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Authored by Andrew Thornebrooke via The Epoch Times,

China has dramatically increased its cyberattacks against the United States since Chinese Communist Party leader Xi Jinping came to power in 2012.

From espionage to intellectual property theft to sabotage, here is a look at 20 of the largest Chinese cyberattacks against the United States in the last 10 years.

August 2014: Community Health Systems Hack 

A state-backed hacking group in China—referred to as APT18—launched an advanced malware attack against Tennessee-based Community Health Systems, one of the nation’s largest hospital health care services.

The group succeeded in exfiltrating the sensitive personal information of more than 4.5 million patients, including their Social Security numbers, phone numbers, addresses, names, and birth dates.

(Left) FEMA Administrator Deanne Criswell addresses the media from the National Hurricane Center in Miami on May 31, 2023. (Right) United States Postal Service trucks in Farmingdale, N.Y., on April 12, 2020. Joe Raedle/Getty Images, Madalina Vasiliu/The Epoch Times

November 2014: NOAA and USPS Hacks

State-backed hackers in China launched malware and DDOS attacks against several government entities, including the U.S. Postal Service (USPS), the National Oceanic and Atmospheric Administration (NOAA), and the Office of Personnel Management.

The personal information of more than 800,000 employees at USPS, as well as that of customers who had called customer services, was exfiltrated. NOAA officials reported that they were immediately able to restore service to four affected websites but had not reported the incident for months, which was a violation of U.S. policy.

The entrance to the Theodore Roosevelt Federal Building that houses the Office of Personnel Management headquarters in Washington on June 5, 2015. U.S. investigators have said that at least four million current and former federal employees might have had their personal information stolen by Chinese hackers. Mark Wilson/Getty Images

June 2015: Office of Personnel Management Hack

The federal government’s primary hiring agency was hacked by state-backed cyber actors in China. More than a million users’ personal information, including names, addresses, and Social Security numbers, were stolen.

Those affected included current and former federal employees and contractors, as well as applicants for federal jobs and individuals listed on background check forms.

The attack was the third and largest of its kind in a matter of weeks and appeared to have specifically targeted data and applications related to U.S. security clearances. As such, the data stolen also included the financial histories and family information of those undergoing federal background checks at the time.

A Belgian plant of the U.S. chemicals group DuPont de Nemours in Mechelenon on April 13, 2004. Herwig Vergult/AFP via Getty Images

January 2016: Dupont Chemical Hack 

Pangang Group, a Chinese state-owned steel manufacturer, was charged by the U.S. government for stealing trade secrets from DuPont, a major chemical corporation. The group had obtained access to information on the U.S. company’s computers.

Pangang worked with unidentified hackers to purchase trade secrets from a long-time DuPont employee, who stole the company’s method for manufacturing titanium dioxide, a white pigment used in many applications, including semiconductors and solar panel cells.

The Aviation Industry Corporation of China (AVIC) logo is seen in during the International Paris Air Show in Le Bourget on June 25, 2017. Eric Piermont/AFP via Getty Images

April 2017: FAA, NASA Spearfishing Campaign 

Song Wu, an employee for China’s state-owned aerospace and defense corporation AVIC, allegedly began a multiyear spearfishing campaign against targets in the Federal Aviation Administration (FAA), National Aeronautics and Space Administration (NASA), U.S. Air Force, Navy, and Army.

Wu was later charged in 2024 for creating email accounts impersonating U.S.-based researchers and engineers to obtain restricted software used for aerospace engineering and computational fluid dynamics.

The U.S. government alleged that the software obtained could be used to develop advanced tactical missiles and aerodynamic designs for other weapons.

A sign depicting the four members of China’s military indicted on charges of hacking into Equifax Inc. and stealing data from millions of Americans is on display shortly after Attorney General William Barr held a press conference at the Department of Justice in Washington on Feb. 10, 2020. Sarah Silbiger/Getty Images

May 2017: Equifax Hack

Chinese military hackers breached the Equifax credit bureau in the largest-known theft of personal information.

More than 145 million Americans’ sensitive personal data, including Social Security and driver’s license numbers, were stolen. The hackers also obtained roughly 200,000 American credit card numbers.

The hackers routed traffic through approximately 34 servers located in nearly 20 countries to obfuscate their true location.

The United States later indicted four members of China’s military for the hack in 2020. As in most such cases, the hackers remain in China and have never been arrested.

January 2018: Navy Personnel, Technology Hacks

Chinese state-backed hackers allegedly compromised the computers of a U.S. Navy contractor and stole a large amount of highly sensitive data on undersea warfare, including U.S. plans for a supersonic anti-ship missile known as “Sea Dragon” for use on submarines, The Washington Post reported.

The hacked material also included signals and sensor data, information about submarine cryptographic systems, and electronic warfare documents from the Navy’s primary submarine development unit.

A sign depicting Chinese government hackers who allegedly targeted scores of companies in a dozen countries, at a press conference about Chinese hacking at the Justice Department in Washington on Dec. 20, 2018. Nicholas Kamm/AFP via Getty Images

June 2019: APT10 Utility Spearfishing Campaign 

APT10, a hacking group directed by China’s Ministry of State Security, began a massive spearfishing and hacking campaign targeting U.S. aerospace, engineering, and telecommunications firms.

By using stolen passwords and malware, the hackers were able to steal records related to 130,000 Navy personnel.

Huntington Ingalls Industries, the largest builder of U.S. military ships and nuclear-powered submarines, acknowledged that it was targeted in the attack, and that computer systems owned by one of its subsidiaries were discovered connecting to a foreign server controlled by APT10.

Acting U.S. Attorney for the District of Columbia Michael R. Sherwin speaks to the media about charges and arrests related to a computer intrusion campaign tied to the Chinese government by a group called APT 41, at the Department of Justice in Washington on Sept. 16, 2020. Tasos Katopodis-Pool/Getty Images

August 2019: APT41 Hacks Revealed 

China-based hacking group APT41 penetrated and spied on global tech, communications, and health care providers for China’s Ministry of State Security.

The group deployed rootkits, granting itself hard-to-detect control over computers, by compromising millions of copies of a utility called CCleaner. APT41 also hijacked a software update pushed by Asus to reach 1 million computers, targeting a small subset of those users.

A nurse prepares a dose of the Moderna vaccine against COVID-19, donated by the United States, at a vaccination center in San Juan Sacatepequez, Guatemala, on July 15, 2021. Johan Ordonez/AFP via Getty Images

May 2020: Moderna COVID-19 Vaccine Espionage 

Chinese regime-linked hackers targeted biotech company Moderna as it conducted research to develop a vaccine for COVID-19.

The effort involved conducting reconnaissance in order to steal proprietary research needed to develop a vaccine for the disease, which Moderna received nearly half a billion dollars to create from the U.S. government.

A U.S. indictment alleged that the China-based hackers probed public websites for vulnerabilities and scouted accounts of key personnel after gaining access to a network used by Moderna.

Paul Nakasone, director of the National Security Agency, looks at a hearing with the House Armed Services Subcommittee on Cyber, Innovative Technologies, and Information Systems in the Rayburn House Office Building in Washington on May 14, 2021. Anna Moneymaker/Getty Images

February 2021: Chinese Access to NSA Hacking Tools Revealed

Israeli researchers discovered that Chinese spies had stolen and deployed code first developed by the U.S. National Security Agency (NSA) to support their hacking operations.

