By Omkar Godbole (All times ET unless indicated otherwise)

Keeping an eye on the Far East has been our mantra lately, and the latest news from the Chinese bond market shows why. Just today, China’s one-year government bond yield dropped below 1% for the first time since the Great Financial Crisis, adding to the year-to-date downturn. The benchmark 10-year yield slipped to 1.7%.

How does that play out for risk assets like bitcoin, which slumped overnight? Well, there are two key reasons to feel optimistic. For a start, the continued decline in yields suggests Beijing will have to roll out more aggressive stimulus measures than we saw earlier this year.

Jeroen Blokland, the founder and manager of the Blokland Smart Multi-Asset Fund, put it succinctly: “This indicates that China’s economic troubles are far from over, and the government will do what aging economies often do: ramp up government spending, allow for larger deficits and higher debt levels, and drive interest rates down toward zero.”

And there’s more to consider. This situation in China also raises questions about Fed Chairman Jerome Powell’s recent alarm over interest rates, which sent bitcoin tumbling to $95,000 from $105,000.

China, the world’s factory, is facing worsening deflation having already experienced the longest stretch of falling prices since the late 1990s. That could cap PPI and CPI readings worldwide, including in the U.S., a major trading partner.

BNP Paribas noted this phenomenon earlier this year, with analysts saying that China has already contributed to lowering core inflation in the eurozone and the U.S. by about 0.1 percentage point and core goods inflation by roughly 0.5 percentage point.

What this means is that Powell’s concerns about stubborn inflation may be unfounded and begs the question whether he will really stick to just two rate cuts for 2025 as he implied on Wednesday? Many experts think there might be more.

“Fed concerns on inflation are misguided. Interest rates are still too high in the U.S., and liquidity is about to increase, driving Bitcoin higher,” said Dan Tapiero, CEO and CIO of 10T Holdings, on X, alluding to China’s declining bond yields.

For now, markets aren’t considering this bullish angle. BTC has dropped below $95,000 and ETH has slipped to $3,200. All the 100 biggest coins are flashing red. Futures tied to the S&P 500 are down 0.5%, indicating a negative open and continuation of the post-Fed risk-off.

Sentiment may worsen if the core PCE, the Fed’s preferred inflation gauge, comes in hotter than expected later today. That might see markets price out another rate cut, leaving just one on the table for 2025. Stay alert!

What to Watch

• Crypto:
  • Dec. 23: MicroStrategy (MSTR) stock will be added to the Nasdaq-100 Index before the market opens, making it part of funds like the Invesco QQQ Trust ETF that track the index.
  • Dec. 25, 10:00 p.m.: Binance plans to delist the WazirX (WRX) token. Two other tokens being delisted at the same time are Kaon (AKRO) and Bluzelle (BLZ).
  • Dec. 30: The European Union’s Markets in Crypto-Assets (MiCA) Regulation becomes fully effective. The stablecoin provisions came into effect on June 30.
  • Dec. 31: Crypto exchange Gemini is shutting its operations in Canada. In an email sent out on Sept. 30, it said all customer accounts in the country would be closed at the end of the year.
  • Jan 3: Bitcoin Genesis Day. The 16th anniversary of the mining of Bitcoin’s first block, or Genesis Block, by the blockchain’s pseudonymous inventor Satoshi Nakamoto. This came roughly two months after he published the Bitcoin white paper in an online cryptography mailing list.
• Macro

Token Events

• Token Launches
  • Binance Alpha announced the fourth batch of tokens, including BANANA, KOGE, BOB, MGP, PSTAKE, GNON, Shoggoth, LUCE and ODOS. Binance Alpha is the pre-selected pool for Binance listings.

Conferences:

Token Talk

By Shaurya Malwa

Fartcoin (FART) just touched $1 billion.

The scatologically named AI agent token jumped over $1.1 billion in market cap early Friday even as the broader market saw a second-straight day of losses, becoming one of the few tokens in the green.

FART’s rise is as much about human psychology as economics. In a market where fundamental investments are faltering, it has become a symbol of the absurd, a light-hearted rebellion against the grim financial forecasts.

Its platform allows users to potentially submit related-theme memes or jokes to earn tokens. It features a unique transactional system where each trade produces a digital flatuence sound.

People are investing not for the promise of utility or groundbreaking technology but for the joy of the moment, the shared giggle over a coin whose name alone is enough to break the tension of the day.

It isn’t all about the jokes, though. The token is part of the rising AI agent crypto sector, one that claims to use AI-powered entities to perform tasks on blockchain networks autonomously under a memecoin branding.

Derivatives Positioning

• The BTC one-month basis has pulled back to 10% on the CME while the three-month basis has dropped to around 12% on offshore exchanges. ETH futures display similar behavior.
• Most major tokens are showing negative perpetual cumulative volume deltas for the past 24 hours, a sign of net selling pressure. DOGE has seen the most intense selling.
• Front-end BTC and ETH show a strong put bias, but calls expiring on Jan. 31 and beyond continue to trade at a premium.
• Block trades in options leaned slightly bearish, with large transactions involving a standalone long position in the $75K put expiring on Jan. 31.
• Someone sold a large amount of ETH $3K put.

