MARKETS week ahead: December 23 – 29Last week in the news
The Fed cut interest rates by another 25 bps, but Powell`s rhetoric in an after the meeting address to the public did not make markets happy. A correction was strong and immediate. The US equity markets were hit the most, followed by the crypto market. A market correction brought the S&P 500 down to the level of 5.930. BTC reached its lowest weekly level at $ 92K, however, recovered as of the weekend to the level of $97K. The price of gold followed US Dollar volatility, dropping down to the level of $2.622. In line with Feds expectations of a 50 bps cut in 2025, the 10Y US benchmark yields jumped to the levels above the 4,5%.
At a December FOMC meeting the Fed cut interest rates by another 25 bps, which was generally expected. However, markets were not at all happy to hear what followed. The FOMC projections for year 2025 showed inflation expectations to be higher from previously estimated. The PCE inflation indicator is expected to end 2025 at 2,5%, higher from previous estimation of 2,2%. The targeted 2% is expected to reach in 2027. At the same time the Fed expects the jobs market to be cooling, but the GDP forecast was not changed from the previous estimate. As the discounting rate changed, so the markets entered into correction, where US equity markets were hit the most.
On a positive side for US markets is that the Bank of Japan decided to hold interest rates at 0,25% for the third time this year. Considering significant carry trade in Yen, this is positive news that markets will not suffer another shock till the end of this year.
A hit for the European markets during the previous week was a slide of value of Novo Nordisk shares by 20%. This drop came after the Danish drug maker published results for a weight-loss drug that did not meet expectations in a trial. Although the drug was expected to help patients to lose 25% in weight, the trial showed efficiency of 22,7%. It seems a low difference in effect, but might make a huge difference with competition, hence, investors decided to reduce the value of Novo Nordisk.
China is continuing execution of its long term goals to be the leader in the field of electric vehicles in the future period. The news published by Reuters, points to a Chinese company Nio which has introduced its new EV car model, with the aim to compete with Mercedes SMART and BMW Mini electric vehicles. Nio`s EV will have the same price as German carmakers on China's market. Germany's auto industry is already facing difficulties with car sales, where China was one of the main markets, after Europe.
Crypto market cap
It was a hard week on the crypto market. Unfortunately, this was also the last actively trading week for this year, before the Holiday season in the Western markets. So, what actually happened? The Fed managed to spoil Holiday fun and decided to revise its economic projections for the next year. In a fear of inflation which is expected to be persistent, the Fed is expecting to cut interest rates probably two times, in total by 50 bps. This is exactly what markets did not want to hear, considering that now the discount factor is higher, bringing evaluations into a correction. Also, it should be considered that borrowed money will be more expensive, from previous projections, which again might imply less funds for the crypto market. Total crypto market capitalization decreased by 7% on a weekly basis, although the drop in one moment was more than 10%. Friday's market correction erased some of the weekly losses. Daily trading volumes were also higher, to the level of $397B on a daily basis, from $297B traded a week before. Total crypto market capitalization increase from the end of the previous year currently stands at $1.622B, which represents a 99% surge from the beginning of this year.
Bitcoin was the one to drive the market sentiment during the previous week. However, BTC lost “only” 3,5% in value compared to the price from the end of the week before. BTC also lost $71B in its market cap. Still, when it comes to drop in value in relative terms, altcoins were the ones that lost the most during the previous week. The range goes from 10% up to 30% with some specific coins. The majority of altcoin lost somewhere around 20% on average. It could be noted that major coins lost much less in value from other altcoins. In this sense, XRP was down by 6% on a weekly basis, BNB dropped by 6,5%. Surprisingly, or not, ETH dropped by 12,5%, earning $57B from its market cap.
Considering coins in circulation, the increased activity continues. Stablecoin Tether withdrew the number of coins by 0,2%. LINK had an increase in the number of coins on the market by 1,8%, while Filecoin increased its circulating coins by 0,4% this week. The majority of other altcoins had an increase by 0,1% during the week.
Crypto futures market
The spot market was not at all pretty during the previous week, hence, the crypto futures market could not look much better. Both BTC and ETH futures were traded lower for all maturities, in line with spot market sentiment. However, there are also some positive developments, not all looks so bad.
BTC futures fell by more than 5% for all maturities. Still, on a positive side is that futures maturing from April 2025 hold the levels above the $100K. Also, December 2025 ended the week at the level of $105.710, while March 2026 was last traded at $107.990. This is a positive sign that the market still perceives BTC strong in the long run.
ETH futures had a stronger drop on a weekly basis, of around 12,5% on average for all maturities. The prices of futures fell below the $ 4K levels. December 2025 was last traded at $3.721, while March 2026 closed the week at $3.790.
