@ HCM Capital

U.S. Labor Markets

The U.S. economy demonstrated resilience in December, adding 256,000 jobs, far exceeding expectations of 155,000. The unemployment rate remained steady at 4.1%, reflecting a strong labor market even as wage growth moderated to 3.9% year-over-year. This performance capped a robust year for U.S. employment, despite headwinds from tightening monetary policy and geopolitical uncertainties.

The jobs report reinforced expectations that the Federal Reserve may slow the pace of rate cuts in 2025. The Fed’s December meeting minutes indicated officials remain cautious about inflation risks, with Federal Reserve Governor Michelle Bowman stating that inflation remains “uncomfortably above” the 2% target. This hawkish stance, combined with resilient economic data, suggests interest rates could stay elevated longer than previously anticipated.

Investors reacted sharply to the report, sending equities lower on Friday as the implications for tighter financial conditions weighed on sentiment.

Equity Markets Under Pressure Amid Inflation and Policy Concerns

U.S. equities posted losses as inflation fears and political uncertainty dominated market sentiment. Began positively, with optimism around potential softening of trade policies under President-elect Donald Trump. However, this faded after Trump dismissed reports of a more lenient tariff stance.

Economic data further dampened optimism. The Institute for Supply Management’s (ISM) Services PMI for December came in at 54.1, signaling continued expansion in the services sector. However, the index’s prices-paid component jumped by 6.2 percentage points to 64.4, raising concerns about persistent inflationary pressures.

Treasury Yields Surged on Strong Jobs Data

U.S. Treasury yields climbed throughout the week and spiked on Friday following the strong labor market report. The benchmark 10-year Treasury yield reached its highest intraday level since November 2023. This movement reflects market expectations that the Fed will maintain higher interest rates for an extended period to combat inflation.

In the corporate bond market, investment-grade issuances were heavily oversubscribed, though spreads widened due to elevated supply. High-yield bonds mirrored equity market performance, trading in a mixed and cautious environment. Utilities gained attention amid California wildfires, adding to regional economic uncertainties.

Reference: T.RowePrice

The debut of US spot Bitcoin exchange-traded funds (ETFs) in 2024 marked a turning point for the bitcoin market and traditional finance, achieving unparalleled success in its first year. Approved by the US Securities and Exchange Commission (SEC) on January 10, 2024, these ETFs launched the following day, swiftly capturing the attention of institutional and retail investors alike.

Explosive Growth Surpassing Projections

BlackRock’s Bitcoin ETF reached $61 billion in assets under management (AUM) within a year—a feat that took its gold ETF two decades to achieve. This rapid growth reflects the pent-up demand for institutional-grade Bitcoin exposure. Investors were drawn to ETFs’ simplicity and familiarity, eliminating the challenges of self-custody while ensuring regulatory compliance.

Drivers of Success

Institutional Demand and Market Readiness

For over a decade, the bitcoin community anticipated a US spot Bitcoin ETF. Its launch fulfilled a significant market gap, providing institutions and sophisticated investors with a way to access Bitcoin without the risks and complexities of direct ownership.

Favorable Economic and Policy Environment

The 2024 macroeconomic backdrop amplified demand. Federal Reserve interest rate cuts eased financial conditions, while Bitcoin-friendly policies under President-elect Donald Trump added regulatory clarity. Analysts also pointed to the asset’s price recovery and upcoming events, such as the Bitcoin halving in April 2024, which historically drive price appreciation.

Global Trust in US Financial Markets

As the birthplace of ETFs and the largest capital market globally, the US offers unmatched liquidity and investor confidence. With ETFs managing over $10.5 trillion in AUM domestically—out of $15 trillion globally—the US is a natural leader in this space.

What Lies Ahead for Bitcoin ETFs?

Continued Growth in 2025

Market experts anticipate that 2025 will outperform 2024 as more professional investors gain access to Bitcoin ETFs. Bitwise CIO Matt Hougan noted that ETF adoption is often a multi-year process, with second-year inflows typically exceeding first-year figures. This pattern suggests significant upside potential for the market.

Expansion of Offerings

The competitive landscape is set to diversify, with multiple providers refining their offerings to cater to a broader audience. Features like staking-enabled ETFs and innovative custody solutions could become differentiators, attracting even more inflows.

The first year of US spot Bitcoin ETFs has redefined market standards, creating a benchmark for other jurisdictions. As these products evolve, they will likely remain at the forefront of the crypto and traditional financial worlds, offering a bridge between digital assets and institutional adoption.

Reference: Bitbo, Cointelegraph, Coinglass

1.Meta Shareholder Proposal Advocated Bitcoin Allocation to Hedge Against Inflation

A Meta shareholder proposal, submitted by Ethan Peck, calls for the company to allocate a portion of its $72 billion in cash and short-term cash equivalents to Bitcoin (BTC) as a hedge against currency debasement. The proposal highlights inflation’s erosive impact on Meta's cash holdings, claiming a 28% loss of value over time due to inflation. Peck underscored Bitcoin’s potential, noting its outperformance of bonds by 1,262% over the past five years.

In the proposal, Peck stated: “Mark Zuckerberg named his goats 'Bitcoin' and 'Max.' Meta director Marc Andreessen has praised Bitcoin and is also a director at Coinbase. Do Meta shareholders not deserve the same kind of responsible asset allocation for the Company that Meta directors and executives likely implement for themselves?”