The NSA hacking tools were leaked online in 2017. Still, cyber investigators found evidence that the Chinese communist-backed APT31 hacking group had deployed an identical tool as early as 2014. This suggests that China-based hackers had persistent access to the nation’s best national security cyber tools for years.

People walk by a Microsoft store in New York City on July 26, 2023. Samira Bouaou/The Epoch Times

March 2021: Silk Typhoon 

A cyber-espionage group associated with China’s Ministry of State Security stole emails and passwords from more than 30,000 organizations by exploiting flaws in Microsoft Exchange Servers.

The group, dubbed Silk Typhoon by Microsoft, worked closely with China-back APT40, leveraging a flaw in Microsoft’s software to gain full access to emails hosted on more than 250,000 servers in the United States.

Among the organizations most affected by the hack were American pharmaceutical companies, defense contractors, and think tanks.

Attendees pass by an Alibaba.com display at a consumer technology trade show at the Las Vegas Convention Center in Las Vegas on Jan. 8, 2019. David Becker/Getty Images

December 2021: Log4j Hacks 

APT41 returned to action, leveraging a previously unknown vulnerability in commonly used open-source logging software Log4j. The group used the vulnerability to hack into at least six unspecified U.S. government agency networks over a nine-month period.

The vulnerability allowed APT41 to keep track of user chats and clicks and follow user link clicks to outside sites, allowing hackers to control a targeted server.

The hackers then used the hijacked networks to mine cryptocurrency, create botnets, send spam, and establish backdoors for future malware attacks.

Notably, the China-based company Alibaba first discovered the security flaw and privately reported it to Apache Software, which created the affected software. The Chinese Communist Party afterward punished Alibaba by revoking an information-sharing deal, as Chinese law requires security flaws to be reported to the regime.

Sen. Angus King (I-Maine) sets up a sign alongside a bipartisan group of Democrat and Republican members of Congress as they announce a proposal for a COVID-19 relief bill on Capitol Hill on Dec. 1, 2020. Tasos Katopodis/Getty Images

December 2022: COVID-19 Relief Fund Theft 

APT41 stole millions of dollars worth of U.S. COVID-19 relief benefits, which were intended to help Americans who were negatively impacted by the government’s economic shutdowns during the 2020 pandemic.

The sum was part of a staggering estimated $280 billion in stolen COVID-19 relief, which was illicitly intercepted by foreign hackers and domestic fraudsters who used the Social Security numbers and personal information of deceased and incarcerated Americans to claim benefits illegally.

To date, the Justice Department has only successfully recovered about $1.5 billion of the stolen funds.

May 2023: Antique Typhoon 

Antique Typhoon, a Chinese state-backed hacking outfit, forged digital authentication tokens to access the webmail accounts of 25 organizations, including numerous U.S. government agencies.

The hackers were able to obtain the emails of government officials, including Commerce Secretary Gina Raimondo, and members of Congress, including Rep. Don Bacon (R-Neb.). The hackers used persistent access to the email accounts only for exfiltrating data, suggesting that their purpose was primarily espionage.

Taiwanese Vice President Lai Ching-te gives a speech at the CommonWealth Semiconductor Forum in Taipei, Taiwan, on March 16, 2023. Annabelle Chih/Getty Images

August 2023: HiatusRAT 

China-backed hackers began targeting U.S. and Taiwanese military procurement systems, as well as semiconductor and chemical manufacturers.

The hackers leveraged a remote access tool to breach the system used to coordinate arms shipments from the United States to Taiwan. International open-source reporting suggests that the hackers’ goal was to gain intelligence on future defense contracts between the two powers.

September 2023: BlackTech Router Attack 

China-backed hacking group BlackTech began targeting major corporate headquarters throughout the United States. The group appeared to focus its attacks on gaining access to American and Japanese companies working in the defense sector.

U.S. and allied intelligence agencies announced that having penetrated the international subsidiaries of major companies, BlackTech was now using its access to grant itself entry to major corporate networks within the United States in order to exfiltrate data.

January 2024: Volt Typhoon 

U.S. intelligence agencies announced that Volt Typhoon, a Chinese state-backed hacking group, was pre-positioning malware in critical infrastructure throughout the United States, including water, gas, energy, rail, air, and port infrastructure.

Unlike most other Chinese hacking efforts that focus on espionage or intellectual property theft, Volt Typhoon sought to position malware in U.S. infrastructure in order to sabotage it in the event of a conflict between the two nations. Such sabotage would result in mass casualties among American citizens.

U.S. intelligence agencies said that they have removed Volt Typhoon malware from thousands of systems but that it remains embedded in some privately owned infrastructure and has been present since at least 2021.

(Left) A sign is posted in front of an AT&T retail store in San Rafael, Calif., on May 17, 2021. (Right) A man on his cell phone walks past a Verizon Wireless store in Washington on Dec. 30, 2014. Justin Sullivan/Getty Images, Jim Watson/AFP via Getty Images

November 2024: Salt Typhoon 

U.S. intelligence agencies acknowledged that Salt Typhoon, a Chinese state-backed hacking group, has compromised the infrastructure used by eight major telecommunications companies, including AT&T, CenturyLink, and Verizon.

Salt Typhoon appeared to have gained access to the backend infrastructure used to accommodate the U.S. government’s own wiretapping efforts and thus gained access to virtually all calls and texts made using the affected networks.

Despite the wide-ranging access, China-based hackers appeared to have used the persistent access to target high-profile individuals, including President-elect Donald Trump and Vice President-elect JD Vance.

Congressional leaders have described the hack, which likely began in 2022, as among the most significant breaches in history. It is unclear how Salt Typhoon will be evicted from the infrastructure. The group retained access to U.S. telecommunications until late December.

Secretary of the Treasury Janet Yellen delivers remarks at Johns Hopkins University’s School of Advanced International Studies in Washington on April 20, 2023. Anna Moneymaker/Getty Images

January 2025: US Treasury Department Hack 

The Treasury Department revealed that Chinese state-backed hackers had breached the department’s networks, gaining access to the servers of an office responsible for administering international sanctions.

The hackers also gained access to the department’s networks by compromising third-party cybersecurity service provider BeyondTrust, stole an as-of-yet unknown number of unclassified documents, and targeted the accounts of Treasury Secretary Janet Yellen.

Via Brian McGlinchey at Stark Realities

Contrary to exaggerated, partisan rhetoric that frames the Jan 6, 2021 Capitol Hill riot as a “deadly insurrection,” the truth is that only one homicide occurred that day. The victim, an unarmed Trump supporter, was shot and killed by a police officer with a history of irresponsible handling of firearms, who opted against a nonlethal response to an act of trespassing, and who fired his weapon in the absence of any imminent threat of death or serious injury to himself or others in his vicinity.

US Capitol Police (USCP) Lieutenant Michael Byrd’s killing of Ashli Babbitt came just six months after George Floyd’s death under the knee of Minneapolis police officer Derek Chauvin, an incident that sparked outrage, widespread calls for police reform, and nationwide rioting. In the case of Babbitt’s killing, however, the collective reaction from the American left and major media at best amounted to an indifferent shrug. Worse, many reflexively heralded Byrd as a hero and viewed Babbitt as a deserving recipient of the bullet that perforated her trachea and lung.

The contrast illustrates how partisan framing short-circuits people’s ability to uniformly and objectively apply principles to the facts before them. Put another way, an intellectually honest person can reject Babbitt’s politics, condemn her unlawful conduct on Jan. 6 and rightly conclude that she was the victim of an unjustified police shooting.

