December 2024 Macroeconomic Report: The US economy operates steadily, and the crypto market reaches new highs.

In December 2024, the U.S. economy maintained a stable operation, with most core economic data meeting market expectations. However, the Federal Reserve's hawkish remarks triggered short-term market fluctuations. Nevertheless, supported by the overall macro environment, both the U.S. stock market and Bitcoin reached historic highs, providing substantial returns for investors. Looking ahead to 2025, several institutions hold an optimistic outlook, generally forecasting that the price of Bitcoin is expected to break through the $200,000 barrier.

The economic data released by the U.S. in December basically met expectations: Non-farm payrolls increased by 227,000 in November, slightly better than the market expectation of 220,000; the CPI in November grew by 2.7% year-on-year and 0.3% month-on-month, both in line with expectations. The Federal Reserve then announced a 25 basis points reduction in the target range for the federal funds rate to between 4.25% and 4.50%, which was also within market expectations. However, the Federal Reserve subsequently indicated that the rate cut in 2025 might be narrowed to 50 basis points, meaning that the number of rate cuts next year could be reduced from the previously expected four times to two times. This statement brought some shock to the market, leading to a brief decline in the U.S. stock market and the crypto market.

The Federal Reserve has simultaneously released its latest economic outlook. It is expected that the U.S. economic growth rates for this year and next will be 2.5% and 2.1%, respectively, an increase of 0.5 and 0.1 percentage points compared to the September forecast. The unemployment rate is expected to be 4.2% and 4.3%, which is a downward adjustment from previous estimates. The inflation rate is projected to be 2.4% and 2.5%, with the core inflation rate forecasted at 2.8% and 2.5%, all above the long-term target of 2%. This indicates that the overall performance of the U.S. economy is good, but inflation still needs to be further controlled.

The December PMI data also reflects different directions in the economy: the preliminary services PMI reached 58.5, far exceeding the expected 55.8 and the previous value of 56.1; while the preliminary manufacturing PMI was 48.3, below the expected 49.5 and the previous value of 49.7. The composite PMI preliminary value was 56.6, also higher than expected. This indicates that the services sector is experiencing its fastest growth since 2021, while the manufacturing sector is underperforming due to insufficient export demand.

In this macro environment, the US stock market has steadily risen, with the Nasdaq index breaking through the 20,000-point barrier. Tech giants such as Apple, Amazon, Google, Tesla, and Meta have all reached historic highs. The continued advancements in the field of artificial intelligence have also boosted market sentiment. Investors generally exhibit a high level of optimism, with a survey by Bank of America showing that investor cash allocations are at a historic low, while allocations to the US stock market have reached a historic high.

It is noteworthy that the Dow Jones Index has experienced a rare "ten consecutive declines" this month, marking the worst streak since 1974. This is mainly due to the differences in the composition of the stocks, particularly the political turmoil surrounding healthcare giant UnitedHealth, as well as the poor performance of newly added component stock Nvidia.

In the crypto market, Bitcoin broke through the $100,000 mark on December 5, creating a new historical high. Ethereum also surpassed $4,000. This surge was mainly driven by political factors, particularly market expectations for future policy changes. Currently, global investor interest in encryption assets has significantly increased, with the proportion of cryptocurrency holders in South Korea reaching 30%.

Looking ahead to 2025, several institutions hold an optimistic view of the crypto market. The largest crypto fund index in the United States, Bitwise, predicts that Bitcoin will reach $200,000. According to the OKLink Research Institute, the funds entering the Bitcoin market in the coming year may reach $2.28 trillion, which is generally consistent with the predictions of several well-known financial institutions.

Key focuses in the crypto field for 2025 include the changing role of Bitcoin in global asset allocation, the emergence of new incremental markets, breakthroughs in price ceilings, and the evolution of the regulatory environment. Currently, only 0.01% of publicly listed companies hold Bitcoin, indicating that there is still significant potential for institutional investor participation.

In terms of regulation, 2025 will be a critical year for the clarity of regulation in the encryption industry. Bipartisan support for cryptocurrencies in the United States may transform regulation from a hindrance to a driving force. The EU's Crypto Assets Market Regulation Framework (MiCA) will come into full effect, unifying cryptocurrency regulations among member states. Asian countries such as Japan and South Korea are also continuing to encourage innovation while strengthening regulation.

Apart from Bitcoin, artificial intelligence and stablecoins may become the new highlights of 2025. Many traditional financial institutions have started to lay out plans in the stablecoin market, which could be a key step for encryption technology to further integrate into the mainstream financial system.

Despite the optimistic outlook, investors must remain vigilant about the risks posed by short-term market volatility. The crypto market is about to experience its "coming of age"; Bitcoin is expected to become a consensus investment in mainstream finance, while stablecoins may become practical application tools. The crypto market in 2025 is projected to be more attractive and influential than in 2024.