Macroeconomic Review for December 2024 and Outlook for 2025

In December 2024, the U.S. economy remains stable, with major economic indicators generally meeting expectations. However, the Federal Reserve's hawkish comments triggered short-term fluctuations in the market. Nevertheless, in a favorable macroeconomic environment, both the U.S. stock market and Bitcoin reached historical highs, providing substantial returns for investors. Looking ahead to 2025, most institutions hold an optimistic outlook, expecting Bitcoin to possibly break the $200,000 mark.

The non-farm payroll data for November was slightly better than expected, with an increase of 227,000 jobs. The CPI for November rose by 2.7% year-on-year and 0.3% month-on-month, both in line with market expectations. The Federal Reserve lowered the benchmark interest rate by 25 basis points to a range of 4.25%-4.50% as expected. However, the Fed then stated that the rate cut in 2025 may be reduced to 50 basis points, which caused market volatility and affected investors' expectations for a rate cut in January 2025.

The latest economic forecast from the Federal Reserve shows that the GDP growth rate for the United States is expected to be 2.5% and 2.1% for 2025 and 2026, respectively, both up from the September forecast. The unemployment rate forecast has been slightly lowered, while the inflation rate forecast remains above the long-term target of 2%. This indicates that the U.S. economy is generally robust, but inflation still needs to be further controlled.

The December PMI data is a mixed bag. The preliminary service PMI reached 58.5, far exceeding expectations and the previous value. However, the preliminary manufacturing PMI was 48.3, below expectations and the previous value. The composite PMI preliminary value was 56.6, higher than expectations and the previous value. The service sector is experiencing its fastest growth in nearly three years, while the manufacturing sector is underperforming due to weak export demand.

In a favorable macro environment, the Nasdaq index has broken through 20,000 points. Several tech giants have reached new highs in their stock prices, and the artificial intelligence boom continues to heat up. However, the Dow Jones index has experienced a rare "ten consecutive declines," primarily affected by poor performance in the healthcare sector and the newly included component stock Nvidia.

It is worth noting that a certain cryptocurrency-related company has officially been included in the Nasdaq 100 Index components, which is seen as an important step for crypto assets to further integrate into the traditional financial system.

On December 5th, Bitcoin first broke through the $100,000 mark, and Ethereum also exceeded $4,000, triggering a frenzy in the market. Political factors are believed to be the main driving force behind this round of increase. Currently, global investor interest in cryptocurrencies is at an all-time high, with about 30% of the population in South Korea holding cryptocurrencies.

Multiple institutions are optimistic about the cryptocurrency market outlook for 2025. A well-known crypto fund predicts that Bitcoin may reach $200,000 by 2025. It is expected that the Federal Reserve will enter a rate-cutting cycle by the end of 2024, creating a favorable environment for high-risk assets, and more institutions may include Bitcoin in their asset allocation.

Looking ahead to 2025, key issues in the crypto space include the changing role of Bitcoin in global asset allocation, new incremental markets, price ceilings, and regulatory environments. Currently, only 0.01% of publicly listed companies hold Bitcoin, and the market is still in its early stages. Several institutions predict that tens of trillions of dollars could flow into the Bitcoin market in the coming year.

The regulatory environment will be an important theme in 2025. The U.S. may experience a turning point in cryptocurrency regulation, the new regulatory framework of the European Union will come into full effect, and Asian countries are also actively improving relevant regulations. The clarification of the global regulatory environment is expected to attract more investors.

Aside from Bitcoin, artificial intelligence and stablecoins may become the new highlights of 2025. Several traditional financial institutions are actively positioning themselves in the stablecoin market, seeking new profit growth points.

Although the market is generally optimistic about the prospects of the cryptocurrency market in 2025, investors still need to be wary of short-term volatility risks. The cryptocurrency industry is about to reach its "coming-of-age ceremony," with Bitcoin expected to become a mainstream investment product and stablecoins likely to gain broader applications. The cryptocurrency market in 2025 may be more attractive and influential than in 2024.