Takeaways
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Crypto Markets Face Correction: Bitcoin dips below $93,000, leading a broader market downturn influenced by hawkish Fed signals and fiscal uncertainty in the U.S.
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Record Outflows for Bitcoin ETFs: U.S. spot Bitcoin ETFs experience $680 million in daily outflows, marking the largest single-day withdrawal in history, as investor caution rises post-Fed announcements.
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First Hybrid Bitcoin-Ethereum ETFs Approved: The SEC gives green light to dual-asset crypto ETFs from Hashdex and Franklin Templeton, expected to launch in January with an 80/20 Bitcoin-Ethereum split.
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Copper Exits UK Market: Crypto custodian Copper withdraws FCA application, shifting focus to overseas hubs like the U.S., Switzerland, and Hong Kong under new leadership.
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Ripple Launches RLUSD Stablecoin: Ripple’s USD-pegged stablecoin RLUSD debuts on major global exchanges, aiming to challenge stablecoin leaders Tether and Circle.
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Final MiCA Guidance Released: The ESMA publishes final guidance for MiCA regulation, addressing asset classification and regulatory uniformity ahead of the December 30 compliance deadline.
Crypto Market Faces Downturn Amid Fed’s Hawkish Rate Cut Signals
The cryptocurrency market has seen continued downward pressure following the Federal Reserve’s recent 25 basis point rate cut. The global crypto market cap has dropped to $3.33 trillion, marking an 11.8% decline. Bitcoin has notably fallen by over 10% since the Dec. 18 rate decision, settling near its post-election support level of $90,700–$91,000. This correction follows a period of crypto outperformance, with analysts attributing the sell-off to the Fed’s hawkish tone and ongoing fiscal uncertainty in the U.S.
Trading volumes suggest the market correction remains orderly, indicating the potential for buy-the-dip activity as investors adjust to the changing macroeconomic environment. The Federal Reserve has signaled a cautious approach to future policy adjustments, with Chair Jerome Powell emphasizing that upcoming rate cuts in 2025 will depend on evolving economic data.
This tempered outlook is echoed in the broader financial markets, with U.S. rate futures pricing in fewer cuts next year and only modest reductions in 2025. While Powell expressed optimism about the economy’s trajectory, crypto markets remain in flux, reflecting broader concerns about inflation and fiscal priorities as they adjust to the latest monetary policy shifts.
U.S. Spot Bitcoin ETFs See Record $680 Million in Daily Outflows
U.S. spot Bitcoin ETFs experienced an unprecedented $680 million in daily outflows on Thursday, marking the largest single-day withdrawal in their history. This abrupt reversal ended a 15-day streak of positive inflows, highlighting investor caution following hawkish signals from the Federal Reserve. Fidelity’s FBTC led the outflows with $208.6 million withdrawn, followed by Grayscale’s Bitcoin Mini Trust with $188.6 million and ARKB by Ark and 21Shares losing $108.4 million. Meanwhile, BlackRock’s IBIT, the largest spot Bitcoin ETF, reported no movement, and WisdomTree’s BTCW was the only fund among 12 ETFs to record positive flows, with $2 million in inflows.
The record outflows coincided with a notable drop in cryptocurrency prices, with Bitcoin falling below the psychological mark of $100,000. Ethereum followed suit, declining to $3,200. The broader market mirrored this downturn, as reflected by a 6.3% drop in The Block’s GMCI 30 index, which tracks the top 30 cryptocurrencies. Spot Ethereum ETFs also felt the impact, recording $60.5 million in outflows and ending an 18-day streak of positive flows. Trading volumes across the 12 Bitcoin ETFs surged to $6.3 billion, up from $5.9 billion the previous day, underscoring heightened activity amid the market downturn.
SEC Approves First Hybrid Bitcoin-Ethereum ETFs From Hashdex and Franklin Templeton
In a significant development for the crypto investment space, the SEC has approved the first-ever spot exchange-traded funds (ETFs) combining Bitcoin and Ethereum. After extended reviews since June, Nasdaq will list the Hashdex Nasdaq Crypto Index US ETF, while the Cboe BZX Exchange will host the Franklin Crypto Index ETF. The dual-asset ETFs will allocate their holdings based on free-float market capitalizations, with analysts projecting an 80% Bitcoin and 20% Ethereum split at launch in January.
