Bitcoin’s remarkable rally in 2024 stunned the world but with the advent of the new year only hours away, the rally seems to be stalling.

The cryptocurrency, which surged to a record high of $108,000 in mid-December, was trading at $93,670 early Monday in New York, 16% below the high.

Smaller tokens like Ether and meme favourite Dogecoin have also struggled to gain traction in recent days.

The BTC rally was fuelled by the US election results owing to President-elect Donald Trump’s favourable stance toward cryptocurrencies.

Investors loaded up on the cryptocurrency driven by Trump’s proposals of building a national Bitcoin reserve and making the regulatory environment easier for crypto firms.

A month later, he named Paul Atkins as the new Securities and Exchange Commission (SEC) chair who will replace Gary Gensler, known for bringing more than a hundred actions against crypto firms during his tenure.

However, the enthusiasm has gradually been tempered by reduced expectations of Federal Reserve interest-rate cuts, which have cooled speculative activity across financial markets.

Chris Weston, head of research at Pepperstone Group, said that “the momentum has come out of the post-election move” in Bitcoin, citing outflows from exchange-traded funds focused on the cryptocurrency as evidence of this slowdown.

At the same time, MicroStrategy, the software company turned Bitcoin accumulator, has been on a buying spree in recent weeks.

With over $40 billion in Bitcoin holdings, the company is closely watched by traders, who anticipate regular announcements of new purchases.

Invezz takes a look at the many aspects that might shape Bitcoin’s price trajectory in 2025, and the many milestones it could possibly touch:

BTC 2025 outlook: Experts weigh in

Despite the current stall, analysts maintain a largely optimistic view of Bitcoin’s future.

Alex Thorn, head of research at Galaxy Digital, dismissed the recent pullback as a temporary blip.

Thorn predicts that Bitcoin will surpass $150,000 in the first half of 2025 and potentially “test or best” $185,000 by the end of that year.

“A combination of institutional, corporate, and nation state adoption will propel Bitcoin to new heights in 2025,” Thorn wrote, adding,

Throughout its existence, Bitcoin has appreciated faster than all other asset classes, particularly the S&P 500 and gold, and that trend will continue in 2025.

Not all market observers share this bullish outlook.

Rania Gule, an analyst at XS.com, warned on Monday that Bitcoin could slide to $85,000 in the near term due to the expiration of approximately $14 billion worth of options contracts.

Blockware’s scenarios for BTC’s 2025 price

Blockware Research has outlined three potential trajectories for Bitcoin’s price in 2025, depending on macroeconomic and policy developments:

Bear Case: Bitcoin could rise modestly to $150,000, and this scenario would take place if the Fed kept interest rates higher for longer, and long-term holders started aggressively selling their Bitcoin.

The bull-run could also be hindered by a failure of the Trump administration to act on the Strategic Bitcoin Reserve Plan.

Base Case: Bitcoin reaches $225,000, supported by Federal Reserve rate cuts, steady corporate adoption, and the establishment of Bitcoin as a US reserve asset through the SBR initiative.

Bull Case: Bitcoin soars to $400,000, driven by ultra-dovish Federal Reserve policies, accelerated corporate adoption, and a significant expansion of the US government’s Bitcoin reserves.

The post Can Bitcoin’s price double by 2025? Expert analysis after rally slows appeared first on Invezz

The debate surrounding the true nature of cryptocurrency continues to evolve, with San Francisco Federal Reserve President Mary Daly weighing in on the matter.

In a recent interview, Daly argued that crypto should be considered its own distinct asset class, rather than being grouped alongside gold as is often the case.

Defining crypto: more than just a commodity

“I see crypto as a complicated thing, and the service we need to do for everyone is really unpack what we mean and call it what it is once we’ve done that,” Daly stated on Yahoo Finance’s Opening Bid podcast.

She emphasized that crypto could serve multiple roles—a currency, a medium of exchange, or an asset that can appreciate or depreciate in value—and that these terms require clear definition.

“So I don’t think of it as like gold,” Daly added.

It has properties like gold sometimes, but I don’t think of it like that.

Contrasting views within the Fed

Daly’s perspective presents a slight departure from the views of Federal Reserve Chair Jerome Powell, who earlier this month energized the crypto community with his comments on bitcoin.

Powell described bitcoin as a “speculative asset,” comparing it to virtual or digital gold.

“People are not using it as a form of payment or as a store of value,” Powell said at the New York Times DealBook conference.

It’s highly volatile. It’s not a competitor for the dollar; it’s really a competitor for gold.