In 2021, the Department of Justice announced it had completed an investigation of the shooting and found “insufficient evidence to support a criminal prosecution.” The DOJ did not, however, assert that Byrd’s use of deadly force was warranted. Last year, Babbitt’s husband filed a civil suit against the federal government, seeking $30 million in damages; the trial is slated to commence in July 2026.

Babbitt, a 35-year-old Air Force veteran from San Diego who operated a pool business with her husband, attended the “Save America” rally in Washington on Jan. 6 before joining others who proceeded to the Capitol grounds. After things escalated and rioters breached the Capitol building, she entered it, and a female police officer reportedly instructed her to walk toward the House side of the complex.

Here’s how the DOJ described what happened next; I’ve bolded three words I’ll address shortly:

Ms. Babbitt was among a mob of people that…gained access to a hallway outside “Speaker’s Lobby,” which leads to the Chamber of the U.S. House of Representatives. At the time, the USCP was evacuating Members from the Chamber, which the mob was trying to enter from multiple doorways. USCP officers used furniture to barricade a set of glass doors separating the hallway and Speaker’s Lobby to try and stop the mob from entering the Speaker’s Lobby and the Chamber, and three officers positioned themselves between the doors and the mob.

Members of the mob attempted to break through the doors by striking them and breaking the glass with their hands, flagpoles, helmets, and other objects. Eventually, the three USCP officers positioned outside the doors were forced to evacuate. As members of the mob continued to strike the glass doors, Ms. Babbitt attempted to climb through one of the doors where glass was broken out. An officer inside the Speaker’s Lobby fired one round from his service pistol, striking Ms. Babbitt in the left shoulder, causing her to fall back from the doorway and onto the floor.

Though it’s not narrowly relevant to Byrd’s decision to pull the trigger, the DOJ’s passive-tense claim that the three officers on Babbitt’s side of the doors “were forced to evacuate” is important because it indicates an extreme inclination to put the best spin possible on officers’ decisions. Video shows those three officers failing to make any meaningful effort to stop those who were hammering the glass doors. After enduring mounting verbal abuse and violations of their personal space, they simply walked away from the doors, clearing the way for the rioters to remove the glass from a side window and for Babbitt to proceed through the opening.

According to the 32-page complaint filed in the civil suit, one of those three officers later told investigators, “I grapple with this, you know, if I should’ve stayed.” More pointedly, one of the members of the Containment and Emergency Response Team (CERT) who ascended the stairs from behind the mob told investigators, “I was thinking why, why the fuck did they leave?”

Some of the most damning information in the civil complaint comes from Byrd’s own mouth. In a 2021 NBC interview conducted by an excessively sympathetic Lester Holt, Byrd said:

• “I could not see exactly what was happening [on the other side of] the door…it’s impossible for me to see what’s on the other side because we had created such a barricade — it was high enough that the visibility was impossible.”

• “[Babbitt’s] failure to comply required me to take the appropriate action to save the lives of members of Congress and myself and my fellow officers.”

• “It was later [that] I found out that the subject did not have a weapon, but there was no way to know that at that time, and I could not fully see her hands or what was in the backpack or what the intentions [were].”

• “Of course we had our weapons drawn as part of our training. You had [false reports of] shots fired onto the House floor, you’re trained to take a tactical defensive position and prepare for the threat.”

There are many unsettling things about Byrd’s statements, chief among them his admission that he saw no weapon in Babbitt’s hands, and had “no way to know” if she was armed or what her intentions were. “Without additional information indicating that a person is likely armed, officers cannot conclude that someone has a weapon just because they cannot see definitively that the person does not have a weapon,” wrote Geoffrey Alpert, Jeff Noble, Seth Stoughton at Lawfare.

Among other incriminating elements of Byrd’s NBC interview:

• Byrd asserts that Babbitt’s mere failure to comply with orders not to proceed through the door justified the use of lethal force.

• He implies that (false) reports of shots fired somewhere else in the Capitol gave him a green light to start shooting noncompliant people in his vicinity; in other words, he seems to have made a blanket assessment that every trespasser in the building posed an imminent danger justifying deadly force.

“Officers cannot rely on generalized assumptions. They must base their conclusions on specific and individualized facts,” the Lawfare authors note.

Unsatisfied with merely defending his killing of Babbitt, Byrd used the NBC interview to declare himself as a hero, telling Holt, “I showed the utmost courage on January 6…I know that day I saved countless lives.” That latter boast is truly extraordinary, especially considering it was made with the benefit of hindsight. It would be one thing for Byrd to try attributing his deadly decision to a reliance on bad information amid the chaos of Jan. 6; it’s another to lionize himself with a baseless claim of rioters’ murderous intent.

Under USCP policy, lethal force is only authorized when “the officer perceives that the subject poses an imminent danger of death or serious physical injury to the officer or to another person.” As Babbitt rose to awkwardly enter through the open window — where she would next have to awkwardly navigate a furniture barricade on the other side — there was no indication that she had the ability to seriously injure or kill anyone.

As seen in video of the shooting, Byrd’s positioning was problematic; the civil complaint characterizes it as an “ambush.” From the perspective of the rioters, Byrd was positioned on the far left, at an angle some 160 degrees from Babbitt, who was on the right side of the doors. Before stepping forward and killing Babbitt, Byrd was tucked inside another doorway, with only his pistol extending past the opening.

It’s very unlikely Babbitt saw his raised pistol and knew she was being threatened with death if she went through the window. Indeed, one of those three officers who inexplicably abandoned the doorway on Babbitt’s side told investigators, “I saw him . . . there was no way that woman would’ve seen that.” What’s more, Byrd told Holt that he repeatedly screamed “get back..stop…get back…no,” but made no claim that he verbally warned Babbitt that she was on the verge of being shot.

By all indications, Babbitt’s unarmed ascent to the window was a circumstance that called for the use of nonlethal force. That could have taken many forms — a firm shove back through the window, yanking her forward to the floor, or perhaps using pepper spray or a taser. While not clear how the various officers were equipped, note that police aren’t justified in resorting to deadly force just because it’s all they have available. It’s telling that, among multiple armed officers on that side of the doorway, Byrd was the only one who opened fire.

The civil complaint also credibly accuses Byrd of failing to handle his firearm in accordance with USCP policy, by:

• Unholstering it before any imminent threat had emerged to justify doing so

• Failing to hold his pistol at a “low ready” position and instead pointed it at people who posed no imminent threat

• Putting his finger inside the pistol’s trigger guard, “tapping it on and off the trigger for at least 14 seconds before he shot and killed Ashli.” Across law enforcement, the military and in civilian self-defense, it’s a universally-embraced principle that one’s finger shouldn’t be put inside the trigger guard until a decision to fire has been made.

After shooting Babbitt, Byrd took to his radio, his voice filled with panic — and a self-serving falsehood. “We got shots fired in the lobby. We got shots, shots fired in the lobby of the House chamber. Shots are being fired at us and we’re sh… uhh, prepared to fire back at them,” he said, seemingly so desperate to justify his action that he falsely reported coming under fire himself.

In the aftermath of incidents involving excessive use of force, we often find the officer in question has a blemished service record. That’s the case with Byrd, whose checkered past includes irresponsible handling of firearms. In 2019, Byrd was suspended for 33 days after he left his loaded weapon in a Capitol Visitor Center complex bathroom for nearly an hour; it was discovered by another officer.

Even more concerning was a 2004 off-duty incident. Byrd fired his service weapon at a stolen car fleeing his neighborhood — hitting it from behind. Investigators said Byrd’s claim that he fired at the car in self-defense as the driver attempted to hit him was “inaccurate.”

