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Bitcoin is closing the year in consolidation mode after its weakest Q4 since 2018, global equities are ending a strong year at record highs amid growing valuation concerns, and central banks are signaling that the era of rapid easing may already be behind us.

This week is less about chasing upside and more about identifying where real strength, fragility, and opportunity may emerge as we approach 2026.

Here’s what we’ll cover today:

Let’s dive in 👇

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Bitcoin is ending 2025 on a muted note, trading around $87,000 and roughly 30% below its October all-time high. This marks its weakest Q4 since 2018 and puts the asset on track for an annual loss of just over 6%. Repeated failures near $90,000 amid thin liquidity, ETF outflows, and uncertainty around Fed policy have capped upside momentum. In our view, this consolidation reflects a maturing market phase, shifting from euphoric moves to deeper fundamental reassessment. The key question heading into 2026 is whether $90,000 is a structural ceiling or merely a pause before renewed institutional demand.

European equities are closing out their strongest year since 2021, with the Stoxx Europe 600 up roughly 16% in 2025 and printing fresh all-time highs above 590. The outperformance reflects a meaningful shift in global capital flows, as investors increasingly view Europe as a relative value opportunity amid stretched U.S. valuations and rising uncertainty around U.S. trade policy.

The Federal Reserve delivered its third consecutive rate cut in December, lowering rates to 4.25–4.5%, but signaled a slower path ahead. Markets now price just two additional 25 bp cuts through the end of 2026, down sharply from earlier easing expectations. Divisions within the FOMC persist, with policymakers balancing labor market risks against inflation pressures tied to tariffs. For investors, this reinforces a higher-for-longer rate environment into 2026, capping valuation multiples and increasing sensitivity across risk assets.

Equity leadership in 2025 has been heavily concentrated in AI-linked names. Micron surged 245% this year, while Sandisk gained an extraordinary 578%, driven by an AI capex boom expected to reach $519 billion in 2026. While earnings momentum remains strong, analysts warn of a growing “K-shaped” economy and rising fragility beneath the surface. Valuation risks are becoming harder to ignore, with the Shiller P/E recently hitting 40.74, its second-highest level on record, surpassed only during the dot-com bubble.

Looking ahead, 2026 is likely to demand far greater selectivity and active risk management. Investors will need to balance AI-driven productivity gains against historically stretched valuations, tariff-related inflation risks, and a market approaching a rare fourth consecutive year of double-digit equity returns, a setup that last preceded the late-1990s unwind.

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