The United States Consumer Price Index (CPI) for December saw a small drop, going from 324.122 to 324.054. This change happens while gold prices soar to new heights, now over $4,630 per troy ounce. Gold’s price increase is notable, even with a strong US dollar and rising Treasury yields tied to recent CPI data. In the cryptocurrency market, privacy coins are thriving and are expected to grow by 290% in 2025 as more people seek on-chain anonymity.

Cryptocurrency Use And Regulatory Actions

The use of the cryptocurrency tumbler Tornado Cash is growing, partly as a reaction to regulatory actions like the 2025 GENIUS Act. Additionally, the Federal Reserve faces more scrutiny after receiving subpoenas from the Department of Justice, which is a response to pressures from the Trump administration. Ripple (XRP) is maintaining its value above $2.00, with trading activity showing stability. However, the recovery faces challenges despite a $1.23 billion inflow into spot Exchange Traded Funds (ETFs). The dip in the Consumer Price Index is minor compared to the bigger issues in the market. The major concern is the Department of Justice subpoenaing the Federal Reserve, which creates significant uncertainty in monetary policy. It might be wise to use options on interest rate futures, like straddles, to handle the upcoming volatility without guessing the Fed’s direction. Gold’s rise past $4,630, in light of a strong dollar, indicates a move toward safety. This isn’t just an inflation hedge; it’s a response to the perceived political risks affecting the Federal Reserve’s independence. Taking long positions through call options or futures contracts appears reasonable as this institutional crisis likely deepens.

Market Responses To Central Bank Actions

The conflict between the administration and the central bank usually stirs fear across the market. Historical events, like the political pressure on the Fed in the 1970s that led to high inflation, show that this kind of uncertainty can have lasting impacts. Investing in derivatives linked to the VIX might be a smart way to protect against, or benefit from, a surge in overall market volatility. In the crypto world, we should pay attention to the strong momentum in privacy coins, which are projected to gain an impressive 290% by 2025. The market rewards assets that respond directly to increasing regulation, a trend further emphasized by the US Treasury’s crackdown on mixers back in 2022. Building long positions in this high-performing sector makes sense. On the other hand, XRP’s failure to rise even with $1.23 billion in ETF inflows suggests weakness. While it stays above the $2.00 support level, the stagnant price movement hints at possible distribution. This makes it less suitable for long positions and could be an opportunity for puts if it falls below this important support. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now