Global markets experienced a significant surge last Friday, driven by two pivotal events: Japan’s central bank increasing interest rates to a 30-year high and softer-than-expected U.S. inflation data. These factors reignited investor risk appetite, propelling major cryptocurrencies, technology stocks, and equities higher.
Bitcoin’s Meteoric Rise and Crypto Market Recovery
Bitcoin broke past the $87,000 mark during Asian trading sessions, signaling renewed strength in the cryptocurrency market. Other major coins, such as Ethereum, Solana (SOL), Cardano (ADA), and Dogecoin, also posted gains. According to CoinDesk, the CoinDesk 20 Index reflected a 2% overall rise in the crypto market.
This rebound comes after widespread liquidations in the market, with over $576 million being settled as leverage-driven traders were forced out of positions within a 24-hour period. Blockchain data hints that long-term Bitcoin holders may be nearing the end of an extended selling cycle, as approximately 20% of the total supply has been moved back into circulation over the last two years.
Japan’s Benchmark Interest Rate and Market Sentiment
The Bank of Japan (BOJ) raised its benchmark interest rate, the highest increase in three decades, pushing Japan’s 10-year bond yield to 2% for the first time since 2006. This move, although anticipated, confirmed the BOJ’s hawkish stance under Governor Kazuo Ueda. Despite the rate hike, the yen weakened, while Japan and Asia’s major stock indices climbed, showcasing the market’s confidence in the region’s growth prospects.
Tech Stocks Shine in U.S. Markets
In the U.S., tech stocks took center stage after consumer price index (CPI) data revealed a 2.7% inflation rise in November, falling short of the expected 3%. Core CPI also showed slower-than-anticipated growth, sparking speculation of future Federal Reserve interest rate cuts. Nasdaq led the rally with a 1.4% gain, followed by the S&P 500 (0.8%) and Dow Jones (0.2%).
On the corporate side, Micron Technology reported stellar quarterly earnings, with profits nearly doubling analysts’ expectations. The chipmaker’s strong performance alleviated concerns about AI sector spending. Shares of Micron soared by 10%, while other technology heavyweights like Nvidia and Broadcom rebounded following setbacks earlier in the week.
Fed Rate Cut Speculation and Employment Update
While economic indicators fueled optimism, labor market data added to the mix. Weekly jobless claims dropped by 13,000 to 224,000, showcasing a robust employment backdrop. Market participants have since increased their bets on a potential Federal Reserve rate cut in the coming months, with Federal Reserve Governor Chris Waller signaling openness to easing monetary policy.
Looking Ahead
As year-end approaches, caution persists due to declining trading volumes, particularly in the cryptocurrency markets where leverage remains elevated despite recent gains. Nevertheless, improving macroeconomic indicators and strong corporate earnings suggest a positive outlook for global markets heading into the new year.
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