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Santa Claus Rally Stumbles on Fed Outlook

Our market recap offers a concise overview of key blockchain categories and their recent price action within the broader market context, providing valuable insights for investors and industry practitioners.

Gabriel Selby, Mark Pilipczuk

• 3 min read
Santa Claus Rally Stumbles on Fed Outlook

Key takeaways for the month

  • Monetary Uncertainty Pulls Bitcoin Back from New Highs: Bitcoin surged to a new record high, with our CME CF Bitcoin Real Time Index briefly breaching $108,000, fueled by $6.1 billion in crypto-related fund inflows and regulatory optimism. However, the Federal Reserve's more hawkish stance at its December meeting, signaling a slower path for future rate cuts, triggered a sell-off in risk assets, including digital assets. Despite heightened volatility, crypto fund flows remained resilient, most notably into Ether ETFs. Discussions continued surrounding a U.S. strategic Bitcoin reserve, which highlights the increasing institutional and governmental acceptance of Bitcoin as a long-term store of value.
  • DeFi Dominates in December: The CF DeFi Index emerged as the only index to finish the month in positive territory (+8.69%), rising as much as 38.6% mid-month before retracing lower. Conversely, the CF Blockchain Infrastructure Index and CF Digital Culture Index lagged, falling 17.1% and 14.8%, respectively, after sharp sell-offs in the latter half of the month. Year-to-date, the CF Ultra Cap 5 Index led with 103.79% growth, followed by the CF Free-Float Broad Cap Index (99.16%). The CF Digital Culture Index lagged, gaining just 30.61%.
  • Synthetix and Hedera Rise on Innovation: Synthetix (SNX) led the gains with a 78.8% increase after launching multi-collateral perpetuals on Base, which boosted its TVL and DEX volumes. Hedera (HBAR) followed with a 57.5% gain, driven by a partnership with SpaceX for space data management and a collaboration with Chainlink to provide secure on-chain data feeds for DeFi developers. tellar (-36.8%) and Fantom (-36.4%) underperformed this month as investors shifted away from small-cap tokens following Bitcoin’s mid-month correction.
  • Digital Asset Fund Flows Top $6 Billion, Ether Flows Set New Monthly Record: Fund flows into digital assets continued in December, with investors allocating over $6.1 billion. Ether saw record-breaking monthly fund flows, surpassing the $2 billion mark for the first time. From a regional perspective, fund inflows remained concentrated in North America ($6.0 billion), while the South America region saw investor demand recover modestly ($32 million).
  • CME Ether Futures Surge to Record Highs: Total open interest in CME Ether futures continued to grow in December, increasing by nearly 40% from the previous month and reaching new all-time highs. Bitcoin futures open interest also hit record highs earlier in the month but ended December with a modest decline of 8.4%.
  • PENGU Airdrop Fuels Sales Boom: Ethereum secured the top position on the NFT sales volume leaderboard, recording a 107% increase in volume. This surge was driven by heightened trading activity ahead of the highly anticipated PENGU airdrop, which led to an 85.4% rise in transaction counts. The Bitcoin network also saw impressive growth, with sales volumes increasing by 72.7% as the number of transactions surged by 112%. Meanwhile, Solana’s sales volume rose by 39.1%, accompanied by a 7.2% uptick in transaction count.
  • Bitcoin Mining Revenues Hit Post-Halving Highs: Bitcoin’s price increase led to a 19.3% rise in mining revenues in December. Of the total miner rewards for the month, 2.7% came from fees, a decrease from 3.2% in November. Despite a continued decline in on-chain activity, the price gains boosted miners’ earnings to their highest levels since the April halving.
  • Ethereum Fees Climb 6.7% as Network Throughput Gains Momentum: Total fees paid on the Ethereum network rose by 6.7% from the previous month, reaching $198.4 million. While total fees grew, the 10% decline in average fees per interaction suggests that the network’s throughput continues to grow.
Source: CF Benchmarks, Bloomberg, as of December 31, 2024

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