Group 1 - The article does not provide any relevant content regarding the company or industry [1]

Investment Rating - The report maintains a modestly pro-risk stance for 2026, recommending an overweight (OW) position in equities and underweight (UW) in credit [6]. Core Insights - The macroeconomic environment has shown positive surprises, with growth being the primary driver of risk appetite in 2026 [4]. - The Risk Appetite Indicator (RAI) has reached its highest level since early 2025, indicating strong market sentiment [2]. - Growth repricing has been broad across regions and asset classes, with equities outperforming bonds and cyclicals outperforming defensives [3]. Summary by Sections Economic Outlook - Since the beginning of 2026, macroeconomic indicators have generally exceeded expectations, with the US unemployment rate dropping to 4.4% and positive manufacturing data from Germany [1]. Market Sentiment - The RAI has accelerated above 0.9, marking the 96th percentile since 1991, suggesting that while small corrections may occur, strong equity returns can persist in a supportive macro backdrop [2]. Asset Performance - Certain assets, such as silver, have experienced their best start-of-year performance in decades, with the Russell 2000 showing the largest historical outperformance against the Nasdaq composite [5]. Asset Allocation Recommendations - The report suggests an overweight position in equities, particularly in APAC ex-Japan and emerging markets, while recommending underweight positions in credit and commodities like copper [6][23].

Core Insights - U.S. spot Bitcoin exchange-traded funds (ETFs) experienced a three-day streak of outflows, totaling $205.5 million on Thursday and a cumulative net flow of $934.8 million over the three days, indicating a shift in trader sentiment as optimism wanes [1] - Despite the outflows, the 7-day net flow remains positive at $240.7 million, suggesting some resilience in the market [1] - Bitcoin's year-to-date gains have decreased from 8% to 4%, with the cryptocurrency trading flat at $91,100 after briefly dipping below $90,000 [2] Market Sentiment and Factors - ETF flows are seen as a lagging indicator of crypto market sentiment and can influence the price direction of assets [2] - Current outflows are attributed to tactical positioning and sentiment shifts rather than a collapse in demand, influenced by capital reallocation, resistance at $92,000, and macroeconomic uncertainties [3] - The decline in ETF demand coincides with a significant on-chain supply wall, as Bitcoin's price rose above $94,000, entering a zone with a clustered cost basis for recent top buyers between $92,100 and $117,400 [4] Market Dynamics - Analysts note rising sell-side pressure as investors regain the opportunity to exit positions without incurring losses, which may hinder a sustained bull phase [5] - The options market indicates a shift in momentum, with short-dated call skew turning negative, signaling the end of the early-January upside chase [5] - The market is expected to consolidate over the next few weeks, with a critical level to watch being the short-term holder cost basis of $98,900 for potential recovery [6]

Group 1 - The equity markets have had a positive start to the New Year, with the Dow Jones Industrial Average and the S&P 500 reaching new all-time highs in the first week of January [1]

Market Overview - Crypto markets experienced a significant rally, with Bitcoin surpassing $92,000 and Ether exceeding $3,100, indicating a return of risk appetite at the start of the year [1] - The rally is perceived as a potential shift in market regime rather than a temporary bounce, supported by a reduction in year-end tax-loss selling and renewed focus on policy options [2][7] Geopolitical Influences - Geopolitical events, such as the capture of Venezuelan President Nicolás Maduro by US special forces, contributed to market sentiment, with lower oil prices potentially providing a disinflationary effect [3] - Speculation regarding seized digital assets has sparked discussions about a possible "shadow" Bitcoin reserve, reflecting sovereign interest in crypto holdings [4] Derivatives Market Dynamics - The derivatives market has shown increased support, with a compression in put skew indicating reduced demand for downside protection and heightened interest in longer-dated upside exposure, including January 2026 $100,000 Bitcoin calls [4] - Demand for topside structures like straddles has also increased, although overall positioning remains cautious [4][7] Whale Activity - Large crypto holders transferred approximately $2.4 billion worth of Bitcoin and Ether to Binance, marking the exchange's largest net inflow in about a month, with deposits evenly split between the two assets [6]

Bitcoin Outlook - Strategy CEO Phong Le views Bitcoin as a unique asset class combining technological innovation, macroeconomic attributes, and capital market breakthroughs [1] - Short-term Bitcoin price performance is influenced by liquidity and risk appetite, exhibiting volatility similar to other risk assets [1] - The long-term value of Bitcoin requires time for market understanding [1] Potential Macroeconomic Factors for Bitcoin in 2026 - A more dovish Federal Reserve could create a more favorable macro environment for Bitcoin [1] - A rebound in risk appetite associated with the midterm election cycle could positively impact Bitcoin [1] - Continued adoption of Bitcoin by banks and nation-states could contribute to a more favorable environment [1]

