In a year when prices surpassed $100,000: Bitcoin about to mark second yearly profit in row
Bitcoin rose on Tuesday for the first time in three days away from five-week lows as the psychological barrier of $90,000 holds its ground.
By the end of 2024, bitcoin is heading for the second yearly profit in a row, achieving a series of record highs this year and surpassing $100,000 for the first time since it started trading in 2009.
The Price
Bitcoin rose 3.5% at Bitstamp today to $95,880, with a session-low at $91,900.
On Monday, bitcoin lost 1%, the second loss in a row, hitting a five-week trough at $91,315.
Crypto Market Value
The market value of cryptocurrencies rose by $65 billion to a total of $3.435 trillion as both bitcoin and other major currencies rebounded.
US Yields
US 10-year treasury yields fell 0.6% on Tuesday, sharpening losses for the second session and plumbing a two-week low at 4.507%, in turn improving risk appetite.
It comes as investors await more clues on the path ahead for US interest rates in 2025.
Yearly Trades
Bitcoin is up over 125% so far in 2024, about to mark the second yearly profit in a row.
The world’s most valuable cryptocurrency achieved a series of record highs this year, culminating in $108,364.
After the approval and launch of US bitcoin exchange traded funds in January 2024, a series of other regulatory approvals were passed for cryptocurrencies worldwide.
The London Exchange said it’ll accept the issuance of bonds listed in bitcoin and ethereum, while Thailand opened the door for crypto exchange traded funds as well.
Additionally, as the global monetary easing cycle commences, bitcoin has received a lot of support alongside other cryptocurrencies, with even more gains after the election win by US President-elect Donald Trump in November.
Trump has vowed stronger regulatory support for cryptocurrencies, and to make the US the world’s “crypto capital”, with major mining operations in the country.
Bitcoin’s value more than doubled this year and gained over 125%, on track for even more successive gains to come.
The MicroStrategy corporation purchased about 256,400 bitcoins this year, valued at $22 billion, raising its total holdings of bitcoins to 446,400 units, valued at $27.9 billion.
The crypto market garnered even more support after MicroStrategy was listed in the major NASDAQ 100 index on Wall Street.
US dollar shines in 2024: The reasons behind the stellar gains
The US dollar fell in European trade on Tuesday against a basket of major rivals, resuming losses under pressure from the weaker US 10-year treasury yields.
By the end of 2024, the US dollar is heading for the third yearly profit in the past four years, reflecting its dominance in the forex market.
The Index
The dollar index fell 0.2% today to 107.87, with a session-high at 108.09.
On Monday, the dollar index rose 0.1%, marking the first profit in three days.
US Yields
US 10-year treasury yields fell 0.6% on Tuesday on track for the second loss in a row, plumbing two-week lows at 4.507% and pressuring the greenback.
It comes as investors await more clues on the path ahead for US interest rates in 2025.
US Rates
According to the Fedwatch tool, the odds of a 0.25% January interest rate cut by the Federal Reserve stood at just 11%, with investors now waiting for more data and remarks by Fed officials.
Yearly Trades
Across 2024, the dollar index is up over 6.5%, on track for the third yearly profit in the past four years.
The Fed maintained interest rates high for an extended duration this year to combat stubborn inflation.
As prices prove resilient, the Fed is expected to maintain relatively high interest rates compared to other major central banks during 2025.
The US economy has also proven its resilience and strength throughout the year, boosting the greenback.
Additionally, higher US 10-year treasury yields and geopolitical tensions in eastern Europe and the Middle East boosted the dollar’s status as a safe haven.
The US dollar hit a two-year high on December 20 at 108.54 against a basket of major rivals, underpinned by the outlook of stimulatory policies by US President-elect Donald Trump.
In the world of records: Gold shines with biggest yearly profit since 2010
Gold prices rose in European trade on Tuesday for the first time in three days, holding above $2600 as US 10-year treasury yields tumbled.
