Market Overview - Bitcoin (BTC) has decreased to $68,500, failing to reclaim the $70,000 mark after a brief period above that level over the weekend. The CoinDesk 20 Index (CD20) has also dropped by 0.23% in the past 24 hours. The market is stabilizing after a decline to $60,000, which erased all gains since Donald Trump's presidential election victory in November 2024 [1][2]. Liquidations and Market Dynamics - The recent decline in Bitcoin prompted over $2.7 billion in liquidations, primarily affecting leveraged positions. This selloff may not indicate a fundamental shift in the crypto market but could be linked to declining liquidity in the broader financial ecosystem [2]. - Raoul Pal, CEO of Global Macro Investor, attributed the selloff in crypto and tech stocks to temporary drains in U.S. dollar liquidity related to Treasury operations and government funding dynamics [2]. Impact of Artificial Intelligence - Investments in artificial intelligence (AI) have been absorbing available capital, negatively impacting other sectors, including cryptocurrencies. A note from Wintermute indicated that removing AI companies from the Nasdaq 100 index nearly eliminates the negative skew for crypto [3]. - Jasper De Maere, a trader at Wintermute, stated that the underperformance of crypto during rallies and increased selling during downturns can be largely explained by the rotation into AI investments. For crypto to outperform again, a reduction in AI investment is necessary [4]. Japanese Market Influence - Following Prime Minister Sanae Takaichi's election victory, Japanese government bond yields have risen but are now dropping, which may prevent further unwinding of the yen carry trade. This could potentially lead to up to $5 trillion being reinvested in Japan [4]. - Arthur Hayes, co-founder of BitMEX, suggested that Takaichi's victory could lead to a depreciation of the yen against the dollar, making the Japanese currency less attractive and potentially benefiting risk assets, including cryptocurrencies [5]. Current Price Trends and Investor Sentiment - Prices are expected to remain rangebound for the time being. The Coinbase Premium Index, which measures demand from large U.S. investors, remains negative, and spot bitcoin ETF flows show hesitance, with daily net inflows at just $145 million [6]. - Institutional flows through ETFs and derivatives are currently influencing market direction, while retail investors are diversifying their attention across other asset classes [6].

Core Insights - The recent crash in cryptocurrency prices, particularly Bitcoin, saw a drop of nearly $15,000 in just 24 hours, reminiscent of the collapse following Sam Bankman-Fried's empire in 2022 [1] - Bitcoin has since recovered to around $70,000, but the incident has raised questions among crypto insiders about the underlying causes [1] Group 1: Causes of the Crash - A theory suggests that the crash was driven by Hong Kong traders who made high-leverage bets on Bitcoin that backfired [1] - Evidence points to the sudden failure of Hong Kong hedge funds that held call options in BlackRock's IBIT, the largest Bitcoin ETF [2] - The hedge funds utilized the Yen carry trade to finance substantial positions in out-of-the-money IBIT options, betting on a recovery in Bitcoin prices that did not materialize [3] Group 2: Impact on Hedge Funds - The hedge funds faced a "perfect storm" as the crypto market continued to decline, leading to a liquidation of their holdings and a mass sell-off of IBIT shares, which contributed to Bitcoin's price drop [4] - The funds' strategy involved running a leveraged options trade on IBIT, which became increasingly risky as losses mounted and financing costs in JPY rose [4] Group 3: Market Dynamics - The Hong Kong hedge funds traded Bitcoin exclusively through ETF shares, distancing them from the traditional crypto ecosystem, which limited the spread of information regarding their predicament on platforms like "Crypto Twitter" [5] - This lack of communication meant that there were no significant counter-parties to warn others about the potential risks involved [5]

[Chart courtesy of MarketWatch.com][Chart courtesy of MarketWatch.com]Moving the marketThe major indexes opened sharply lower, dragged down hard by Microsoft after its latest earnings miss.The stock tanked 11%—its worst day since March 2020—on slower cloud growth and soft margin guidance for the next quarter.That sparked fresh worries that AI might disrupt even Microsoft’s core business model, so software names got hit too: ServiceNow dropped 12% (even after beating estimates), Oracle fell 5%, and Salesforc ...

