Market Wrap: Monday, December 16th, 2024 

Last week, central banks took significant action as the Swiss National Bank and the Bank of Canada cut interest rates by 50 basis points. Meanwhile, the European Central Bank made a smaller 25 basis point rate cut but signaled a dovish shift in its stance.  The statement dropped references to restrictive policies and emphasized the need for inflation to return to target levels. With Trump’s trade tariffs looming and Europe’s economy showing signs of slowing, markets are anticipating further rate cuts from the ECB in the near future. 

The U.S. Dollar remains strong, supported by robust economic performance and interest rate differentials, which are also keeping U.S. interest rates elevated. This week, the FOMC is set to meet, with markets currently pricing in a 97% probability of a 25-basis-point rate cut, according to the CME FedWatch Tool. For more on the evolving U.S. interest rate outlook, explore this analysis: The Fed’s Game Plan on Interest-Rate Cuts Keeps Shifting - WSJ.

 PIMCO has highlighted concerns over the sustainability of U.S. debt, pointing to a lukewarm demand for longer-dated Treasury securities due to rising deficit fears. For more insights, read: Pimco Sees ‘Vigilance Before Vigilantism’ on Rising US Deficit. Echoing these concerns, Ray Dalio has expressed a similar outlook, favoring investments in gold and Bitcoin as alternatives. 

Google advances in quantum computing - but can Willow crack Bitcoin’s encryption? Will Willow, Google's quantum computing chip, put Bitcoin at risk? Short answer: maybe, but not anytime soon.

Michael Saylor’s Microstrategy officially joins the Nasdaq 100 today: Bitcoin proxy MicroStrategy to join the Nasdaq 100 and heavily traded 'QQQ' ETF BlackRock’s latest publication on Bitcoin: “Sizing Bitcoin in Portfolios” can be found here: BII Investment perspectives.

This marks the final Weekly Wire of 2024. From all of us at CoinFlip, thank you for your support throughout the year. We wish you a joyful holiday season and look forward to reconnecting as we kick off 2025! 

Corporate and Sovereign Treasury Insights 

As crypto corporate treasury news continues to make headlines, we’ve decided to dedicate a section of this publication to tracking developments in this dynamic space. We may be seeing an intriguing and potentially transformative trend: the increasing adoption of cryptocurrencies by both corporations and sovereign entities. This could represent the next phase in crypto integration, following the financial sector’s earlier steps with the launch of BTC and ETH ETFs earlier this year. 

Riot Platforms announced on Friday the acquisition of an additional 5,117 BTC at an average price of $99,669 per coin, totaling approximately $510 million. This purchase was funded through proceeds from the company’s recent $525 million convertible bond issuance, which carries a 0.75% coupon rate. With this purchase, Riot’s total holdings now stand at 16,728 BTC, currently valued at approximately $1.68 billion based on a market price of $100,303. For further details, view the relevant SEC filing here.  

Cities and states are racing to stay ahead of the new U.S. administration’s plans for a strategic Bitcoin reserve. Last week, Texas and Vancouver announced their plans to hold Bitcoin on their state and city balance sheets, respectively.  

Texas has proposed a bill that would enable the state to establish a strategic Bitcoin reserve. Under the proposal, the state would accept taxes, fees and donations in bitcoin, holding them for a minimum of five years. As the U.S. state with the highest concentration of Bitcoin miners, Texas hopes to encourage these miners to start paying taxes in cryptocurrency. However, it’s important to note that the bill, in its current form, does not include a plan for direct bitcoin purchases by the state.   

Further north, Vancouver City Council approved a motion to become a “Bitcoin-friendly city” and explore potential municipal use cases for crypto. The motions are worth a read as it provides a global overview of several crypto friendly jurisdictions and the positive impacts these regions have experienced by adopting a Bitcoin-friendly policy. Vancouver City Council - Becoming a Bitcoin Friendly City 

Last week, Microsoft shareholders rejected a proposal to include Bitcoin in their corporate treasury reserve. In October, Microsoft’s board told shareholders had recommended rejecting the proposal, a stance supported by the National Center for Public Policy Research (NCPPR), a pro-free-market think-tank based in Washington, D.C., which originally proposed the resolution. The NCPPR made a similar recommendation to Amazon earlier this month.  Amazon shareholders will likely vote on the matter at their annual meeting‌ this spring. The company’s board is also expected to provide a recommendation to the proposal before the vote.

Discussions around establishing Bitcoin strategic reserves are gaining traction in Russia. Anton Tkachev, of the New People party, has reportedly asked Finance Minister Anton Siluanov to assess the feasibility of creating a strategic Bitcoin reserve in Russia. This proposal might have particular merit, given the country’s current sanction-imposed limitations with respect to international payments.  

Nano Labs, a leading fabless integrated circuit design company and product solution provider, has recently announced an increase in its Bitcoin holdings. As of December 12, 2024, the company holds approximately 360 Bitcoins, valued at an estimated  US$36.22 million. The average acquisition cost per BTC stands at approximately US$107,000.  

The Macro Week Ahead

As the holidays draw near, this week is packed with key economic data and major central bank events. The FOMC, BoJ, and BoE meetings are set to take center stage.    

Financial Advice Disclaimer: Nothing in this article constitutes professional or financial advice, performance data or any recommendation that any specific cryptocurrency, portfolio, index, investment product, transaction or investment strategy is suitable for any specific person. You assume the sole responsibility of evaluating the merits and risks associated with all financial decisions and should seek the advice of a registered financial advisor when in doubt.