They also determined that Byrd put his innocent neighbor in the line of fire as he pulled the trigger. Stray rounds hit nearby homes, according to the Babbitt civil complaint. Foreshadowing Byrd’s decision-making on Jan. 6, the Office of Professional Responsibility (OPR) concluded he’d fired in a “careless and imprudent manner.” That finding was overruled, however, via an appeal to the Disciplinary Review Board.

In another off-duty incident, Byrd was given a seven-day suspension without pay in 2015 after accosting a police officer providing security at a high school football game, showering him with profanities and reportedly calling him “a piece of shit, asshole and racist” who was only concerned with policing the “black side” of the football field.

Further underscoring the double-standards at play in the Babbitt case, imagine the response from the left if there were a controversial shooting in which a white male police officer had demonstrated a similar, racially-charged loss of composure years before killing an unarmed black female trespasser.

“The ironies of Babbitt’s death abound—and not just because in this case the cop with the quick trigger finger was black and his victim was a white woman,” wrote Jonathan Tobin. “Both those who are supporting Byrd and those who consider the pass he got from his superiors an injustice have probably been on the opposite side of similar controversies in the past year. Some of those who think Babbitt was the victim of a police murder have defended officers accused of killing unarmed black persons. And many who are lauding Byrd as a defender of democracy were outraged by the same killings.”

Stark Realities undermines official narratives, demolishes conventional wisdom and exposes fundamental myths across the political spectrum. Read more and subscribe at starkrealities.substack.com  

Views expressed in this article are opinions of the author and do not necessarily reflect the views of ZeroHedge.

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Authored by Lance Roberts via RealInvestmentAdvice.com,

Santa Is A No-Show

Last week, we discussed how it seemed as if Santa arrived on Christmas Eve, pushing the markets back above the important 50-DMA. However, by the end of the year, it seemed investors were naughty this year and received a “lump of coal,“ with markets selling off back toward recent lows. One important note was that momentum and relative strength remained weak, keeping selling pressure intact.

There is no way to sugarcoat the market’s poor performance. While December started with a bang, it ended with a whimper, with a long stretch of daily losses into year-end. Now, 2025 is opening with a whimper. Small caps fell apart after attempting to “make a comeback,” and overall market breadth declined. However, with the markets now oversold, we should expect a rally heading into the Presidential inauguration, which likely started on Friday.

Despite Friday’s impressive reflexive rally, the market fell about 0.5% short of rallying enough to save the “Santa Rally.”

However, although the “Santa Rally” failed to materialize, bullish hopes for 2025 are not yet lost.

“Since 1950, when all three January indicators (The Santa Claus Rally (SCR), First Five Days (FFD) and the full-month January Barometer (JB)) are up, the S&P 500 was up 90.6% of the time (29 out of 32 years) with an average gain of 17.7%. When one or more of the Trifecta is down, in this case, the SCR, the year is up 59.5% of the time (25 of 42) with a paltry average gain of 2.9%.” – Stocktraders Almanac

While the lack of a Santa rally is disappointing, as noted by Stocktraders Almanac:

“Of the 16 down SCRs since 1950, 11 years have been up and 5 down, but the average gain is a tepid 6.1%.“

However, even with a failed Santa rally, the January barometer holds the key for the year. Historically, a positive January has been a bullish sign for stocks. The chart below highlights that the popular Wall Street maxim has stood the test of time. Since 1950, the S&P 500 has posted an average annual return of 16.8% during years that included a positive January. Furthermore, the index generated positive returns in 89% of these years. In contrast, when the index traded lower in January, annual returns dropped to -1.7%, with only 50% of occurrences yielding positive results.

With the bulls needing a positive January performance, the market has its work cut out. However, with the market’s short-term oversold and breadth, there is a reasonable technical setup for an improvement in performance in January.

However, will 2025 be another banner year? Maybe. But the market certainly faces headwinds, from elevated earnings expectations to valuations. Our best guess is that while this year will likely see a continuation of the bull market cycle, it will be punctuated by increased bouts of volatility that will weigh on investor sentiment. In other words, “buckle up and keep your arms and belongings inside the vehicle.”

This week, we will do a short 2024 review.

2024 Review – Another 20% Plus Year

The market had another 20% plus return for the year. As we discussed previously, the market rarely delivers an “average” return of 8-10%. About 38% of the time, the market delivers 20% or more returns.

Since 1900, the stock market has “averaged” an 8% annualized rate of return. However, this does NOT mean the market returns 8% every year. As we discussed recently, several key facts about markets should be understood. Stocks rise more often than they fall: Historically, the stock market increases about 73% of the time. The other 27% of the time, market corrections reverse the excesses of previous advances. The table below shows the dispersion of returns over time.”

For analysts, being permanently “bullish” leads to a 73% success rate on market calls, which, if you are a professional baseball player, a .730 batting average will enshrine you in the “Hall Of Fame.” However, as investors, the problem with being always bullish is the impact on our portfolios for the “other” 27% of outcomes. This is important in the history of 20% plus annual returns. In the table above, in the far-right column, there are periods where 20% plus gains were clustered.

So, what does that mean?

The Long Term

It is worth noting that these periods of “well-above-average” returns were followed by “well-below-average” returns. As shown, these periods of “mean-reversion” were generally triggered by some event that reversed elevated valuation levels.

As we see in the market, these periods of excess valuations are a psychological byproduct of investor sentiment. Our 2024 review found that investor allocations to equities reached a record, corresponding to a sharp increase in valuation levels as investors were willing to overpay for earnings growth.

As asset prices rise, speculation. increases, creating a “feedback loop.” The more asset prices rise, the more confident investors become, leading to further price increases fueling a bull market. The chart below shows the length of previous bull markets throughout history, with the average length of bull markets running about 5 1/2 years.

However, while the long duration of bull markets favors being bullish, the problem is that eventually, some “event” occurs that causes a reversal of expectations. When that occurs, investors reprice the market back to reality. As shown, bear markets and the ensuing recessions are generally very short. Most bear markets last less than 18 months and are more painful experiences.

Does that mean 2025 will be a “mean reverting” year? No. However, as discussed in this 2024 review, there are certain warning signs that next year could be very different.

2024 Review – A Year Of Concentration

For the second year in a row, the one big standout was the level of market concentration. The “Mega-cap” stocks have become an ever-increasing percentage of the S&P 500 index. We have not witnessed this since the early 70s with the “Nifty-Fifty” and just before the “Dot.com” crash.

Over the last few years, capital flows into the largest market capitalization stocks have led to an increasing skew between the “have and have nots.” Over the last year, the companies that dominate the market capitalization weighting of the S&P 500 index created a substantial outperformance over the equal-weighted index.

Speaking of the “have-nots,” the 60/40 allocation lagged far behind the S&P 500 index on a performance basis as bonds struggled with “sticky inflation” and continued to push to increase portfolio risk as investors chased asset prices higher.

However, that continued performance chase has led to the most significant rolling two-year performance spread between the market capitalization and equal-weighted index since 2008 and 2019.

While the surge in market concentration has been notable over the last two years, the chase for performance has been a growing issue since 2014. As shown, the Nasdaq and S&P 500 (both market-capitalization-weighted and dominated by the same stocks) have massively outperformed everything from small and mid-capitalization companies to gold, oil, and bonds.

Notably, in 2024, the “Mega 7” market-capitalization companies returned 50%, while the S&P 500 was higher by 22%, and the Russell 2000 trailed far behind, rising just 12%.