Core Insights - Bitcoin is facing challenges as it struggles to maintain its value amid concerns regarding the yen's strength and fiscal instability, leading to a divergence between cryptocurrency and traditional safe-haven assets [1] - The yen has appreciated over 1.4% against the dollar following comments from Japan's Prime Minister regarding necessary measures to address market volatility [2] - A potential coordinated action between the Federal Reserve and Japan is causing investors to move away from riskier assets, with significant capital expected to return to Japan, impacting markets including Bitcoin [3] Market Movements - Bitcoin has decreased by 0.8% to below $88,000, while ether has dropped more than 1.6% to just under $2,900, with the broader CoinDesk 20 index retreating by 1.54% [1] - The Nikkei 225 index fell by 1.8%, and futures for the Nasdaq and S&P 500 also declined as capital flows shifted [3] Asset Preferences - Capital has not moved towards Bitcoin but rather to gold, which has surpassed $5,000 per ounce, indicating a preference for traditional safe-haven assets during periods of uncertainty [4] - NYDIG's research suggests that Bitcoin's liquidity and instant settlement features may be less favorable compared to gold during times of market stress [4] Investor Behavior - Data from CryptoQuant indicates that older Bitcoin holders are beginning to sell at a loss for the first time since October 2023, signaling potential internal weakness in the market [5] - The upcoming Federal Reserve meeting is anticipated to maintain interest rates, but guidance from Chair Jerome Powell will be crucial for market sentiment [5] Economic Uncertainty - The risk of a U.S. government shutdown is currently estimated at 79% on Polymarket and near 78% on Kalshi, adding further uncertainty to the market ahead of significant earnings reports from major tech firms [6]

Core Insights - Japan's 30-year treasury yields reached a record high of 3.52%, marking a 48-basis-point increase since November, raising concerns about potential impacts on U.S. and global markets [1] Group 1: Fiscal Conditions and Budget - Japan's government bond yields have surged significantly over the past year due to deteriorating fiscal conditions, with a record budget of ¥122.3 trillion ($785 billion) approved for the fiscal year starting April 2026, driven by increased social welfare and defense spending [2] - In addition to the budget, a ¥21.3 trillion ($140 billion) economic stimulus package was approved by the government [3] Group 2: Bond Yields and Currency Impact - Japan's 10-year government bond yield has risen to 2.12%, the highest since 1999, while the 30-year yield is at 3.46%, also a record high [3] - The Japanese Yen has depreciated over 34% against the U.S. Dollar in the past five years and 6.6% in the last six months, indicating a growing fiscal risk [5] Group 3: Market Dynamics - The rising bond yields are attributed to the Bank of Japan's continued purchasing of longer-term bonds, which caps yields and signals a rising risk of a debt crisis [4] - Japan's low-rate environment has supported significant carry trades, where investors borrow in yen to invest in higher-yielding assets abroad [6]

Group 1: Bitcoin Market Dynamics - Bitcoin experienced significant volatility following a soft inflation report, leading to over $500 million in liquidations within the crypto market [1] - The recent liquidation data indicated that $575 million were liquidated in the past 24 hours, with Bitcoin accounting for $202 million of that total [2] - Despite the sell-off, Bitcoin has shown resilience, trading around $88,100 and maintaining demand in the $85,000 to $81,000 range [3] Group 2: Economic Influences - The Bank of Japan's decision to raise interest rates by a quarter point marks the end of a 30-year low rate regime, potentially impacting crypto and other risk assets [4] - The unwinding of the carry trade following the rate hike is expected to reduce liquidity that has supported risk assets for years [4] - Elevated leverage in the crypto ecosystem has been noted, with significant liquidations occurring during December [5] Group 3: Market Sentiment and Predictions - Traders remain optimistic about Bitcoin's future, with a 61% chance predicted for its price to reach $100,000 rather than $69,000 [3] - As the holiday season approaches, increased volatility is anticipated due to shrinking liquidity and portfolio rebalancing among investors [6] - Defensive positioning among futures and options traders is expected to amplify market conditions [6]