Peck, an employee of the National Center for Public Policy Research — a Washington, D.C.-based think tank advocating free-market policies — has been involved in submitting similar Bitcoin treasury proposals to companies such as Microsoft and Amazon in 2024. However, the Meta proposal was submitted independently, representing shares owned by Peck’s family.

This proposal aligns with the growing trend of corporate Bitcoin adoption as a hedge against inflation, though it remains to be seen whether Meta’s board will entertain the idea.

Reference: Cointelegraph, The Coin Rise

2. DOJ Cleared to Sell Seized Bitcoin After Court Ruling

The U.S. Department of Justice (DOJ) has been authorized to sell tens of thousands of Bitcoins seized in the government’s largest-ever crypto asset confiscation.

On Dec. 30, a federal judge in the Northern District of California rejected a motion by Nevada-based venture capital firm Battle Born Investments to block the sale of Bitcoin valued at $6.5 billion. Battle Born had claimed rights to the assets, but the court ruled against the firm, effectively ending a years-long legal battle.

Seized Bitcoin Linked to Silk Road\ The 69,370 Bitcoins were confiscated in 2020 from an unidentified hacker, referred to in court as "Individual X." Federal agents traced the funds to the Silk Road, a notorious darknet marketplace dismantled in 2013. While the hacker's identity remains unknown, the government secured control of the funds.

Potential Government Auction\ Though the ruling does not mandate an immediate sale, the U.S. Marshals Service typically auctions off seized cryptocurrency, just as it does other confiscated assets like cars or real estate. A sale of this magnitude would be among the largest ever, potentially unsettling crypto markets. To mitigate market impact, the government has historically staggered auctions.

Last month, blockchain analytics firm Arkham Intelligence reported that U.S. government wallets moved $1.9 billion in Silk Road Bitcoin to Coinbase. While some investors feared an imminent sale, the move may be part of the government’s contract with Coinbase to manage digital assets.

Strategic Bitcoin Reserve Discussions\ The timing coincides with renewed political interest in Bitcoin under President-elect Donald Trump, a vocal crypto supporter. Trump has advocated for a national Bitcoin reserve as a hedge against inflation and encouraged investors to “never sell your Bitcoin.” Wyoming Senator Cynthia Lummis has also introduced legislation proposing the government purchase one million Bitcoin over five years. If the DOJ proceeds with the sale, it will add a significant chapter to the evolving intersection of cryptocurrency and government policy.

Reference: Yahoo Finance, The Crypto Times

Federal Reserve’s Michael Barr to Resign Amid Crypto Industry Scrutiny

Michael Barr, Vice Chair for Supervision at the US Federal Reserve, announced his resignation effective February 28 or earlier if a successor is appointed. His departure marks another high-profile exit tied to “Operation Chokepoint 2.0,” a controversial alleged effort to limit banking access for crypto firms.

Barr will remain a Federal Reserve Board Governor. In his resignation letter to President Joe Biden, dated January 6, Barr reflected on his tenure, during which he gained a reputation within the crypto industry for his critical stance on banks engaging with crypto assets. In a March 2023 speech, Barr stated: “We would likely view it as unsafe and unsound for banks to directly own crypto-assets on their balance sheets.”

Crypto Industry Reactions\ Barr’s resignation has elicited strong reactions from the crypto community. Senator Cynthia Lummis criticized his leadership, accusing him of facilitating Operation Chokepoint 2.0 and undermining Wyoming’s digital asset industry. Caitlin Long, CEO of Custodia Bank, labeled Barr the “Fed’s debanker-in-chief,” suggesting he was instrumental in the alleged campaign against crypto companies.

Nic Carter of Castle Island Ventures noted that many key figures linked to anti-crypto policies, including FDIC Chair Martin Gruenberg and SEC Chair Gary Gensler, have recently left their roles or faced defeat. Carter’s so-called "anti-crypto" list now includes a shrinking roster of figures such as Senator Elizabeth Warren and Federal Reserve Board member Michael Gibson.

Ongoing Investigations into Operation Chokepoint 2.0\ While US officials have denied orchestrating a campaign to debank the crypto industry, recent court orders granted Coinbase access to unredacted FDIC documents to investigate the agency’s role in the alleged initiative. Paul Grewal, Coinbase’s Chief Legal Officer, claimed the filings reveal a coordinated effort to suppress crypto activities ranging from Bitcoin transactions to more complex services. Former prosecutor and crypto advocate John Deaton has offered to lead an investigation into these actions under the incoming Trump administration, warning: “If unchallenged, such actions set a dangerous precedent, allowing regulatory bodies to quietly stifle innovation and economic opportunity.”

Reference: Cointelegraph

Launching the Chinese Version of "My First Bitcoin"

Over the past year, we've worked closely with the MiPremierBitcoin team to produce the Chinese version of Bitcoin Diploma My First Bitcoin . As the HCM team is based in Asia, we're passionate about connecting more people to Bitcoin and fostering its global adoption. We're thrilled to announce that the book will be launching soon! Stay tuned for more updates and join us on this incredible journey.

Unchained led the sponsorship for Max and Stacy Invitational

Unchained sponsored the Max & Stacy Invitational, a landmark event set to take place in El Salvador, the heart of the global Bitcoin movement. This gathering celebrates innovation, community, and the transformative potential of Bitcoin, embodying the vision championed by Max Keiser and Stacy Herbert. With the support of the community, we strive together to inspire continued progress toward the bitcoin future.

Reference: X.com