The road to currency status

Echoing Powell’s sentiment, Daly stressed that crypto is not yet ready to function as a currency, despite the aspirations of many crypto enthusiasts.

“The property it needs is that it has to grow as the economy grows,” Daly explained.

So its value doesn’t change just because people want it. So when more people want a dollar bill, the dollar bill doesn’t rise in value. What causes the dollar to fluctuate is the economy and how fast our growth is relative to other countries. So that is a property it will have to perfect for it to be a currency.

Crypto’s market momentum despite regulatory uncertainty

While the path to official recognition as a currency by Congress remains uncertain, the momentum behind various digital assets continues to build.

Bitcoin has seen significant gains since Donald Trump’s election on November 5, breaking through the $100,000 mark for the first time on December 4.

Bitcoin prices have risen 38% since Election Day and are 106% higher this year.

Crypto-linked stocks like Coinbase (COIN) and Robinhood (HOOD) have also seen impressive growth.

Institutional adoption and the Trump factor

The warming sentiment towards crypto is also reflected in recent investments from institutional players that typically favor traditional assets.

In May, Wisconsin’s pension fund purchased over $160 million in bitcoin shares, signaling growing acceptance from traditional financial players.

Furthermore, MicroStrategy (MSTR), led by Michael Saylor, has continued its aggressive acquisition of bitcoin.

The new Trump administration’s appointment of venture capitalist David Sacks as a crypto czar may pave the way for new initiatives, including a potential bitcoin reserve.

“Just the fact that there would even be someone who would be focused on making the United States a leader in crypto, bitcoin mining, and other areas President Trump has talked about is a sea change,” Benchmark Company analyst Mark Palmer said on Opening Bid.

“We assume in our analysis [that] the price of bitcoin will reach $225,000 by the end of 2026.”

He also emphasized that “The fact that we are seeing increased institutional adoption of bitcoin is key here.”

The post Crypto’s identity crisis: Fed’s Daly says it’s no gold, needs its own definition appeared first on Invezz

According to a letter sent to Congress, Chinese state-sponsored hackers accessed sensitive Treasury data through a compromised cloud-based service provided by BeyondTrust Inc.

While the department has contained the immediate threat, the incident reveals significant risks in outsourcing critical infrastructure to external vendors.

This breach comes amid escalating concerns over cyber-espionage campaigns targeting US agencies and private firms, raising questions about the robustness of existing security protocols.

As international tensions flare, cybersecurity is emerging as a pivotal issue in safeguarding national interests.

Chinese-linked hackers exploit software provider loophole

Investigations into the Treasury breach revealed that hackers gained access via a key used by BeyondTrust to secure its cloud-based services.

The attack allowed the perpetrators to infiltrate specific Treasury workstations and access unclassified documents.

BeyondTrust, a federal contractor with over $4 million in government contracts, also serves the Departments of Defense, Veterans Affairs, and Justice.

While the affected service has been disabled, the incident has drawn scrutiny to the broader ecosystem of third-party vendors.

Experts are questioning whether stringent security audits are being conducted before awarding such contracts, particularly given the sensitive nature of the data involved.

The breach highlights an alarming trend: state-backed actors increasingly targeting indirect entry points, such as contractors, to bypass direct security measures.

The Cybersecurity and Infrastructure Security Agency (CISA), the FBI, and other agencies are now collaborating on the investigation, aiming to prevent recurrence.

China-US cyber tensions escalate

This incident is part of a wider pattern of alleged cyber-espionage by Chinese state-sponsored groups.

Notably, the Salt Typhoon group has been implicated in attacks on US telecommunications firms, reportedly accessing private communications of prominent political figures.

These breaches come after a period of relative détente in US-China relations, complicating diplomatic efforts.

China has denied involvement, with its Washington embassy accusing the US of “smear attacks” and demanding evidence.

The timing of these incidents, coinciding with President Biden’s final month in office, has fuelled speculation about geopolitical motives.

The Treasury hack and telecom espionage expose a critical vulnerability in the US government’s cyber defences: reliance on third-party vendors.

With agencies dependent on private firms for operational support, the potential for supply chain infiltration becomes a pressing concern.

These developments have reignited debates on domestic technological self-reliance and the need for stricter cybersecurity frameworks.

What’s next for US cybersecurity policy?

In response to these threats, the White House has pledged decisive action, including a ban on China Telecom and plans for stricter oversight of federal contractors.

These measures align with broader efforts to hold Beijing accountable for cyberattacks while strengthening domestic cybersecurity infrastructure.

