Funding spreads and borrow costs move in lockstep with global rate guidance, driving treasury strategy re-evaluations across the industry.
Bitcoin News
Bitcoin rose to approximately $91,950 on Sunday, extending its recovery from December's $85,000 low as traders prepare for the Federal Reserve's final rate decision and key employment data.
The world's largest cryptocurrency gained 1.8% on the day and has recovered 5.3% for the month after hitting early December lows. Bitcoin has traded in a narrow range following the $19 billion leverage wipeout in early October.
Michael Wu, CEO of Amber Group, explained that shifting rate expectations ripple through crypto funding markets in Asia much faster than traditional asset classes. Funding spreads and borrow costs move in lockstep with global rate guidance, driving treasury strategy re-evaluations across the industry.
Services inflation has cooled from last year's peaks but remains firmer than goods prices, with shelter costs still running above the Fed's target. That uneven progress has complicated the central bank's disinflation plan and kept traders uncertain about the pace and extent of future rate cuts.
Gold and silver have soared while Bitcoin lingers, with the digital asset remaining more sensitive to macro shocks than U.S. equities. Ryan McMillin, chief investment officer at Merkle Tree Capital, noted that low liquidity remains an issue for the market since October's event wiped out order books.
Market makers have been slow to return in size following the October leverage event. McMillin added that with economic data releases now back on schedule following delays caused by the government shutdown, the market conditions have improved.
Economists forecast initial jobless claims on Thursday will spike by 30,000 from the previous reported figure of 191,000, according to MarketWatch data. That increase could strengthen the Fed's case for a rate cut as labor market conditions show signs of cooling.
A cut to the Fed's funds rate typically benefits risk assets by making borrowing cheaper, potentially leading to rallies in cryptocurrency and other risk-on investments. McMillin stated that with the Fed ending quantitative tightening on Dec. 1, the market is positioned to rally, with the rate cut potentially serving as the catalyst.
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