The question is, why is this happening?

2024 Review – Speculation Goes Parabolic

As discussed, the surge in “Exchange-Traded Funds” or “ETFs” has changed the investing landscape.

“Following the 2020 pandemic shutdown, the Government and Federal Reserve went into overdrive, providing round after round of fiscal and monetary support. Money flooded the economy, from PPP Loans to rent moratoriums, $1500 checks directly to consumers, debt forgiveness, zero interest rates, and quantitative easing. Unsurprisingly, much of that money entered the financial markets, and retail investors plowed nearly $900 billion in market-related ETFs. Interestingly, in 2024, most of those supports are gone, interest rates have risen sharply, and the Federal Reserve is reducing its balance sheet. Yet, somehow, investors figured out a way to push $913 billion (YTD) into ETFs, which is a record inflow.”

That surge of capital into ETFs contributed to the outsized performance of large capitalization companies, primarily the “Magnificent 7,” relative to the rest of the index, as shown above. This happens because most of these passive ETFs are market capitalization-weighted.

For example, every ETF that tracks the S&P 500 index, the Nasdaq, or some variation thereof has the same top holdings. Currently, the top 10 stocks comprise roughly 40% of those ETFs.

Therefore, every time someone invests $1 into one of those ETFs, roughly 40 cents of that dollar flows into just 10 stocks. Such is why, in our 2024 review, those 10 stocks, except Microsoft, outperformed the S&P 500 index by a wide margin.

The byproduct of consistently rising prices and investors’ chase for performance creates demand for Wall Street to provide more products for investors to purchase. This is why 2024 saw a massive increase in single-stock ETFs and, more critically, leveraged ETFs.

The growing demand by investors to leverage speculate in the market is a topic we covered recently in our Daily Market Commentary and is the hallmark of our 2024 review:

“We see surging volume in leveraged single-stock ETFs. An example of such an ETF is Granite Shares NVDL. The ETF offers a 2x leveraged holding of Nvidia shares. If Nvidia falls by 3%, the ETF will decline by 6%. Conversely, if Nvidia rises by 5%, the ETF will climb 10%. Accordingly, leveraged single-stock ETFs can be incredibly speculative. Furthermore, the massive surge in volume in such ETFs, as we share below, further confirms speculative behaviors are growing.

Leverage and extreme speculation can drive markets higher than most investors forecast. However, in the process, they create a divergence between fundamentals and valuations, thus exposing the markets to risk. Increased leverage and speculation are not reasons to sell immediately, but they indicate that markets are getting frothy, warranting our close attention.“

The important point is that while 2024 was a great year in the markets, history suggests that expectations for 2025 should likely be tempered. Such brings us to the obvious question, “What should I be watching for to signal a shift in investor sentiment?”

2024 Review – What To Watch For In 2025

While investors are giddy with returns over the past year, that exuberance has increased the expectation that things will continue in 2025. Of course, earnings growth will be the biggest driver for returns in 2025.

Forward earnings estimates are optimistic and well above their long-term historical logarithmic growth trend. Analysts expect the S&P 500 will see earnings reach $249/share from $208/share at the end of 2024. That is an expected growth rate of 19% for earnings. However, that current estimate is $68/share above historical earnings’ long-term exponential growth trend. While such deviations existed previously, they were usually close to the point where such optimism ended. The ends of those exuberant periods of earnings growth generally coincided with a recession or a mean-reverting event. However, while estimates are currently very elevated, they can remain elevated longer than you think possible.

The timing of “the” event that reverses more extreme investor exuberance and speculation is always the most challenging. However, it always occurs when it is least expected. As we enter 2025, investor sentiment of expected stock returns over the next 12 months is near the highest levels on record. At the same time, credit spreads remain near the lowest levels on record, confirming the high degree of complacency in today’s markets.

Such exuberance and overconfidence tend to precede some level of disappointment.

Earnings Matter More Than You Think

The most significant risk in 2025 is an event that causes a significant decline in earnings expectations. As shown, there is a very high correlation between earnings trends and the rate of change in asset prices.

As I discussed in “Predictions For 2025:”

“The problem with current forward estimates is that several factors must exist to sustain historically high earnings growth.

1. Economic growth must remain more robust than the average 20-year growth rate.
2. Wage and labor growth must reverse to sustain historically elevated profit margins, and,
3. Both interest rates and inflation must reverse to very low levels.

While such is possible, the probabilities are low, as strong economic growth cannot exist in a low inflation and interest-rate environment. More notably, if the Fed cuts rates further, as most economists and analysts expect next year, such will be in response to a slowing economic environment or financial stress. Such would not support more optimistic earnings estimates of $251 per share next year. This represents roughly a 19% increase from Q4-2024 levels. (In 2023, estimates for 2024 suggested a 14% increase, which was just 9%. The long-term trend of earnings growth from 1900 to the present is just 7.7%).”

While the bullish predictions for next year are certainly possible, that outcome faces many challenges. This is particularly true given that the market trades at fairly lofty valuations. Even in a “soft landing” environment, earnings should weaken, which makes current valuations at 27x earnings more challenging to sustain. Therefore, assuming earnings decline toward their long-term trend, that would suggest current estimates fall to $220/share by the end of 2025. This substantially changes the outlook for stocks.

Samantha Dart, co-head of global commodities research at Goldman Sachs, said colder-than-average weather across the EU “is a stronger driver” than the halt in Russian NatGas exports via Soviet-era pipelines running through Ukraine, which will, in turn, pressure EU NatGas prices higher. By Friday, EU NatGas prices reached levels not seen in over a year, exceeding 50 EUR/MWh. 

No other country in Northern Europe grinds to a halt like the British state does in reaction to a bit of cold weather. pic.twitter.com/IizvpxuFkv

— Wolf 🐺 (@WorldByWolf) January 3, 2025

“While this week’s key headline in natural gas has been the halt in the residual Russian gas flows through Ukraine, the main tightening driver of NW European gas fundamentals this winter is in our view colder-than-average weather currently forecast for the next two weeks, aided by low wind power and Norwegian production outages observed in December,” Dart said. 

She continued: “If this cold forecast realizes without other offsets, we see significant risks that TTF prices rally towards oil-switching economics in a 63-84 EUR/MWh range in the coming months, well above our 40 EUR/MWh 2025 TTF base case under average weather, to help manage European gas storage.” 

The latest data from Bloomberg shows that EU Natgas storage is 71.8% full at the start of the new year—this is well below the 16-year average of 74.29% for the same point in time. This indicates that increased heating demand and tightening supplies will force the continent to draw down supplies at the quickest rate in four years. 

Here’s more from Dart’s note:

• NW European tightening from Ukraine flow halt modest so far… We estimate that the halt in Russian gas flows from 42 mcm/d to zero from January 1st, which had been our base case and largely market consensus, represents a net tightening to NW Europe gas balances in the order of 16 mcm/d (2.7% of our 2025 expected demand in the region). To be clear, while NW Europe was not receiving any of that gas, we expect Austria to rely on pipeline imports from Germany to cover its gas demand1 and potentially additional marginal flows to complement Slovakia’s needs. Preliminary data for January 1st show German gas exports to Austria up by 9 mcm/d on the day.

• …especially when compared to significantly colder-than-average weather forecasts. A more significant and surprising tightening driver of January gas balances are the much-colder-than-average temperatures currently forecast for NW Europe for the next two weeks, over 4°C below the ten-year average. If realized, we estimate such low temperatures would lift NW European gas demand by more than 100 mcm/d in January.

