What a week it has been in the markets, with the crypto space roaring back to life and risk sentiment sharply turning more optimistic. BTC has reclaimed the USD 100,000 mark, proving its resilience amid a whirlwind of macro developments. This move has not only reignited market enthusiasm but also demonstrated the enduring strength of liquidity in the face of fading inflation fears.
The week began with choppy price action as markets braced for critical inflation data. Wednesday’s US CPI print set the tone, coming in softer than expected with core inflation rising just 0.2% against the forecast of 0.3%, which came on the heels of a softer than expected US PPI print. The result? Bond yields retreated, the USD lost steam, and risk assets, led by crypto seized the moment. Bitcoin’s recovery from the sub USD 90,000 level from the start of the week has been a standout story. The psychological reclaim of USD 100,000 was bolstered by renewed market confidence, alongside an increasingly supportive macro backdrop. Meanwhile, SOL and XRP have stolen some spotlight from BTC, with SOL climbing 10% yesterday and XRP hitting a 7-year high and surging into the top 3 crypto assets by market cap. Aside from the broader macro developments driven by this week’s US CPI data, reports that President-elect Trump is considering an executive order to designate cryptocurrency as a national priority — including the potential creation of an “America-first” strategic reserve prioritising US -founded cryptocurrencies like USDC, SOL, and XRP — seem to have ignited the surge in both XRP and SOL, injecting renewed optimism into the crypto space.
This week’s market dynamics highlight the shifting narrative. Earlier concerns about reaccelerating inflation are fading, with China’s deflationary pressures, subdued oil prices, and a global slowdown exporting disinflation to the US. This has weakened the argument for prolonged “higher for longer” narrative, leading to a sharp unwinding of bond yields with US10yr now back around 4.6%. This has directly supported risk markets, including crypto. The Fed’s more tempered stance, coupled with reduced bond market volatility, allows investors to lean back into high-beta assets like bitcoin with renewed confidence.
As we look ahead, the next key moments for markets next week will be the FOMC meeting and the much-anticipated inauguration of President-elect Trump. Meanwhile, the narrative around BTC and broader risk remains firmly tied to the evolving macro picture.
While the risk rally has been impressive, markets remain finely balanced. The interplay between liquidity, rates, and macro data will be critical in determining the next leg for BTC and the broader crypto space. However, as we have seen this week, the resilience of crypto in the face of headwinds continues to highlight its growing maturity as an asset class, and at the rate that we are currently going at, we may just end up getting tired of writing “ATH” every week!
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