Macro update

We’re entering the penultimate full trading week of 2025 with the markets broadly lacking direction. Across risk assets, price action has been about consolidation rather than continuation, as any form of year-end rally failed to fully materialize. Digital assets and equities are showing signs of fatigue, with rotation and de-risking becoming increasingly visible beneath the surface, particularly on the equity side as non-tech sectors begin to catch up after a prolonged tech-led compound.

From a cross-asset perspective, the second half of last week underscored a growing divergence. U.S. equities continued to rotate away from crowded growth trades, as AI-linked names came under pressure on an increasingly uncertain 2025 outlook and rising CapEx concerns. Digital assets initially showed relative resilience, though that strength has started to fade. Bitcoin has spent the past two and a half weeks consolidating in a tight USD 88,000–92,000 range, but that structure is now being tested, with BTC briefly trading down to USD 86,500, marking a clean break below the lower bound. Whether this marks a deeper retracement or simply a range extension will depend on buyer response and the direction of broader macro forces, with several narratives now competing for control.

Looking ahead to this week, three key macro narratives are driving market positioning.

The Federal Reserve

Last week’s Fed meeting delivered a widely expected 25bp rate cut, bringing cumulative easing to 175bp since September 2024. More notable was the shift in tone, with forward guidance turning cautious and the dot plot implying just one cut across all of 2026. At the same time, the Fed announced USD 40bn in Treasury bill purchases, effectively ending QT, framed as a funding-market stability measure rather than stimulus. Markets have largely discounted the dot plot, continuing to price closer to three cuts next year. With a new Fed chair likely in 2026 and policy priorities potentially shifting toward growth, the gap between Fed signalling and market pricing remains wide.

AI narrative deflation

On the equity side, the AI trade is undergoing a period of reassessment. While skepticism around excessive AI spending has existed for some time, the past week marked a shift from narrative to fundamentals. Broadcom’s earnings beat was overshadowed by margin warnings and the withdrawal of 2026 guidance, raising questions around near-term profitability of AI infrastructure investment. As hyperscalers reassess spending timelines and turn to lower-cost alternatives, this has weighed on semiconductors and adjacent tech names. For crypto, this creates a nuanced dynamic: fading AI dominance frees up mindshare and capital, but crypto remains structurally sensitive to broader growth sentiment. An orderly deflation of the AI narrative is likely constructive; a violent unwind would not be.

Bank of Japan

The Bank of Japan is expected to hike rates to 0.75%, the highest level in three decades, alongside plans to sell more than USD 500bn of ETFs. This has reignited concerns around the JPY carry trade and global liquidity. While some selling last month was already linked to BoJ hike fears, the current focus has shifted to Bitcoin’s performance following prior hikes, citing sharp drawdowns in March and July 2024 and January 2025. While the historical pattern is notable, causality remains unclear. Japan’s policy shift is one input among many, and extrapolating prior BTC moves without accounting for positioning, liquidity, and broader macro context risks oversimplifying a far more complex picture.

Finally, we continue to receive questions around regional selling pressure. From a flow perspective, the past month has been dominated by U.S. activity. Selling during November was primarily U.S.-led, particularly around the hawkish shift in Fed communication, while European flows were more balanced and at times buyers of that weakness. More recently, the picture has stabilised, with the U.S. still driving net directional moves but increasingly stepping in to buy dips. Europe remains largely neutral, while Asia has been flat and less directional.

Finally, we continue to receive questions around regional selling pressure. From a flow perspective, the past month has been dominated by U.S. activity. Selling during November was primarily U.S.-led, particularly around the hawkish shift in Fed communication, while European flows were more balanced and at times buyers of that weakness. More recently, the picture has stabilised, with the U.S. still driving net directional moves but increasingly stepping in to buy dips, flipping negative as of today. Europe remains largely neutral, while Asia has been flat and less directional.

Our take:

“The market looks to be consolidating/oversold and digesting macro uncertainty rather than entering a sustained risk-off phase.”

This still looks more like late-year digestion than a structural regime shift. The failure of a clean year-end rally has introduced short-term fragility, but price action so far reflects consolidation and position-cleaning rather than outright risk aversion. Bitcoin breaking consolidation levels at the time of writing is something to monitor however without evidence of forced selling or a sustained deterioration in liquidity, downside moves are more likely to remain orderly rather than disorderly.

Near term, macro still seems to be driving the market however with the Fed cut behind us and some exhaustion from the past two months of pure macro driven markets, it’s possible some bottom up narratives such as the U.S. crypto regulation will soon pop up Until then, expect wider ranges, choppy price action, and selective dip-buying, rather than a clean trend, as markets wait for clarity on growth, policy, and liquidity into early 2026.