• Stock-out risks are low, but storage refill, a challenge. To be clear, we see risks of an inventory stock-out as very low, even under such a cold weather forecast. The main challenge for Europe is that the lower that end-March storage levels are, the harder it will be for the region to refill ahead of the next winter. Specifically, under the colder-than-average scenario that is currently forecast, and assuming no offsets elsewhere in the balance, we would estimate end-Mar25 inventory levels to drop to 30% full (vs 35% under average weather). This would imply end-Oct25 storage levels in the low 80s% (vs high 80s% under average weather), well below the 90% full EU requirement. More specifically, we estimate this scenario would create a 21 mcm/d deficit in the market during the 2025 summer (relative to the 90% full EU storage target).

• G2O switching and LNG can solve 2025 tightness – at a price. Given European gas prices are already fully above hard coal generation costs, the next source of demand substitution is gas-to-oil (G2O) switching, in a 60 EUR/MWh (fuel oil) to 78 EUR/MWh (distillate fuel) range. During Europe’s energy crisis in 2022, we estimate G2O switching in industrial applications peaked at 24 mcm/d. In this higher TTF scenario we would also expect incremental LNG to be delivered to Europe (competed away from Asia). In addition to further changes to the European weather forecast, key drivers to watch from here include NE Asia weather forecasts and the ramp of the upcoming US liquefaction capacity additions. Venture Global’s Plaquemines recently exported its first commissioning cargo, while cargo loadings have remained unchanged so far at Cheniere’s Corpus Christi facility, which is undergoing a capacity expansion starting in early 2025.

Higher energy prices in the EU, particularly in Germany—the continent’s economic powerhouse—add to the continued headwinds crushing the country’s all-important automotive industry into a devastating downturn. 

On the bright side, at least for the US, the EU will be forced to replace Russian LNG with US LNG during the Trump 2.0 era. Dart noted last month that this is “theoretically” possible.

Authored by Andrew Korybko via Substack,

Russian Energy Minister Alexander Novak shared an update on the proposed Russian gas pipeline to China through Kazakhstan, which was analyzed here in November, shortly before the start of the year. He confirmed that “This process, so to speak, is underway. Estimates, the feasibility study and negotiations are now underway.”

This statement shouldn’t be misinterpreted as assuming that the project is a done deal like RT implied in its report, however, since it’s more of a message to the US at this point.

The previously mentioned analysis cited last summer’s about the continued Sino-Russo pricing dispute over the Power of Siberia II (POS2) pipeline, which boils down to China demanding bargain-basement prices (reportedly equivalent to Russia’s domestic ones) while Russia obviously wants something better. This impasse hasn’t yet been resolved, and while some like Asia Times’ Yong Jian consider the trans-Kazakh proposal to be an agreed-upon rerouting of POS2, that’s arguably a premature conclusion.

Pricing disputes still exist and the “process” that Novak described has only begun. It’s far from finalized and might still take a while to be completed, if ever, as suggested by the POS2 and Pakistan Stream Gas Pipeline precedents. The first, which was earlier known as the “Altai Pipeline” before the decision to reroute it via Mongolia, has been discussed for a full decade already with no deal in sight. The same goes for the second, which was first agreed upon in 2015, but no progress has been made since then either.

Amidst the latest talk of the Russia-Kazakhstan-China (“RuKazChi”) gas pipeline, Russia’s last direct gas pipeline to Europe was just shut down after Ukraine’s decision to let their five-year transit agreement lapse. Russia can still indirectly export gas to Europe via TurkStream, and Europe can always compensate for this long-foreseen loss of 5% of its gas import total via more Russian LNG, but the writing is on the wall that the EU will continue diversifying from Russia under American pressure.

In that event, Russia’s lost budgetary revenue from energy exports to Europe can only realistically be replaced by China, but Russia is still reluctant to agree to the bargain-basement prices that China is reportedly demanding. Its decisionmakers’ thought processes can only be speculated upon given the opacity and sensitivity of these talks, but this might reasonably be due to the expectation that the US’ more muscular containment of China could coerce Beijing into agreeing to better prices with time.

Another possibility, which isn’t mutually exclusive at this point at least, is that they might also be holding out hope that some of their European exports could one day be resumed seeing as how the infrastructure still exists but their partners made a US-pressured political decision to cut off imports. The best-case scenario from their perspective would therefore be that China agrees to prices closer to the market rate while the EU resumes some of their Russian gas imports after the special operation ends.

The reality though is that Russia is unlikely to have its cake and eat it too, and there’s no guarantee that either of its two main gas partners – the EU and China – will behave as expected even at a later date. The EU won’t resume any pipeline imports unless it receives approval from the US while China is known to operate on a much longer timeframe than most so it might hold off on clinching a deal indefinitely until Russia finally accepts its bargain-basement price demands. This places Russia in a very bad position.

Unless something changes, Russia might very well be coerced by the unfortunate circumstances in which it finds itself into agreeing to China’s reported proposal to sell it gas at domestic prices, which could turbocharge China’s superpower rise while placing Russia in a greater position of dependence.

That might be preferred by Russian decisionmakers over sitting on these reserves indefinitely without receiving any financial benefit from them as sanctions start to create fiscal and monetary challenges.

From the US’ perspective, it’s worse for Russia to turbocharge China’s superpower rise and enter into a relationship of greater dependence with it that could be exploited by China to procure other resources at equally cheap rates than to allow the partial resumption of Russian exports to Europe. At the same time, such resumptions couldn’t be approved until after the Ukrainian Conflict ends, and this would be politically impossible in any case unless the US could spin the outcome as a victory of sorts over Russia.

Likewise, Russia couldn’t agree to this arrangement unless it too was able to spin the outcome as a victory, especially if the informal terms include a commitment not to build any new pipelines to China in exchange for the abovementioned proposed resumption overcompensating for that lost revenue. Therein lies the need for creative diplomacy of the kind suggested here last month and here the other day, the insight of which will now be blended, summarized, and built upon for the reader’s convenience.

The gist is that the US and Russia could agree to a series of mutual compromises culminating in the partial restoration of an energy bridge between Russia and the West for the purpose of depriving China of its envisaged decades-long access to ultra-cheap Russian resources for fueling its superpower rise. No one should assume that everything proposed below will enter into force, but these suggestions could help move their talks along.

From the US’ side, its possible compromises could take the form of:

* Ukraine finally holding elections as part of a US-backed “phased leadership transition” against Zelensky, who’s the top obstacle to a lasting peace, and then legitimizing the following two agreements;

* Ukraine restoring its constitutional neutrality in order to exclude itself from ever joining NATO and thus resolving the core security concern that provoked Russia’s special operation;

* Ukraine demilitarizing and denazifying everything east of the Dnieper in what had for centuries been Russia’s traditional “sphere of influence” (everything west had traditionally been under Polish influence);

* The US terminating its bilateral security agreement with Ukraine in order to assure Russia that any cessation of hostilities wouldn’t be a ruse for rearming Ukraine and reigniting the conflict at a later date;

* The US agreeing that no Western peacekeepers will deploy along the DMZ between Russia and Ukraine east of the Dnieper (all parties might agree to an entirely non-Western peacekeeping mission though);

* The US also agreeing that Article 5 won’t apply to any Western country whose uniformed troops in Ukraine, which would be unilaterally deployed there in this scenario, come under attack by Russia;

* The US approving the EU’s partial resumption of Russian gas pipeline imports in order to buoy the bloc’s struggling economy via an influx of low-cost fuel (but higher-priced than what China demands);

* The US and EU returning some of Russia’s seized assets as “compensation” for the West retaining control over the European portion of its pipelines;

* The US lifting its sanctions on the Russian-EU energy trade, including Russia’s use of SWIFT, and expanding this to include more countries and spheres as a reward for keeping the peace with Ukraine;

* The US waiving sanctions on Russia’s Arctic LNG 2 project for itself, the EU, India, and Japan so that they can replace lost Chinese investment and ensure that they receive this gas instead of China;

* The US replicating the preceding policy on a case-by-case basis to squeeze out and ultimately replace all Chinese investment in Russian energy projects to preclude the possibility of more future exports to it;

* and the US building upon the trust that it hopes to regain with Russia through these compromises to resume frozen strategic arms control talks on a priority basis before the expiry of the New START in 2026.