The Treasury breach has also prompted a reassessment of vendor relationships.

Moving forward, agencies are likely to demand enhanced compliance measures from contractors, ensuring better protection against state-sponsored threats.

Meanwhile, cybersecurity experts are urging the administration to invest in advanced detection systems to identify breaches earlier.

As the geopolitical stakes rise, the Treasury hack serves as a stark reminder of the need for proactive measures in securing the nation’s digital assets.

The post China-linked hackers target US Treasury through compromised software provider in cyber attack appeared first on Invezz

The US economy is heading into 2025 with strong momentum, but significant uncertainties could alter its trajectory. 

A strong 3% GDP growth rate in 2024 and the addition of nearly 2 million jobs have defied predictions of a slowdown.

Many were once again left anticipating a recession that never came. Consumer spending and a resilient labour market have kept the economy steady. 

However, the upcoming presidency of Donald Trump, set to begin in January, is expected to bring significant policy changes that could alter this outlook.

Trade dynamics, fiscal adjustments, and geopolitical tensions are just a few of the variables that could influence the economic path forward. 

Growth will slow, but not stop

The consensus among economists is that the economy will grow at a slower pace in 2025, likely around 2%. 

This rate aligns with the long-term potential of the US economy. While soft landings are rare, the Federal Reserve’s recent monetary easing and consumer strength have built a solid foundation for continued growth. 

However, factors such as higher interest rates, rising debt levels, and geopolitical risks could act as headwinds.

What will the US Fed do next?

The Federal Reserve reduced interest rates three times in second half of 2024, lowering the terminal rate to 3%.

Markets anticipate fewer cuts in 2025 as Fed Chair Jerome Powell focuses on maintaining stability. 

Inflation, currently at 2.4%, is near the Fed’s 2% target but could rise from here. Economists warn that additional tariffs or supply chain disruptions may push inflation higher.

A surprise rebound in inflation could lead to renewed rate hikes, raising borrowing costs for businesses and consumers. For now, markets expect the Fed to tread cautiously, balancing growth and inflation concerns.

Meanwhile, businesses are closely watching the Fed’s actions to plan for capital investment and borrowing decisions.

Persistent inflation above 2% could also impact consumer confidence, potentially slowing the spending that has driven much of the recent economic expansion.

Will consumers remain unfazed?

Real income growth has been a key driver of consumer spending. Unemployment rose slightly to 4.2% by the end of 2024, but hiring remains steady.

Employers are hesitant to lay off workers, a trend known as labor hoarding, which helps stabilize the job market. Despite these positives, elevated consumer debt levels signal financial stress for some households.

Retailers are likely to see mixed results. High-income households may continue spending, but those in lower-income brackets could pull back. 

Inflation’s trajectory will play a crucial role in shaping consumer behavior in 2025. Rising costs in essentials such as food and energy could disproportionately affect lower-income families, adding pressure to adjust discretionary spending. 

On the other hand, continued real wage growth could mitigate these effects and sustain overall consumption levels.

Policies that could shake things up

The incoming Trump administration’s economic policies are creating uncertainties. Key proposals include new tariffs, tax cuts, and stricter immigration rules. 

Analysts expect a 90% likelihood of sweeping tariffs on imports from key trade partners like China, Mexico, and Canada.

Historical data shows a 1% tariff increase raises inflation by 0.1%, potentially offsetting recent progress in price stability. 

Proposed tax cuts could boost corporate and household spending but may widen the budget deficit, which is projected to grow by $4.6 trillion if current policies are extended, according to the Congressional Budget Office. 

Stricter immigration policies could exacerbate labor shortages, raising costs in sectors like construction and agriculture.

The combination of these policies may create ripple effects throughout the economy. For example, increased tariffs could lead to higher costs for manufacturers and retailers, ultimately passing those costs onto consumers. 

Tax cuts, while potentially stimulating short-term growth, may reduce funding for government programs or lead to increased borrowing. 

Global tensions add uncertainty

The geopolitical landscape is anything but certain. Lots of ups and downs were observed in 2024 and the next year isn’t likely to be any different. 

Revisionist powers like China and Russia are challenging the existing world order.

Xi Jinping’s government continues to focus on Taiwan, raising tensions in Asia.

A perceived decline in U.S. global influence could embolden China to act more aggressively. 

Despite economic isolation, Putin remains committed to his vision of restoring Russian influence, particularly in Ukraine.

The U.S.’s trade and security commitments could be tested if these tensions escalate.