At the last session of 2024, the year of record, gold is heading for its biggest yearly profit since 2010 with a 26% surge due to massive investment demand.
Prices
Gold prices rose 0.45% today to $2617 an ounce, with a session-low at $2602.
On Monday, gold lost 0.6%, the second loss in a row under pressure from the US dollar.
US Yields
US 10-year treasury yields fell 0.6% on Tuesday, sharpening losses for the second session and hitting a two-week trough at 4.507%, in turn boosting non-yielding assets such as gold.
Bond traders are waiting for more clues from the Federal Reserve on the future path of interest rates in 2025.
US Yields
According to the Fedwatch tool, the odds of a 0.25% US interest rate cut in January stood at 11%, with investors waiting for crucial US labor data next week to gather more clues.
Yearly Trades
Gold is up 26% so far this year, heading for the biggest yearly advance since 2010.
Gold hit a record high on October 31, 2024 at $2790 an ounce, after achieving successive record highs above $2100.
Global central banks launched a series of monetary easing policies after somewhat containing inflation, with lower rates usually benefiting the non-yielding gold.
Gold also benefited from haven demand as geopolitical tensions intensified in the Middle East and the Russian-Ukrainian war.
And central banks, and especially the People’s Bank of China, also accumulated gold reserves as a hedge against economic uncertainty.
SPDR
Gold holdings at the SPDR Gold Trust were flat yesterday at 872.80 tons.
Euro's decline in 2024: Between dollar's strength and eurozone economic challenges
The euro declined in European trade on Tuesday against a basket of major rivals, moving in a negative zone for the second straight day against the US dollar amid thin holiday trading.
The odds of an ECB interest rate cut in January rose following recent remarks by ECB President Christine Lagarde, which renewed concerns about a wider eurozone-US interest rate gap.
At the last day of trading in 2024, the common currency is heading towards a yearly loss due to a variety of factors, which include the dollar's indomitable strength and economic challenges in the euro zone.
The Price
The EUR/USD pair fell 0.1% today to $1.0397, with a session-high at $1.0415.
The pair closed down 0.15% on Monday, marking the first loss in three days away from a two-week high at $1.0458.
Lagarde
European Central Bank President Christine Lagarde said the eurozone is approaching its medium-term inflation target according to an interview with the Financial Times.
In earlier remarks, Lagarde said the ECB will cut interest rates more aggressively if inflation continues to slow down towards 2%.
She said that the eurozone is very much approaching the stage where the ECB can announce the achievement of the 2% inflation target,
European Rates
Following the remarks, the odds of a 0.25% ECB interest rate hike in January rose from 55% to 65%.
Markets are betting the ECB will cut interest rates by 1.75% throughout 2025, while waiting for important eurozone growth, inflation, and unemployment data to gather more clues.
US Rates
According to the Fedwatch tool, the odds of a 0.25% US interest rate cut in January stood at 11%, with investors waiting for crucial US labor data next week to gather more clues.
Rate Gap
The eurozone-US interest rate gap is now standing at 135 basis points in favor of the US, and will likely expand to 160 basis points in January, in turn boosting the greenback.
Yearly Trades
The euro is down 5.75% so far against the dollar this year, about to mark the third yearly loss in the past four years.
The eurozone faced many challenges including slower GDP growth and lower inflation, which impacted the euro's standing.
The European Central Bank took a more pessimistic note on the economy compared to the Federal Reserve, which prompted it to cut interest rates four times this year, compared to the Fed’s three cuts.
Overall, the ECB cut interest rates by 135 basis points this year, compared to the 100 basis points of cuts by the Fed, maintaining the rate gap between both economies.
Economists expect the ECB to adopt a faster pace of interest rate cuts in 2025 compared to the Fed.
The dollar is also boosted by the election win of US President-elect Donald Trump, which vowed tariffs and a whole host of inflationary and stimulatory policies, which would underpin the greenback even further.