From Russia’s side, its own compromises could take the form of:

* Agreeing to only the partial demilitarization and denazification of Ukraine west of the Dnieper (ideally with the first influenced by the Istanbul Agreement while the second might remain superficial);

* Limiting its control of Ukrainian-claimed lands to only Crimea and those four regions that voted to join Russia in September 2022’s referenda;

* Tacitly accepting that it won’t be able to assert control over the parts of Kherson and Zaporozhye Regions west of the Dnieper but nevertheless continuing to officially maintain such claims;

* Agreeing to limited military restrictions on its side of the DMZ as a trust-building measure for furthering the rest of the complicated negotiation process and then complying with these terms;

* Informally agreeing to prioritize the development of its Arctic and Pacific fleets over its Baltic and Black Sea ones in a tacit cession of influence to NATO that soberly reflects the current military realities;

* Formally acknowledging the loss of control over the EU and Ukrainian portions of its pipeline infrastructure (ideally in exchange for “compensation”, including the return of some of its seized assets);

* Tacitly accepting that the rest of its seized assets are lost, but possibly agreeing that they can be invested in rebuilding Ukraine and/or Syria or donated to the UN, perhaps to fund a new African project;

* Informally agreeing not to build new pipelines to China or expand energy exports to it so long as sanctions-waived energy investments from and exports to others overcompensate for that lost revenue;

* Unofficially preferring sanctions-waived investment from others (America, Europe, India, Japan, South Korea) in its resource-rich Arctic and Far East regions as opposed to that from China;

* Doing the same with regard to preferring tech imports from them (and Taiwan too, which was Russia’s main source of high-precision machine tools a year ago);

* Tacitly accepting that these sanctions waivers can be rescinded in an instant if Russia reneges on the Ukrainian or Chinese terms of this proposed grand deal;

* and negotiating with the US in good faith on strategic arms control, which could ultimately include restoring limits on intermediate-range missiles in Europe that lead to warehousing the mighty Oreshniks.

For as politically difficult as these compromises might be for each side, the US could spin them as having stopped Russia from controlling all of Ukraine and thus preventing it from planting its boots on the Polish border, while Russia could spin them as having stopped Ukraine from joining NATO and thus preventing that bloc from planting their boots on its exposed western border. Moreover, Russia would relieve pressure upon it in Europe, while the US Navy would control the bulk of China’s energy imports.

The key to this is the US offering Russia a decent deal in Ukraine with lucrative sanctions-waived energy and tech opportunities that would incentivize Russia into informally agreeing to deprive China of decades-long access to ultra-cheap resources for fueling its superpower rise at the US’ expense. This grand deal is Trump’s to lose, and the world will know that he fumbled it if Russia makes progress on new pipelines to China, which could accompany or be followed by him “escalating to de-escalate”.

It’s Bitcoin’s birthday: The very first Bitcoin block was mined 16 years ago today.

Bitcoin’s first block was mined on January 3, 2009.

Known as the “Genesis Block,” Decrypt reports that Bitcoin’s pseudonymous creator Satoshi Nakamoto minted 50 BTC into existence with the move. 

Since then, 877,665 blocks have been mined and added to the network’s long ledger. On a blockchain, blocks contain data on transactions.

Only miners can add data to the network, and the difficulty level helps prevent unauthorized additions or edits to the chain, as it would take an incredible amount of computational power to take over the network.

And the network is stronger than ever, with mining difficulty reaching a new all-time high mark as the biggest cryptocurrency rides into the new year.

As CoinTelegraph’s Alex O’Donnell reports, Bitcoin’s hashrate – the total computing power securing the Bitcoin network – reached a new all-time high on Jan. 3 of over 1,000 exahashes per second (EH/s), according to data from CoinWarz. 

Source: CoinWarz

That is nearly double the network’s hashrate 12 months ago. According to CoinWarz, Bitcoin’s hashrate hovered around 510 EH/s in January 2024. At the time of this article’s publication, Bitcoin’s hashrate had retraced to approximately 780 EH/s. 

The network’s rising hashrate indicates Bitcoin miners are devoting more computational resources to the blockchain, thus improving the network’s security. 

Miners are continuing to expand production even after Bitcoin’s April halving reduced mining rewards from 6.25 BTC to 3.125 BTC per block.

Source: CoinWarz

Overcoming headwinds

In 2024, Bitcoin’s strong performance partially offset headwinds from the halving, especially for cash-heavy mining companies like Riot Platforms and CleanSpark.

Mining firms “acquired other miners with turn-key facilities to increase near-term hashrate and increase their power pipeline,” JPMorgan said in a Dec. 10 research note shared with Cointelegraph. 

Miners have also prioritized accumulating BTC on balance sheets. In December, JPMorgan raised price targets for four Bitcoin mining stocks to reflect value from the miners’ electrical power assets and BTC holdings, JPMorgan said.

JPMorgan cited the stock performance of MicroStrategy, a software company turned de facto Bitcoin fund, which traded at a roughly 2.4x multiple to the value of its BTC treasury as of Dec. 10.

Bitcoin miners, including Marathon, Riot and CleanSpark, hold BTC treasuries worth approximately $4.4 billion, $1.7 billion and $910 million, respectively, according to the BitcoinTreasuries.net data service.

Source: Bitcointreasuries.net

Institutional inflows

Bitcoin’s rising hashrate — and the resultant improvement in network security — is especially important as institutional investors pour capital into BTC exchange-traded funds and other regulated cryptocurrency investment vehicles.

In November, Bitcoin ETFs broke $100 billion in net assets for the first time, according to data from Bloomberg Intelligence.

Asset manager Sygnum expects this dynamic to accelerate in 2025 as large institutional investors, including sovereign wealth funds, endowments, and pension funds, add Bitcoin allocations.

“With improving US regulatory clarity and the potential for Bitcoin to be recognized as a central bank reserve asset, 2025 could mark steep acceleration for institutional participation in crypto assets,” Martin Burgherr, Sygnum’s chief clients officer, said in a statement.

However, BlackRock’s iShares Bitcoin Trust (IBIT) spot Bitcoin exchange-traded fund (ETF) just saw record-high outflows on Jan. 2.

Isaac Joshua – the CEO of token launch platform Gems – also told Decrypt yesterday that the recent downturn “can largely be attributed to end-of-year tax-loss harvesting by investors,” he explained.

Founder of Obchakevich Research Alex Obchakevich told Decrypt that “the main reason for the outflow is profit-taking by investors in early 2025.”

“At the end of the year, investors and funds often review their investment portfolios, which can lead to the sale of some shares,” he explained.

Though, bear in mind, IBIT surpassed $50 billion in assets under management just 228 days after its launch – more than five times faster than any other ETF in history.

