friday. Will we see more secondary mainstream coins driven to rebound before the end of the year?
In any case, the fundamental indicators of the cryptocurrency market remain optimistic, and the market capitalization of stablecoins has finally surpassed the peak of the Terra-Luna era. Stablecoins are usually the first stop for most fiat currency users to enter the cryptocurrency market, and the higher market capitalization (fixed price, so entirely driven by quantity) indicates higher mainstream participation.
As investors put more new capital into the market, will the new year see faster growth? Let's hope so!