Market Movements:

• BTC is down 2.55% from 4 p.m. ET Thursday to $94,947.95 (24hrs: -7.92%)
• ETH is down 5.41% at $3,232.19 (24hrs: -14.06%)
• CoinDesk 20 is down 5.14% to 3,196.80 (24hrs: -13.12%)
• Ether staking yield is up 7 bps to 3.19%
• BTC funding rate is at 0.01% (10.95% annualized) on Binance

• DXY is down 0.25% at 108.14
• Gold is up 1.11% at $2,621.1/oz
• Silver is up 0.65% to $29.28/oz
• Nikkei 225 closed -0.29% at 38,701.90
• Hang Seng closed -0.16% at 19,720.70
• FTSE is down 1.05% at 8,020.42
• Euro Stoxx 50 is down 1.36% at 4,812.53
• DJIA closed on Thursday unchanged at 42,342.24
• S&P 500 closed unchanged at 5,867.08
• Nasdaq closed -0.1% at 19,372.77
• S&P/TSX Composite Index closed -0.58% at 24,413.90
• S&P 40 Latin America closed +0.40% at 2,187.98
• U.S. 10-year Treasury is down 0.03% at 4.54%
• E-mini S&P 500 futures are down 0.79% to 5,822.25
• E-mini Nasdaq-100 futures are unchanged at 21,112.25
• E-mini Dow Jones Industrial Average Index futures are down 0.53% at 42,134.00

Bitcoin Stats:

• BTC Dominance: 59.21 (24hrs: +0.58%)
• Ethereum to bitcoin ratio: 0.034 (24hrs: -1.37%)
• Hashrate (seven-day moving average): 785 EH/s
• Hashprice (spot): $62.5
• Total Fees: $2.3 million
• CME Futures Open Interest: 211,885 BTC
• BTC priced in gold: 36.3 oz
• BTC vs gold market cap: 10.34%
• Bitcoin sitting in over-the-counter desk balances: 409,300 BTC

Basket Performance

Technical Analysis

• BTC is fast approaching the lower end of the recent expanding channel pattern.
• A UTC close below the support line could entice more chart-driven sellers to the market, potentially leading to a deeper drop to $80,000, a level widely watched after the U.S. election.

Crypto Equities

• MicroStrategy (MSTR): closed on Thursday at $326.46 (-6.63%), down 5.35% at $309.00 in pre-market.
• Coinbase Global (COIN): closed at $273.92 (-2.12%), down 5.65% at $258.43
  in pre-market.
• Galaxy Digital Holdings (GLXY): closed at C$24.75 (-5.93%)
• MARA Holdings (MARA): closed at $20.37 (-5.74%), down 4.52% at $19.41 in pre-market.
• Riot Platforms (RIOT): closed at $11.19 (-6.36%), down 4.2% at $10.72 in pre-market.
• Core Scientific (CORZ): closed at $14.48 (+0.21%), down 4.42% at $13.84 in pre-market.
• CleanSpark (CLSK): closed at $10.91 (-3.62%), down 3.94% at $10.48 in pre-market.
• CoinShares Valkyrie Bitcoin Miners ETF (WGMI): closed at $24.45 (-5.56%), down 2.66% at $23.80 in pre-market.
• Semler Scientific (SMLR): closed at $61.34 (-5.66%), down 4.22% at $58.75 in pre-market.
• Exodus Movement (EXOD): closed at $50.95 (-4.05%), unchanged in pre-market.

ETF Flows

Spot BTC ETFs:

• Daily net flow: -$671.9 million
• Cumulative net flows: $36.310 billion
• Total BTC holdings ~ 1.142 million.

Spot ETH ETFs

• Daily net flow: -$60.5 million
• Cumulative net flows: $2.406 billion
• Total ETH holdings ~ 3.565 million.

Source: Farside Investors

Overnight Flows

Chart of the Day

• The chart shows annualized perpetual funding rates for major cryptocurrencies have been reset to healthier levels below 10%.
• The market swoon has cleared out over-leveraged bets.

While You Were Sleeping

• Dogecoin’s 11% Drop Leads Losses in Crypto Majors as Bitcoin Sours Festive Mood (CoinDesk): Bitcoin fell early Friday, extending its three-day post-FOMC slump as hawkish Fed signals and overbought conditions triggered a sell-off. DOGE led declines among the 10 biggest cryptocurrencies.
• Dozens of House Republicans Defy Trump in Test of His Grip on GOP (The New York Times): President-elect Donald Trump’s influence over his party failed a test on Thursday as 38 conservative House Republicans ignored his threats and rejected a bill to extend federal spending into 2025 and suspend the debt limit until 2027.
• As Bitcoin’s Post-Fed Price Dip Extends, This Key Contrary Indicator Offers Fresh Hope: Godbole (CoinDesk): Bitcoin’s drop below $96,000 triggered a key contrary indicator—the 50-hour SMA crossing below the 200-hour SMA—suggesting potential for a renewed rally above $100,000, though risks of further declines remain.
• Hedge Funds Cash In on Trump-Fuelled Crypto Boom (Financial Times): Crypto hedge funds surged in November with 46 percent monthly and 76 percent year-to-date gains, as Trump’s election win fueled bitcoin’s rise past $100,000, making Brevan Howard and Galaxy Digital standout performers.
• EM Central Banks Ramp Up Currency Defense as Dollar Surges Ahead (Bloomberg): Emerging-market central banks are deploying aggressive measures, like Brazil’s $14 billion intervention and South Korea’s eased FX rules, to counter a surging dollar that’s raising import costs and escalating debt risks.
• Japan Consumer Prices Rise Faster as Rate Hike Timing Under Scrutiny (The Wall Street Journal): Japan’s inflation rose to 2.9 percent in November, driven by energy and food prices and fueling rate hike expectations, though subdued service inflation and cautious BOJ messaging could delay action until March.

In the Ether