Weekly Market Update: Week of December 19 | Bitcoin and Macro Data, A Diverging Picture into Year-End

Macro Environment - Global markets are experiencing growing macro clarity, with central banks adopting a dovish stance; nearly 90% of global central banks have either eased or held policy steady over the past year, while the Bank of England has cut rates [1] - In the U.S., macro data has softened significantly, with labor market figures showing underemployment rising and payroll growth appearing weak, particularly outside of healthcare and social assistance [2] - Inflation data in the U.S. has undershot expectations, with the Consumer Price Index (CPI) close to the Federal Reserve's 2% target on a three-month annualized basis, reinforcing the case for continued rate cuts [2] Bitcoin Market Dynamics - Despite improving macro conditions, Bitcoin prices have lagged, with a significant disconnect between Bitcoin's price and macro factors, indicating that the weakness is driven more by crypto-specific dynamics [3] - The Crypto Fear & Greed Index has remained in fear or extreme fear territory since early November, contributing to selling pressure from long-term holders and a slowdown in ETF inflows [4] - A rise in long positions on Bitfinex over the past two months suggests that positioning may be improving, despite the overall negative sentiment in the crypto market [4] Implications for the Future - The disconnect between macro conditions and Bitcoin pricing is notable, as traditional risk assets indicate easing financial conditions while crypto sentiment remains negative; this divergence could lead to significant regime shifts [5] - The resolution of this divergence, whether through higher crypto prices or prolonged consolidation, will be a key question as the market heads into the new year [5]