The approval underscores the SEC’s growing confidence in crypto ETFs with dual-asset frameworks, provided they adhere to stringent compliance measures such as surveillance-sharing agreements to detect and prevent market manipulation. These ETFs will disseminate intraday indicative values every 15 seconds during trading hours, ensuring transparency for investors. Current leaders in the crypto ETF market, like BlackRock's IBIT with $56 billion in AUM, continue to dominate, but the introduction of these hybrid products signals a new phase of diversification and accessibility in crypto investment products.
Market observers, including Nate Geraci, president of the ETF Store, anticipate strong demand for these ETFs, given their appeal to advisors seeking diversification in emerging asset classes. The SEC’s willingness to approve hybrid products may open the door for other issuers to follow suit, expanding the range of crypto ETF offerings and attracting both institutional and retail interest in the evolving digital asset landscape.
Copper Withdraws UK Registration Application, Shifts Focus Overseas
Crypto custodian Copper Technologies Ltd. has withdrawn its application to register with the UK Financial Conduct Authority (FCA), signaling a strategic pivot to overseas markets under the leadership of its new CEO, Amar Kuchinad.
The London-based firm, chaired by former UK Chancellor Philip Hammond, has obtained regulatory approvals in Switzerland, Hong Kong, and Abu Dhabi and is exploring expansion into the U.S. Kuchinad emphasized refining Copper’s global growth strategy as his top priority since stepping into the role in October.
Copper’s move highlights the challenges faced by the UK in retaining crypto firms amid fierce competition from jurisdictions like the U.S., where a crypto-friendly administration under president-elect Donald Trump has bolstered the regulatory climate. In contrast, the UK Labour government is working on a unified crypto regulatory framework, which includes rules for stablecoins and staking services, aiming to reestablish the UK as a hub for cryptoasset technology. Despite its withdrawal from the UK, Copper’s overseas ambitions reflect its commitment to scaling its global presence and pursuing opportunities in emerging crypto markets.
Ripple’s RLUSD Stablecoin Launches on Global Exchanges
Ripple’s USD-pegged stablecoin, RLUSD, officially went live on December 17, following regulatory approval from the New York State Department of Financial Services earlier this month. Ripple CEO Brad Garlinghouse confirmed its launch on major platforms such as Uphold, MoonPay, CoinMENA, ArchaxEx, and Bitso, with additional integrations from Bullish, Mercado Bitcoin, Bitstamp, Zero Hash, and Independent Reserve to follow. RLUSD operates natively on Ethereum and Ripple’s XRP Ledger, marking a pivotal step for Ripple in the stablecoin sector.
Positioned as a potential competitor to stablecoin leaders Tether and Circle, RLUSD aims to combine fiat currency stability with blockchain efficiency. Beyond global payments and crypto on/off ramping, the stablecoin will support collateralization, DeFi integrations, and access to tokenized real-world assets. Jack McDonald, Ripple’s senior vice president of stablecoins, emphasized that RLUSD’s launch is just the beginning, highlighting its role in enhancing liquidity, enterprise-grade solutions, and instant settlements for the evolving digital asset ecosystem.
EU Securities and Markets Authority Releases Final MiCA Guidance
The European Securities and Markets Authority (ESMA) has published its final guidance to assist EU member states in transitioning to full compliance with the Markets in Crypto-Assets (MiCA) regulation by the December 30 deadline. While MiCA regulations began taking effect in June 2024, at least six member states, including Belgium, Italy, and Poland, have reported challenges in meeting the deadline due to initial ambiguities in the regulatory framework.
The ESMA report addresses 12 key concerns raised during the commentary period, including inconsistencies in asset classification and legal interpretation among national authorities. Although the guidance clarifies numerous aspects of digital asset regulation, it stops short of offering specific classifications for cryptocurrencies or providing "real-world" examples. To promote uniformity across the bloc, the ESMA has emphasized the need for consistent application of the EU’s Markets in Financial Instruments Directive II (MiFID II) without altering its definition of financial instruments. The agency has committed to ongoing collaboration with lawmakers and stakeholders to refine implementation beyond the December deadline.
Disclaimer: The content provided in this newsletter is for informational purposes only and does not constitute financial, investment, or legal advice. Always conduct your own research and consult with professional advisors before making any investment decisions. Finery Markets assumes no liability for any actions taken based on this information.
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