Market Risk & Appetite - Monitor risk appetite, as alternative investments' performance is contingent on it [1] Small-Cap Performance - Observe small-cap follow-through versus fade, noting that trending was 8 out of 10 green (80%) [1] Stablecoin & Incentive Design - Track BNB Chain's stablecoin details and incentive design [1]

Market Overview - Bitcoin has dropped below $86,000 for the first time in two weeks, indicating a weakening investor sentiment as it enters deeper bear market territory [1] - The cryptocurrency has been trading within a range of $85,000 to $94,000, with low trading volumes and a lack of interest from investors [3] Price Movement - Bitcoin fell as much as 3.3% to $85,578 on Monday and is down approximately 30% from its all-time high of over $126,000 [2] - The decline in Bitcoin's price is occurring alongside other risk assets, breaking its usual correlation with market rebounds [4] Investor Behavior - Investors who purchased Bitcoin near its all-time high are selling off their holdings, contributing to the downward pressure on the price [2] - Michael Saylor's Strategy Inc. has continued to buy Bitcoin, acquiring nearly $1 billion for the second consecutive week, funded by sales of its Class A common stock [6][7] Broader Market Impact - Other cryptocurrencies, including Ether, Doge, and XRP, have also experienced declines of around 5%, with shares of crypto-related companies like Strategy and Coinbase Global Inc. dropping significantly [8] - The overall market sentiment is influenced by weakness in equity markets, with Bitcoin's sell-off aligning with broader market trends [5]

Summary of Key Points from the Conference Call Industry Overview - The focus is on the US equity markets and macroeconomic conditions leading up to the Federal Reserve (Fed) meeting - The current environment is characterized by a resilient risk appetite despite headwinds from interest rates Core Insights and Arguments 1. **Market Performance**: US equity markets closed higher last week, supported by dovish expectations from the Fed. The Risk Appetite Indicator reached 0.66, marking the largest two-week increase since May [1][7] 2. **Mixed Macro Data**: - ISM manufacturing index fell for the ninth consecutive month - ADP reported the largest one-month drop in employment since March 2023 - ISM services index showed improvement - Core PCE inflation rose by 0.2% month-over-month and 2.83% year-over-year - Initial jobless claims decreased to 191k, below expectations [1] 3. **Upcoming Economic Reports**: Key data releases include the JOLTS report and the employment cost index, with expectations of 7,100k and a 0.8% increase respectively [1] 4. **Volatility in Q4**: Following a 'Goldilocks' backdrop of growth optimism and dovish Fed expectations, markets have experienced increased volatility in Q4, particularly in tech-heavy indices like Nasdaq [2] 5. **Bond Yields**: There has been upward pressure on bond yields, especially in Japan and Germany, with the 30-year JGB yield reaching 3.4%, a rise of approximately 110 basis points year-to-date [2][9] 6. **Central Bank Divergence**: The dispersion in G10 central bank pricing has widened, with more banks now anticipating rate hikes in 2026 [2][13] 7. **Investment Strategy**: The company maintains a modestly pro-risk stance into 2026, favoring equities over bonds, commodities, and cash, while underweighting credit [3][6] 8. **Market Expectations for Rate Cuts**: The market is pricing in a 55% probability of more than two rate cuts in the next 12 months [6][17] Additional Important Insights - **Sector Performance**: Growth-sensitive segments, particularly cyclicals and the Russell 2000, have shown strong performance recently [2][15] - **Global Economic Sentiment**: The sentiment indicators suggest a cautious but optimistic outlook among investors, with a notable focus on diversification and hedging strategies [3][27] - **Asset Allocation Recommendations**: The report includes specific asset allocation recommendations, indicating overweight positions in equities and underweight in corporate bonds [20] This summary encapsulates the key points discussed in the conference call, highlighting the current state of the US equity markets, macroeconomic indicators, and strategic investment insights.

Core Insights - Bitcoin has experienced significant volatility recently, diverging from its historically favorable seasonal trends, yet it has stabilized above $90,000 as of early December [1] - There are indications that Bitcoin may be on the verge of a rebound, which could positively impact ETFs like the Coinshares Valkyrie Bitcoin Fund (BRRR) [2] - Market sentiment suggests that Bitcoin could outperform traditional asset classes such as equities and gold, particularly due to its recent aggressive sell-off compared to these assets [3] Market Sentiment and Risk Appetite - A revival in risk appetite is essential for Bitcoin and related ETFs like BRRR to see a substantial rebound, as Bitcoin has become a sentiment gauge for broader market trends [4] - Bitcoin's price movements have mirrored those of US technology stocks, often with greater volatility, indicating its role as a leading indicator for these assets [5] Underlying Factors for Rebound - The recent sell-off in Bitcoin may have been deeper than warranted, driven by deleveraging, which can ultimately lead to a healthier market environment by reducing fragility and resetting positions [6] - Macroeconomic factors, including the potential for a Federal Reserve rate cut, support the case for increased Bitcoin exposure, as Bitcoin tends to react strongly to easing macro pressures [7]