Bitcoin drops to $91,000
Halogen Capital
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Is the bull run over? Key events to watch.
Price Update
Global Markets - Key Events
This wasn’t how things were supposed to go. With a strong economy, a friendly Federal Reserve at its back and Donald Trump heading to the White House, Wall Street saw nothing but a choppy start to the year.?
On Friday, the S&P 500 dropped 1.5%—its steepest decline since mid-December—as an unexpected hiring surge (nonfarm payrolls up 256,000; unemployment down to 4.1%) fueled speculation that the Federal Reserve will hold off on rate cuts until the year’s second half.?
Treasury yields also spiked, with 30-year rates briefly crossing 5%.
In response, major banks revised their Fed forecasts:?
Next week, earnings season kicks off in earnest with financial heavyweights like JPMorgan Chase and Wells Fargo. Both are expected to report robust trading and investment banking gains, which have helped offset weaker net interest income amid higher deposits and sluggish loan demand.?
Malaysia Market - Key Events
Growing inflation fears gripped equity markets as the KLCI declined 1.66% in Week 2 to end at 1,602.41 points despite valiant defending of the 1,600 psychological level mid-week.
USDMYR was largely unchanged at 4.4975, which masks a volatile week in which the 4.50 mark was breached twice.
The local bond market was surprisingly defensive as exogenous inflation fears were balanced with lower domestic inflationary prospects, resulting in tepid moves in the government yield curve (albeit still for anyone holding 30-year MGS):
Investors sought refuge in the higher yield environment of corporate bonds:
Similarly, our Halogen Shariah Ringgit Income Fund was able to outperform the government segment as well.
Crypto Market - Key Events
Bitcoin’s roaring start to the year hit a roadblock this week. After surging past $100,000, the Bitcoin stumbled on Thursday, plunging 2.8% to $91,785— 15% below its all-time record of $108,315 set in mid-December.
It was also weighed down by reports that the US government may soon sell a massive Bitcoin cache seized from the infamous Silk Road marketplace. On Wednesday, Bitcoin ETFs saw $583 million in outflows—the second-biggest since they launched a year ago.
But Bitcoin wasn’t down for long. By Friday, it clawed back to $94,600 as investors digested a surprisingly strong December jobs report, sparking fresh debates about where interest rates might go next.
While Bitcoin faced turbulence, Ripple’s XRP took the spotlight. Already the top-performing crypto since November’s presidential election, XRP kept climbing. It jumped more than 2% on Wednesday, fueled by a buzzworthy dinner between Ripple CEO Brad Garlinghouse, Chief Legal Officer Stuart Alderoty, and President-elect Donald Trump. The meeting sparked excitement over Ripple’s future and gave the market a rare dose of optimism in an otherwise bumpy week.
What We Are Monitoring For The Week Ahead
Looking Ahead: Our Insights
In macro, amidst the strong ISM services prices and non-farm payrolls (NFP)-driven weakness in the S&P 500 last week and US bond markets, the coming midweek’s US CPI and PPI will be ones to watch, with any sniff of further increasing prices cementing the Fed (re)pivot back to being vigilant on inflation resulting in the markets further expecting weakness in asset prices in anticipation of a hawkish Fed. Markets are now pricing in closer to 1 rate cut for 2025 rather than 2, and some commentators even suggest the Fed’s next move to be a rate hike, which would be painful for asset prices.
US 10-year yields are also a key indicator of the market’s view on the Fed’s current direction (or lack of it) on tackling inflation, and with the 10Y rise to 4.79% during the past week, any further strength in prices will likely take it closer to that psychological 5.00% mark that was last teased in Oct 2023.
With crypto chopping around over the week, with Monday rises in Bitcoin (to the $102,000 level) and alts following suit, albeit more muted than in November and December. Excitement was quickly reversed the next day around US ISM prices paid index release causing Bitcoin dropping down on fears of tighter liquidity conditions, although the overall crypto market held up reasonably well (unlike equity markets) following the strong beat on NFP in Biden’s last month as President to end the week pretty much where we started the year at $94,000.?
Looking ahead, President-elect Trump will also take office on January 20, so we anticipate that markets, including crypto, will continue to chop around next week (as they have done since early December) until the inauguration the following week.
On the local front, the MYR managed to hold off the strengthening dollar relatively well during the week. If MY Wholesale & Retail Sales and early 2024 MY GDP estimates come up good (that is, >5%), that should give further ballast to local markets including further MYR strength.
Thank you for reading and we’ll see you next week!
Team Halogen
Disclaimer: The information, analysis, and viewpoints presented here are intended solely for general informational purposes and should not be construed as personalised advice or recommendations for any specific individual or entity. For personalised investment decisions, individual investors are advised to consult their licensed financial professional advisor. The opinions expressed by the Manager are based on certain assumptions or prevailing market conditions, and they are subject to change without prior notice. This material is being distributed for informational purposes only and should not be regarded as investment advice or an endorsement of any particular security, strategy, or investment product. While the information provided herein may include data or opinions from sources believed to be reliable, its accuracy and completeness are not guaranteed. Reproduction of any part of this material in any form or reference to it in other publications is strictly prohibited without the express written permission from Halogen Capital Sdn Bhd. Halogen Capital Sdn Bhd and its employees assume no liability regarding the use of this material or its contents.
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