The most important development of the week in global markets was the Fed meeting. The US Federal Reserve (Fed) cut interest rates by 25 basis points in line with expectations at its last meeting of the year. The decision text changed the wording regarding the interest rate policy assessment. Previously, it only stated “while evaluating additional adjustments”, while the new text emphasized that “various factors will be taken into account when evaluating the scope and timing of additional adjustments”. With this meeting, Fed officials also made significant revisions to inflation projections. The core PCE forecast for 2024, which was projected as 2.6 percent in September, was increased to 2.8 percent. Similarly, the core PCE, which was projected as 2.2 percent for 2025, was revised to 2.5 percent. The upward revision in inflation was met with a sell-off in risky assets. The S&P 500 experienced its sharpest decline since March 2020 following the Fed decision, experiencing a $1.8 trillion market meltdown. US 10-year yields also rose, reaching 4.5 percent.
Signals that the US Federal Reserve (Fed) will be more cautious in interest rate cuts have led to sharp sell-offs in cryptocurrency markets. Bitcoin lost about 10% of its value in the 24 hours following the decision, falling below $93,000. The expectation that interest rate cuts will be spread over a longer period than expected due to inflationary pressures has triggered a ‘risk-off’ movement.
The Fed cut interest rates by 25 basis points in line with expectations, but reduced its forecast of 4 interest rate cuts in 2025 to 2 (Negative). The Fed’s core personal consumption expenditures data, which it follows as an inflation indicator, increased by 0.1% monthly, below market expectations (Positive). US stock indices fell for 10 consecutive days, experiencing their biggest decline since 1974 (Negative). After Chairman Powell said that it is not possible for the Fed to hold Bitcoin at the moment, the total market value of crypto assets (TOTAL) fell to $3.36 trillion (Negative).
Fed Chairman Powell's statements at the meeting on Wednesday negatively affected crypto assets. Powell's statement that interest rate cuts may slow down in 2025 negatively affected all risky assets, especially cryptocurrencies. The market avoided risk in the short term by pricing a Fed that may be less dovish in 2025.
In addition, Powell stated that it is not legally possible for the Fed to hold Bitcoin at the moment. Powell's statement was interpreted by the market as against the crypto-friendly activities expected from Trump.
However, analysts maintain their expectation of an increase with the possible policy change of the new US administration. Bitcoin, which increased by 59.8% after the election and exceeded $ 100,000, is currently 9.1% away from its peak. The fact that cryptocurrencies have reacted negatively to macro developments in the short term is being read as a buying opportunity by some investors.
SoftBank CEO Masayoshi Son announced that he will invest $100 billion in the US over the next four years during the visit of US President Donald Trump to his Mar-a-Lago residence in Palm Beach, Florida.
Apple (AAPL) and Nvidia (NVDA) announced that they are collaborating to improve the performance of large language models. Toyota Motor (TM) announced that it received $4.5 million in funding from the US Department of Energy's Advanced Research Projects Agency (ARPA-E).
The SEC has approved the first hybrid spot crypto ETF application. Following funds that only include Bitcoin (BTC) and only Ethereum (ETH), investment funds that include both Bitcoin and Ethereum can now be launched on US exchanges. Analyst James Seyffart said that the next crypto investment funds to be approved in the US could be Litecoin (LTC) and Hedera (HBAR). The blockchain Sei (SEI), which stands out with its speed in transaction completion, broke its own record with a monthly active address count exceeding 2.5 million. This situation reveals SEI's success in creating loyalty in its existing users and gaining new users.
Darden Restaurants (DRI) shares gained 12.97% in value during the week after the company's balance sheet exceeded Wall Street's estimates. Lamb Weston (LW) shares lost 12.88% in value during the week after Wall Street's balance sheet missed its estimates.
Social media trends can provide high profits, especially to early investors in memecoins, by directing the capital flow in crypto. The memecoin Pudgy Penguins (PENGU), which emerged from an NFT project, returned 834.2% compared to its opening price this week. GALA (GALA) returned 280.1% after the US elections in anticipation of adding movies to the gaming-dominant ecosystem. After the film project came to life, the "selling the news" mechanism was activated. GALA lost 22.20% of its value last week.
Goldman Sachs raised MSCI’s (MSCI) “NEUTRAL” rating to “BUY” and its 12-month average target price from $617 to $723. Jefferies raised Packaging Corp’s (PKG) “HOLD” to “BUY” and its 12-month average target price from $215 to $280. Citi raised Ollie’s Bargain Outlet’s (OLLI) “SELL” to “BUY” and its 12-month average target price from $64 to $133. Citi raised Westlake’s (WLK) “NEUTRAL” to “BUY” and its 12-month average target price from $140 to $152.
Russian President Vladimir Putin answered questions from reporters and the public at his traditional annual press conference, which was broadcast jointly on television and radio in his country. In his statement regarding possible peace talks with Ukraine, Putin stated that they were not looking for preconditions and said, “We do not have any preconditions, we are ready to meet without any preconditions. However, we can meet based on the items in the negotiation process held in Istanbul at the end of 2022 and the current realities on the ground.”
