Trakx Weekly Update: Fed Dissent Clouds the Crypto Outlook

Key Crypto Market Figures

CTIs Weekly Performance

Digital asset prices were modestly lower over the past week, as reflected by a 2% decline in our flagship large-cap Top10 Crypto CTI. The best performer was the relatively defensive Inflation Hedge CTI, which gained almost 1%. At the bottom of the performance rankings were the Recovery and AI Agents CTIs, both of which fell by more than 8% over the past seven days.

A Divided Fed

As widely anticipated, the Fed delivered another 25bp rate cut last Wednesday, bringing the cumulative reduction in the target federal funds rate to 175bp. As with the two prior meetings, the decision was not unanimous, with only nine members voting in favour of the cut. Two members—Schmid and Goolsbee—preferred to keep the target rate unchanged, while recent Trump appointee Miran once again voted for a larger 50bp cut. Such dissension is unusual for the Fed and highlights the tension inherent in its dual mandate. While the labour market has clearly weakened, inflation remains persistently above the Fed’s 2% objective. One consequence is that investors perceive a high hurdle for further rate cuts. This was reinforced by the “dot plot,” which shows officials expecting just one cut in 2026 and another in 2027 – an outlook that was not overly positive for digital asset prices

That said, in addition to cutting rates, the FOMC decided to initiate purchases of shorter-term Treasury securities, beginning with a $40bn acquisition of T-bills last Friday. The stated aim is to maintain an ample level of reserves after concluding that reserve balances had declined to the lower end of that range. As we explained in our last Monthly Update, the Fed has framed this shift from QT to “non-QE” QE as a purely technical adjustment to ensure continued control over short-term interest rates. In reality, however, the Fed is being compelled to support the private sector’s absorption of heavy net Treasury issuance needed to fund a sizeable budget deficit. This further confirms that we have entered a regime of fiscal dominance—a long-run crypto bullish environment—where central bank actions are being impacted by the behaviour of the fiscal authority.

DATs In Focus

One factor contributing to this month’s volatile price action was rumour and speculation that Saylor’s Strategy—the original digital asset treasury—could become a forced seller of Bitcoin, as investors questioned the sustainability of its business model. Given the company’s structure, it was clear these concerns amounted to little more than FUD. In response to critics—and timed to coincide with Saylor’s appearance at the Bitcoin MENA 2025 conference in Abu Dhabi—Strategy announced the acquisition of 10,624 Bitcoin, worth just under $1bn. Strategy was not alone in making large purchases: ETH-focused DAT BitMine, headed by Tom Lee, acquired 138,452 ETH, bringing its total holdings to 3.8 million tokens, valued at approximately $12bn.

However, not all DAT-related news was positive. 21 Capital, a Bitcoin-first company led by CEO Jack Mallers and majority-backed by Tether, listed on the NYSE last Tuesday under the ticker XXI. Despite significant pre-listing hype, shares fell almost 20% on the first day of trading, pushing the company’s market capitalization below the value of its Bitcoin holdings—suggesting a muted reception from investors.

Sources: Trakx, Coingecko, Alphavantage

Market Trends

• Bitcoin Swings Wildly as Fed’s Powell Straddles Labor Market and Inflation Issues: CoinDesk
• Polymarket faces major credibility crisis after whales forced a “YES” UFO vote without evidence: CryptoSlate
• Gemini soars 14% as new license opens door to US prediction markets: Cointelegraph
• Morning Minute: Saylor and Tom Lee Buy Big: Decrypt
• Bitcoin treasury rout deepens as Jack Mallers’ new firm falls 20% in trading debut: DLNews
• TerraUSD creator Do Kwon sentenced to 15 years over $40 billion crypto collapse: Reuters

Trakx News

• We published our 2025 Recap and 2026 outlook detailing the continued evolution of Trakx as well an insight article on the greatest mystery in crypto: What is the true identity of Satoshi Nakamoto.
• Ryan Shea also published an article detailing Canton Network, the smart contract “network of networks” designed to overcome the challenges of privacy and scalability, thereby paving the way for the next wave of tradfi adoption.
• This will be the final weekly newsletter of 2025 so all of us at Trakx would like to take this opportunity to wish you all a very happy holiday season. See you in 2026!

Trakx CTIs Performance

Sources: Coingecko and AlphaVantage

*Return of bitcoin is calculated since 01/05/2020, while CTIs performances were calculated since their respective launch date.
**Includes simulated performance.
***The risk signal is determined according to the historical volatility level, the higher the riskier.

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Disclaimers: No Investment Advice. Index returns and statistics are for illustration only. Index returns do not reflect any transaction costs or expenses. Past performance does not guarantee future results. The information provided in this newsletter does not constitute investment advice, financial advice, trading advice, or any other sort of advice and you should not treat any of the newsletter content as such. Trakx.io does not recommend that any cryptocurrency should be bought, sold, or held by you. Readers shall conduct their own due diligence and consult their financial advisors before making any investment decisions.