All-Time Highs Beckon

The News From Planet Ruby—Friday, December 15, 2023

Signal: CPI, ATHs

Noise: Elizabeth Warren

TradFi Goes Ham

It's been a pretty storming week for the Boomer markets, as major stonks indices push all-time highs. The Dow Jones has closed at its ATH, with the S&P500 and NASDAQ now trading very near their old peaks.

On Tuesday, CPI came in on-target. Inflation is back around 3%. Core is a little high, and the headline figure may take a while to come back to the target 2%, but it's a whole lot better than 15 months ago, when it was hanging out close to 10%.

As expected, the FOMC held rates steady at the current 525-550 bps on Wednesday. However, the "dot plot" of expectations for next year, as well as Jay Powell's language when he answered questions, was particularly dovish for the future. Traders now firmly believe that the next move will be a cut, with a significant chance of that happening in March. The DXY dropped back below 103, and is currently close to 102.

Crypto Corrects, Recovers

Digital assets initially weren't sharing the wider market optimism. After a stellar run-up to almost $45,000, it was time for a cooldown for bitcoin—and where BTC goes, alts tend to follow.

The correction didn't extend beyond about 10%—barely a tremor for bitcoin, which often puts in multiple drops of 30% or more in the course of a bull market. Improving CPI data and dovish commentary from the Fed helped push it back to $43,000.

It's hard to believe that at this stage, with presumed ETF approval less than four weeks away, traders won't go long again soon. On the other hand, this is exactly the kind of move the market loves to pull, confounding expectations of what "should" happen and redistributing money from the impatient to the patient.

A Mixed Bag Of Crypto News

If the crypto community was looking for a narrative to emerge from news headlines, they would be disappointed.

Confused face gif — There's no clear narrative emerging from the crypto news this week.

Senator Elizabeth Warren's bizarre anti-crypto bill has gained a few more signatures, and was credited by some news outlets for "causing" the correction, though there's almost zero chance of it being taken seriously by lawmakers.

At the other end of the spectrum, El Salvador's "Volcano Bonds" bill was signed into law. The idea of mining Bitcoin with geothermal energy from a volcano was announced at the peak of the 2021 bull market, and was emblematic of the kinds of excesses and irrational optimism of the time. Now, it's back, with approval paving the way for the first bonds to be issued in Q1 2024. These will pay investors with the proceeds from Bitcoin mining, and will also help fund the construction of a new Bitcoin City.

In other news, Société Générale, France's third-largest bank, has released an EUR-backed stablecoin in partnership with Bitstamp.

What's New In The SKALEVERSE?

In case you missed it, SKALE's SIP1 passed, establishing a chain pricing model and setting the stage for the network's future economic sustainability.