Rocket Fuel Newsletter – 12/9/2024
As we get closer and closer to 2025, it’s time to begin reflecting back on 2024.
In pop culture, “demure” has been declared the “word of the year,” and our Federal Reserve Chairman, Jerome Powell, is the perfect example of someone who takes the utmost care to be modest and reserved despite the mind-boggling amount of money that trades on his words.
This week’s edition covers Fed-speak, Bitcoin in the housing market and must-attend industry events in the new year.
Fuel up! 🚀
Steady at the helm
As President-elect Donald Trump assembles his cabinet, he has the opportunity to appoint officials like a new Securities and Exchange Commission (SEC chair). However, Federal Reserve Chair Jerome Powell, appointed by Trump in 2018, remains in his role until his term ends in 2026. Despite facing frequent criticism from Trump over the years, Powell has maintained his position. Meanwhile, Treasury nominee Scott Bessent has previously suggested the possibility of appointing a "shadow Fed chair" before Powell's term concludes. Nonetheless, Powell continues to minimize any speculation about potential conflict.
Stocks hit all-time highs
Jerome Powell delivered a speech last Wednesday, amidst a busy week featuring at least 15 speeches by Federal Reserve Board members. During his remarks, stocks hit an all-time high as Powell stated that the economy was in good shape. Powell said officials can afford to be cautious as they lower rates toward a neutral level. The Fed aims to avoid lowering rates too quickly, as doing so could cause inflation to surge again. This cautious approach is especially important given the continued momentum in market enthusiasm and consumer confidence.
Bitcoin breakthrough: How the narrative is shifting
Bitcoin has been making headlines and setting new record highs. The price of a single Bitcoin has rapidly approached $100,000 per coin, gaining increasing attention from the financial community. This new wave of enthusiasm follows an election where Bitcoin was a key talking point for the president-elect Trump, who outlined his pro-crypto stance and policies.
The influx of new money into the asset has pushed Bitcoin’s market cap to around $2 trillion, making it the 7th most valuable asset in the world, just behind major companies like Google and Amazon.
However, relative to the total global wealth, Bitcoin still represents just a fraction of the pie (top left in the image below).
The Bitcoin community remains optimistic, believing that the asset will continue to mature and grow as a percentage of global wealth, particularly with the evolving regulatory environment.
Gary Gensler, former head of the SEC, recently announced his resignation. Known for his strict approach to cryptocurrency, Gensler has often been cited as a roadblock in the sector's development. The potential candidates to replace him are seen as extremely pro-crypto, which could pave the way for more favorable regulations for the industry.
Adding to this optimism, companies are increasingly adding Bitcoin directly to their balance sheets. MicroStrategy is the leading example, having purchased over 400,000 Bitcoin since 2020. The business intelligence company, founded by Michael Saylor, has dominated headlines with its ongoing Bitcoin purchases and the meteoric rise in its stock price. MicroStrategy has not been shy about its intentions to continue buying up as much Bitcoin as possible. The company has even given presentations to the boards of major corporations like Microsoft, urging them to follow suit.
It’s not just companies that are considering Bitcoin, but countries as well – including the United States. The "Strategic Bitcoin Reserve" is a proposal by Senator Cynthia Lummis, endorsed by Donald Trump, which would enable the Treasury and the Federal Reserve to purchase 200,000 Bitcoins annually for five years, ultimately resulting in the U.S. holding one million Bitcoins. This would represent 5% of the total Bitcoin supply and would be held for a minimum of 20 years, if passed.
This new wave of activity is spilling into the real estate market, with Bitcoin-backed loans emerging. This concept involves using both traditional real estate and Bitcoin as collateral for the loan. Watch the full breakdown of this new loan model here.
As Bitcoin continues to break new records, the narrative surrounding it is shifting rapidly from a speculative asset to a more mainstream financial tool. With increasing institutional adoption, potential regulatory clarity and growing support from both companies and governments, the future of Bitcoin looks promising. The asset’s ascent in value and its expanding role in global financial markets indicate that it could play a significant part in the evolution of both traditional finance and emerging digital economies.
Kick off the new year with us at exciting mortgage events. Join the New England Mortgage Expo from January 15 – 17 in Mohegan Sun, CT, featuring keynotes from Rocket Pro TPO leaders. Register for free with code ROCKETFREE.
Don't miss the California Mortgage Expo in Palm Springs on February 11 and Sacramento on February 25. Also, be sure to check out the Conference for Community Bankers; in Phoenix from February 16 – 18, and the Texas Mortgage Roundup in Austin on February 18. Use code ROCKETFREE for complimentary entry at these events.
We hope to see you there.
Two solvers finished last week’s Thanksgiving-themed puzzle in less than a minute, with our winner coming in at 47 seconds.
This week’s puzzle gets 2 Rockets out of 5.
Good luck!