Market Overview - The crypto market is experiencing ongoing bearish price action, raising questions about whether it is in a bear market and if Bitcoin will reclaim $100,000 before year-end [1] - Following bullish US CPI data and an interest rate cut from the Bank of England, Bitcoin saw a slight increase of +1.2%, trading just below $88,000, while the combined crypto market cap fluctuated around $3.1 trillion [2] Price Performance - Bitcoin is down -14% year-to-date, with other major cryptocurrencies like DOT, LINK, ADA, and SOL experiencing declines between -50% and -80% [4] - In Q4 2025, Bitcoin dropped over -30% after falling below $90,000, currently ranging between $85,000 and $88,000, breaking a key support level and prompting bearish sentiment among analysts [4] Analyst Predictions - Analyst Peter Brandt predicts Bitcoin could crash to $25,000 in 2026, citing diminishing returns in each bull run and historical declines of over 80% in previous parabolic runs [5] - Brandt notes that a 20% decline from the all-time high would bring Bitcoin's price to approximately $25,240 [5] Global Economic Factors - The Bank of Japan is raising interest rates to the highest levels in five years, adding uncertainty to global markets, particularly affecting the Yen carry trade strategy [6] - Ongoing global economic uncertainty, the war in Ukraine, and tensions between the US and Venezuela contribute to concerns about the crypto market's state in 2026 [7]

Economic Policy - The Bank of Japan is expected to raise short-term interest rates to 0.75% from 0.5%, marking a significant shift in its monetary policy after decades of near-zero rates [2] - This rate increase reflects Japan's confidence in achieving a sustainable cycle of rising inflation and solid wage gains, with inflation remaining above the BOJ's 2% target for nearly four years [4] Government and Central Bank Alignment - Finance Minister Satsuki Katayama indicated that there is no gap in the economic outlook between the government and the Bank of Japan, suggesting the administration's support for the interest rate hike [3] Investment Landscape - The rate increase raises questions about the future of the yen carry trade and its implications for investors, particularly those following Warren Buffett's investments in Japanese equities [4] - Warren Buffett's investment in Japan has evolved, with Berkshire Hathaway increasing its stakes in Japan's five largest trading houses to nearly 10% each, now valued at over $30 billion, up from $23.5 billion at the end of 2024 [6]

Core Viewpoint - The Bank of Japan's (BOJ) decision to raise interest rates to 0.75% has significant implications for global markets, particularly affecting bond yields, precious metals, and Bitcoin [1][3][5]. Group 1: Interest Rate Changes and Market Reactions - Japan's 10-year government bond yields surged to 1.98% in December 2025, marking the highest level since the 1990s [1][2]. - The anticipated 25-basis-point hike to 0.75% is seen as a modest change, but the speed of this adjustment is critical for market liquidity [3][4]. - Analysts suggest that Japan's yield movements are now a focal point for global capital, indicating that Japan's economic situation is increasingly relevant on the world stage [5][6]. Group 2: Impact on Precious Metals - Precious metals, particularly gold and silver, have surged by 135% and 175% respectively since early 2023, closely tracking Japanese bond yields [1][6]. - The rise in precious metals is attributed to increasing sovereign risk and tighter global liquidity, with gold serving as a hedge against these macroeconomic uncertainties [7][9]. - The silver market is exhibiting signs of speculative behavior, with the China Silver Futures Fund trading 12% above the physical metal, indicating heightened demand for leveraged exposure [8].

Yen strength is the crux of the yen carry trade unwind guys.Had my wires crossed in tonight’s video I apologize! ...