Daily Report 2025.12.31

The market has been relatively stable these days, with US stocks and BTC both oscillating at high levels.

The focus of the market has shifted from Japan's interest rate hikes to the Federal Reserve's rate cuts.

Yesterday, the Federal Reserve released the latest meeting minutes, stating that the recent rise in inflation is mainly influenced by tariffs, and it is unlikely that inflation will reach the 2% target in the short term.

They also mentioned that the US labor market is not very active, possibly due to economic uncertainty or companies reducing hiring to control costs, leading to decreased labor demand.

Additionally, factors such as reduced immigration, an aging population, or more people choosing not to work are decreasing the labor supply, with further declines possible.

This indicates that the US economy may not be as strong as everyone thinks.

Federal Reserve Chair Jerome Powell previously said that the current policy focus is on "maintaining employment," even if inflation is slightly high.

Therefore, changes in the labor market have a significant impact on the entire market.

However, the Fed remains optimistic that the US economy can accelerate growth in 2026.

Regarding monetary policy, if inflation continues to decline in 2026, interest rate adjustments can proceed.

But currently, most officials agree to keep the status quo and observe more data.

This means there is a high probability that the Fed will not cut rates in January, and the next adjustment might be in March.

According to forecasts from the Chicago Mercantile Exchange, the market generally expects the Fed to cut rates twice in 2026, in March and July, with the benchmark rate stabilizing around 3%.

3% is exactly the current neutral interest rate in the US. This also means that by the end of 2026, the Fed's tightening policy will be fully concluded.

Currently, US debt has exceeded $38 trillion. Under such heavy debt pressure, maintaining high interest rates would be suicidal, as interest alone could consume most of fiscal revenue.

Ultimately, this will force the Fed to cooperate with the Treasury Department by easing monetary policy to dilute the debt.

Yesterday, the Fed injected $16 billion into the market through overnight repurchase agreements, the second-largest scale since the COVID-19 pandemic.

Data shows that although BTC has struggled to stay above $90,000, making it difficult for prices to rise sustainably, the support below remains strong, and the chip structure is healthy. Investors holding positions at high levels remain very calm, and selling pressure is not significant.

Currently, BTC is building a bottom between $83,000 and $87,000, with over 800,000 BTC accumulated at $87,000.

Japanese listed company Metaplanet also bought 4,279 BTC, now holding a total of 35,102 BTC, ranking 4th among institutions.

Ethereum's MicroStrategy BMNR bought an additional 32,938 ETH, and then deposited 118,944 ETH into Ethereum's PoS staking.

Overall, the market's main concern remains whether the Federal Reserve will continue to cut rates.

Currently, the probability of a rate cut in January is only 14.9%. If there is no cut in January, the market will have to wait for the March meeting. Before the Fed truly loosens monetary policy, the market is expected to continue oscillating.