The Scoop: Competing narratives struggle to set the tone for 2025

Quick Take

  • Macroeconomic factors are significantly impacting the crypto market and are clearly in the driver’s seat.
  • This column is adapted from The Scoop newsletter.
This column was co-written by Frank Chaparro, director of special projects at The Block, and Laura Vidiella of MNNC Group. The views expressed in this column are their own and do not reflect the opinions of their employers.
 
It feels great to be back in the podcast seat! Last week, we had David Mercer, CEO of FX and crypto exchange operator LMAX, and venture investor Tom Schmidt from Dragonfly on the program. Unsurprisingly, a big focus was the price action around the new year.

As noted in last Wednesday’s newsletter, macroeconomic factors are significantly impacting the crypto market and are clearly in the driver’s seat. With the rollout of spot Bitcoin ETFs last year, traditional market forces are playing a substantial role in driving Bitcoin’s price.

This was fully evident at Friday morning's market open. After the Labor Department released better-than-expected employment numbers, both global equities and crypto experienced a downturn. Strong labor market data signals a healthier economy, which might prompt the Federal Reserve to slow down its pace of rate cuts or even consider raising rates to prevent the economy from overheating. Higher interest rates generally lead to tighter financial conditions, reducing risk appetite and putting downward pressure on asset prices, including crypto.

In the first few minutes of the session, crypto traded almost in lockstep with the Nasdaq. This has been a recurring trend over several sessions. According to Greg Guttas at Flowdesk, the opening price action has been "ruthless," or as I would describe it, brutal, with high volumes and extreme volatility.

Guttas explained, "It's probably a function of ETF traders holding a 24/7 asset that they can only trade 6.5 hours a day."

As we move into the new year, the question remains: Will the positive tailwinds for crypto—such as a favorable regulatory environment, the potential entry of banks with new prime brokerage offerings, and the rebuilding of credit markets—offset the negative macroeconomic headwinds? If the current market sentiment is any indication, the answer seems to be no.

Stay alert, crypto.

The Block’s Frank Chaparro serves up the latest headlines, charts, trends, and views on crypto and DeFi from around The Block, Twitter, and The Scoop pod. Subscribe to The Scoop newsletter, which hits inboxes on Tuesday and Friday mornings.

Subscribe to The Scoop on YoutubeAppleSpotifyGoogle PodcastsStitcher or wherever you listen to podcasts. Please send feedback and revision requests to [email protected].

Disclaimer: The Block is an independent media outlet that delivers news, research, and data. As of November 2023, Foresight Ventures is a majority investor of The Block. Foresight Ventures invests in other companies in the crypto space. Crypto exchange Bitget is an anchor LP for Foresight Ventures. The Block continues to operate independently to deliver objective, impactful, and timely information about the crypto industry. Here are our current financial disclosures.

© 2024 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

About Author

Frank Chaparro is Host of The Scoop podcast and Director of Special Projects. He also writes a biweekly newsletter. Chaparro started his career at Business Insider, where he specialized in the intersection of digital assets and Wall Street, market structure, and financial technology. Soon after joining Business Insider out of Fordham University, Chaparro was interviewing top finance and tech executives, including billionaire Mark Cuban, “Flash Boys” star Brad Katsuyama, Cboe Global Markets CEO Ed Tilly, and New York Stock Exchange President Tom Farley. In 2018, he become a sought after reporter in the crypto world, interviewing luminaries such as Tyler Winklevoss, the cofounder of Gemini, Jeremy Allaire, the CEO of Circle, and Fundstrat head Tom Lee. For inquiries or tips, email [email protected].

Editor

To contact the editor of this story:
Jason Shubnell at
[email protected]

WHO WE ARE

The Block is a news provider that strives to be the first and final word on digital assets news, research, and data.

+ Follow us on Google News
Connect with the block on