With the year drawing to a close amid a historic run for crypto, markets experienced heightened volatility this week. On Tuesday, Bitcoin briefly hit a fresh high above $108,000. On the same day, Bitcoin’s market cap also reached a new all-time high against gold’s market cap, rising to 14%. This milestone came as total assets under management (AUM) for Bitcoin ETFs climbed to $129 billion, surpassing gold ETFs. However, the rally quickly lost momentum following the Federal Reserve’s rate cut decision on Wednesday and the outlook for fewer rate cuts than anticipated in 2025 due to higher-than-expected inflation. During Fed Chair Jerome Powell’s hawkish remarks, the Federal Reserve projected only two quarter-point rate cuts in 2025, reducing rates to 3.9% by year-end. This is a significant shift from the four quarter-point cuts (a full percentage point reduction) projected in September.
US equities sold off following the Fed’s updated medium-term projection for interest rates, with the S&P 500 dropping over 3% on Wednesday. The weakness in equities extended to crypto assets, with Bitcoin falling back to $100,000 on Thursday. On Friday, the broad crypto asset market saw further declines during the start of US trading hours, with Bitcoin briefly dropping below $93,000. Crypto market capitalization plunged more than 11% – one of the sharpest single-day drops this year – though it partially recovered during Friday afternoon trading in line with equities. However, market participants expect Bitcoin’s drawdown to have only a limited impact on the underlying bullish trajectory, supported by strong institutional inflows and resilient market fundamentals.
In US crypto ETFs, funds recorded their largest single-day outflows ever on Thursday, with $680 million exiting the products. This ended a remarkable 15-day streak of positive inflows. In other ETF news, the SEC approved filings from the Nasdaq and Cboe BZX Exchange to list and trade shares of crypto index exchange-traded funds from Hashdex and Franklin Templeton. The Hashdex Nasdaq Crypto Index US ETF and Franklin Crypto Index ETF will initially hold spot Bitcoin and spot Ether based on their respective market capitalizations. As mentioned above, Bitcoin ETFs climbed to $129 billion, surpassing gold ETFs, which hold $128 billion, according to K33 Research.
Market Overview
The global cryptoasset market capitalization currently amounts to roughly $3.5 trillion – down from the $3.8 trillion last week, with bitcoin accounting for almost 55%. Among the Top 30 cryptoassets by market cap, Hyperliquid (HYPE) outperformed, gaining 71% over the week. The price of bitcoin (BTC) fell by 3.6% to $97,219 while the price of ether (ETH) decreased by 12.6% to $3,424. The total value locked (TVL) in DeFi is sitting at $127.5 billion, with Ethereum (excluding Layer 2s) accounting for about 55% of TVL. Arbitrum One remains the largest Layer 2 by value locked, accounting for about 35% of the $54 billion in assets.
This Week’s Headlines
- Incoming House Financial Services Committee Chair chair Rep. French Hill plans to prioritize US digital asset legislation in the new year
- SEC approves first spot Bitcoin and Ethereum combo ETFs from Hashdex and Franklin Templeton
- Bloomberg analysts expect “a wave of cryptocurrency ETFs” next year, including Solana and XRP funds
- Anchorage Digital secures BitLicense in New York, expanding crypto services to large institutions
- El Salvador to shut or sell Chivo crypto wallet as part of $3.5 billion IMF deal
- Justin Sun-connected BiT Global sues Coinbase for delisting wBTC and launching competitor
- MicroStrategy secures Nasdaq-100 inclusion after bitcoin-fueled stock surge
- MicroStrategy acquires another 15,350 bitcoin for $1.5 billion, taking holdings to 439,000 BTC
- Riot Platforms buys more bitcoin, raising holdings to more than 17,000 BTC
- Polygon community rejects proposal to use over $1 billion of bridge stablecoins for yield generation
- German authority orders eyeball-scanning World project to delete data after investigation
Notable Deals and Fundraising
- Tether invests in StablR to promote stablecoin adoption in Europe
- Tokenized securities platform Prometheum raises $20 million in new funding
- MegaETH developer raises $10 million in 3 minutes on Echo
- Crypto-AI startup Fraction AI raises $6 million in pre-seed funding