America’s “America First” policies may strain alliances and disrupt global trade flows, adding another layer of risk to the 2025 economic outlook.

Businesses with global supply chains may face challenges as they navigate shifting trade policies and geopolitical instability.

Meanwhile, increased defense spending in response to global tensions could provide a boost to certain industries, offsetting some of the broader economic risks.

Is the stock market overvalued?

US equity markets soared in 2024, with the S&P 500 delivering a 29% total return. Technology stocks once again led the rally, driven by advances in artificial intelligence. 

However, valuations are now stretched based on historical standards, with the S&P 500 trading at a forward P/E ratio of 22. Nevertheless, elevated profit margins and robust earnings growth are supporting these valuations.

But any earnings disappointments, particularly in tech, could trigger a correction. Case in point, Nvidia’s third-quarter results in 2024 led to a 10% drop in its stock price due to unmet expectations.

For 2025, sector rotation and a closer look at other countries which are now trading at a discount in comparison to the U.S. are becoming favored strategies by experienced portfolio managers.

Are bonds cool again?

With 10-year Treasury yields at 4.6%, bonds now offer reasonable risk-adjusted returns. Long-term inflation expectations of 2.3% suggest that real yields remain attractive for conservative investors. Bonds are also regaining their role as a hedge against stock market volatility.

Corporate debt levels will remain a concern in 2025, particularly in rate-sensitive sectors like housing and utilities. However, strong earnings and productivity gains provide some buffer.

A year to watch closely

The US economy is entering 2025 with solid footing but faces significant risks.

Policymakers must balance sustainable growth with inflation control, while investors are still enjoying the market’s gains over the past few years. 

Resilient consumer spending, stable corporate earnings, and moderated inflation will be critical factors in determining whether the economy can maintain its current momentum

The key question remains: can resilience outpace the challenges? If there’s one economy that can, that is certainly the American economy.

The post Will the US economy and the stock market continue their growth into 2025? appeared first on Invezz

China’s factory activity showed signs of sustained expansion in December, with the official manufacturing purchasing managers’ index (PMI) remaining above the critical 50-point threshold for the third consecutive month.

The PMI stood at 50.1 in December, slightly down from 50.3 in November, according to data from the National Bureau of Statistics (NBS).

This was also below the estimates from economists.

The slowdown in factory activity was due to a decline in the output component, Gabriel Ng from Capital Economics said in a note.

He also mentioned that the output price component fell, indicating ongoing downward pressure on prices.

A reading above 50 indicates expansion, while a reading below 50 signals contraction.

This marks a continuation of the country’s recovery, with expanding economic activity bolstered by macroeconomic policies and seasonal factors.

What drove the expansion?

Zhao Qinghe, a senior statistician at the NBS, attributed the sustained expansion to the combined effects of macroeconomic policies, which have been evident since October.

He highlighted that policies encouraging the replacement of old consumer goods and the approach of traditional festivals helped accelerate growth in key sectors.

In addition to the manufacturing PMI, China’s non-manufacturing PMI, which tracks the service and construction sectors, saw notable expansion, rising to 52.2 in December, up from 50 in November.

This increase points to stronger activity in these sectors, with fiscal support boosting infrastructure spending and easing pressure on construction projects.

However, while domestic demand is expanding, there are challenges. Some industrial enterprises are facing intensified competition and declining profitability, as noted by an NBS spokesperson.

Exports remain a concern for China

Within the manufacturing PMI, the subindex for new export orders rose slightly to 48.3 in December, compared with 48.1 in November.

Despite the overall growth in domestic demand, exports remain under pressure due to external uncertainties.

The export orders index rose to its highest level in four months, likely driven by U.S. importers trying to beat potential higher tariffs that incoming US President Donald Trump might impose on Chinese goods, according to Gabriel Ng.

Beijing is expected to implement more targeted fiscal stimulus in response to Trump’s tariffs in the coming year, with reports suggesting that the country will increase fiscal spending to support economic growth.

The construction sector showed resilience, with the construction subindex rising to 53.2 in December, up from 49.7 in November.

While non-manufacturing sectors have demonstrated resilience, analysts remain cautious about the sustainability of the recovery.

China’s official composite PMI, which combines both manufacturing and non-manufacturing activity, stood at 52.2 in December, improving from 50.8 in November.

This improvement reflects an overall recovery, but uncertainties remain, particularly regarding international tensions and potential tariff increases, especially with the looming inauguration of Donald Trump in January.

The post China’s factory activity expands for third straight month, but at a slower pace appeared first on Invezz