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The Federal Reserve has cut its benchmark interest rate by 25 basis points to a target range of 4.25%-4.5%, reflecting mixed economic signals. This decision comes as the crypto market faces declines, with Bitcoin down 4% and Ethereum and Solana experiencing larger losses.Economic projections indicate a GDP growth of 2.5% for 2024, with a slight rise in the unemployment rate to 4.3% by 2025. Analysts are cautious about future rate cuts, anticipating only two reductions in 2025, while uncertainty surrounding President-elect Donald Trump's policies adds to market volatility.
Ohio State Representative Derek Merrin has introduced the Ohio Bitcoin Reserve Act, aiming to allow the state treasurer to invest surplus funds in Bitcoin to hedge against dollar devaluation. This initiative reflects a growing trend, with similar proposals emerging in Texas and Pennsylvania. Bitcoin's value has surged significantly this year, trading at $104,500, as lawmakers seek to strengthen state investment portfolios.
Bitcoin hovered around $104,710 as traders anticipated a Federal Reserve interest rate decision, with expectations leaning towards a 0.25% cut. Despite a dip-buying sentiment, pre-FOMC selling pressure was evident, and some analysts noted a potential gap in Bitcoin futures at $102,000 that could be filled during the announcement. Concerns about future rate hikes in 2025 due to rising inflation were also highlighted.
The Santa Claus trading window, starting December 24 and ending January 3, historically leads to a stock market rally, with the S&P 500 averaging a 1.3% gain and positive 79% of the time. Factors supporting a bullish outlook include December's strong performance, expected Fed interest rate cuts, and signs of oversold stocks.
Ethereum ETFs experienced a significant inflow of $151 million, continuing a 16-day positive streak, while Bitcoin ETFs added $494 million. Analysts speculate that a potential Trump administration could boost demand for staking in Ethereum ETFs, contributing to institutional interest. Despite recent inflows, both Ethereum and Bitcoin saw a 3% price drop, with ETH trading at $3,835.
U.S. stocks are expected to thrive in 2025, driven by a strong macro environment, robust earnings growth, and significant spending on AI, with a target of 6,600 for the S&P 500. While small-cap stocks face challenges, sectors like financials, consumer discretionary, and utilities present promising opportunities. Inflation is projected to remain slightly above the Fed's 2% target, supported by a resilient economy and ongoing consumer spending.
U.S. stocks are expected to thrive in 2025, driven by a strong macro environment, robust earnings growth, and significant spending on artificial intelligence. The economy is projected to grow around 2% to 2.5%, supported by a healthy labor market and rising disposable income, while inflation may slightly exceed the Fed's 2% target. Small-cap stocks are viewed as less appealing in the near term, with a focus on large-cap companies, particularly in financials, consumer discretionary, and tech sectors.
Bitcoin's price has retreated to $104,000 after reaching a high of $108,000, amid mixed global economic signals and anticipation of the Federal Reserve's interest rate decision. Recent inflation data revealed UK inflation rose to 2.6% year-on-year in November, while Eurozone inflation increased to 2.2%. The UK also saw core inflation rise to 3.5%, indicating persistent price pressures, as construction output grew slightly by 0.2%.
US inflation has decreased this year, influenced by the owners' equivalent rent, which does not reflect actual consumer spending power. The Fed, having been slow to cut rates, is expected to proceed cautiously next year, especially amid uncertainties from potential sales taxes under President-elect Trump. Meanwhile, the UK may also lower rates gradually due to deflation in input producer prices, while the ECB's consumer price inflation figures remain stable and largely unreactive.
Latin America is witnessing a surge in cryptocurrency adoption, driven by economic instability and regulatory advancements. Countries like Argentina, Brazil, and Mexico are leading the charge, with innovative solutions such as Bitcoin-backed bonds and crypto remittances reshaping financial landscapes. As businesses navigate the region's complexities, comprehensive payment solutions are essential for unlocking the full potential of this rapidly evolving market.
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