Authored by John Tamny via RealClearMarkets.com,

Andy Kessler writes in his latest Wall Street Journal column that the U.S. “is strong precisely because we don’t all think the same way. New ideas come from new ways of thinking.” Kessler puts it so well. We individuals generally see the present and future very differently, and it’s this very division praised by Kessler that powers so much advance.

The entertainment industry explains the business meaning of Kessler’s thinking well. Chevy Chase was offered the role of Otter in Animal House, but chose Foul Play instead. Donald Sutherland was offered $20,000 plus gross points in Animal House, but instead held out for $35,000 minus the points given his deep belief that the small movie wouldn’t generate much box office.

Chase and Sutherland’s errant business choices remind us that the good and great decisions are rarely obvious at the time. The previous truth would in a better world awaken the political class to how wrongheaded its actions vis-à-vis TikTok are. Implicit in their attacks and their legislative role in a TikTok ban is that TikTok’s alleged CCP-generated popularity will be used to spy on Americans with an eye on bringing the CCP’s authoritarian ways to the United States.

More realistically, data on Americans is the most valuable in the world, and it’s already sold around the world for exactly that reason.

Which is a reminder that data on the American people already existed (and will exist) in abundance with or without TikTok, and it will be sold around the world (including to producers, politicians, or both in China) with or without TikTok.

At the same time, the desire among the world’s producers to know about us Americans is something to celebrate, not legislate against: they want to know about us because we’re the most productive people on earth. The better they understand us, the better their ability to meet and lead our needs.

What’s important is that the prosperity of the American people is, per Kessler, borne of freedom; of Americans disagreeing about everything and getting to vivify their discordant viewpoints in the marketplace. Economic progress is the happy end result of disagreements expressed. We generally describe those who express disagreements via the profit motive as entrepreneurs.

Bringing the genius of disagreement back to TikTok, protectionist U.S. politicians shouldn’t seek a ban, rather they should allow commerce in the U.S. to freely run its course. And they should do so confidently based on what happens every day in the United States.

What we routinely see in our dynamic markets is that the giants always stumble, and they do because per George Will, tomorrow is another century. Particularly in business, the present is a really lousy predictor of the future. Tim Matheson eagerly coveted the role of Otter that Chase turned down, but as he explains in his excellent new memoir, Damn Glad to Meet You (review forthcoming), “going into a project, you rarely know” if it will be a hit or a box office dud.

The main thing is that disagreement about what will meet and lead the needs of the consumer is what puts the past and present out to pasture, not protectionism.

Protectionism is about limiting and disfiguring the choices of people, not allowing an endless debate within the marketplace to sort out what the future will look like.

At present, U.S. politicians and the courts are in the process of using force to vanquish a U.S.-owned competitor in TikTok that had the temerity to discover the needs of American consumers in ways the competition hadn’t.

How dangerous to use force to suffocate this market signal. Better to rely on freedom.

Authored by Patrick Drennan via RealClearDefense,

Drone boats, drone planes, trolly drones, drone traffic lights and more…

The 2024 word of the year was controversially proposed as either Brat (Collins dictionary), Polarization (Miriam Webster dictionary), or Brain-Rot (Oxford University Press) – however no word has more impact on the modern psych than the word Drone.

The weird and extravagant reactions to drones spotted in the night sky of New Jersey recently reflects that fascination. One member of Congress speculated that they came from outer space.

From drones that can soar through the stratosphere, to rotor drones that hover a few feet above the ground, and submersible drones that glide 50 feet underwater, drones have transformed our lives and modern warfare.

Their impact mainly comes from daily news and internet video images of war footage – particularly the fiery, innovative, and futuristic use of drones in Ukraine.

Cost effective FPV (First Person View), and kamikaze drones excel in reconnaissance, artillery spotting, and direct strikes, proving highly effective at targeting enemy positions…but they have been upgraded for much more than that –

Sea Drones

Ukraine use their Magura V5 and Sea Baby drones to sink Russian barges, attack oil rigs and devastatingly, sink billion-dollar Russian warships.  In February 2024, a video depicted a Ukraine sea drone sinking a Russian battleship. Later, Ukraine used a sea drone with a mounted remote-controlled machine gun to shoot at Russia helicopters. The Russians called in jet fighters to sink these drones, but it is only a matter of time when the sea drones will be mounted with MANPAD ground-to-air missiles.

Trolly Drones

The Palianytsia drone is actually a converted heavy missile powered by a turbojet engine and guided by GPS. It motors down a runway on a wheeled trolley, abandoning the trolley as it gains lift. 

Plane Drones

The Ukrainians have adapted small kitset sports planes into combat drones – flying them by remote control, loaded with explosives. They extend the range of normal drones and increase the payload. On December 15, a video was released showing a Aeroprakt A-22 Foxbat drone aircraft damaging a Chechen/Russian military facility 500 miles from the Ukrainian border.

Drone Swarms

Both sides in the Russian/Ukraine conflict use cheap plastic, polystyrene and wooden drone swarms to confuse and confound sophisticated radar systems, like the Russian TombStone system. The drones are often used in conjunction with more sophisticated drones and ballistic missiles. The Russians combine swarms of Iranian HESA Shahed 136 drones with Kalibr cruise missiles, and 9K720 Iskander ballistic missiles to attack Ukrainian infrastructure and civilians.

Both sides effectively use electronic jamming equipment to counter drones. In response both sides are increasingly reverting to algorithm trained drones that fly by visual navigation without ground signals. Ukraine also cheekily diverted some attacking drones into the territory of Russian ally Belarus.

Drones Operated by Long Fiber Cables

In response Russia developed drones that were operated by attached thin fiber-optic cables that were over 6 miles long. With no radio signal the drone was impossible to detect, and impossible to jam. However, when former U.S. Marine Troy Smothers saw this, he built similar drones for Ukraine with an incredible range of 15 miles.

Ground Combat Drones

Robot ground drones are being used for a variety of purposes including delivering equipment such as landmines, and astonishingly Ukraine has developed a tracked drone armed with a Browning 12.7 mm machine gun – the Droid TW 12.7. It has a range of eight miles and is also equipped with hi-tech cameras for reconnaissance. They are limited in number but have great potential.

Drone Traffic Lights

A telegram user posted a video of a Russian military traffic light system. It flashes a yellow light when a distant hostile drone is detected. The light turns red when there is a high-level threat, and green when there are no nearby threats at all.

Drone Detection From Space

The Chairperson of the Russian Center for Unmanned Systems,  Andrei Bezrukov claimed on December 14 that the center developed the “Kalinka” monitoring system to detect drones that connect to satellite systems, including Starlink. Bezrukov claimed that the system can detect Ukrainian aerial and maritime drones up to 10 miles away.

Specialized Military Drone Branches

Ukraine and Russia have both established large, dedicated military drone branches.

Ukrainian President Volodymyr Zelensky ordered  the establishment of a separate branch within the Ukrainian Armed Forces on February 6, 2024, called the Unmanned System Forces (USF). The USF is responsible for interactions with already existing unmanned systems units and with supporting these units. The USF is also responsible for supplying units with drones, training specialists, planning military operations involving unmanned systems, and cooperating with domestic unmanned systems manufacturers.

In response the Russian Ministry of Defense (MoD) launched a coordinated effort in August 2024 to create a centralized separate branch for unmanned systems, likely to reorganize informal specialized drone detachments and centralize procurement of unmanned systems. The Russian MoD is mainly trying to consolidate the state’s control over Russian drone operators and developers, some of whom had enjoyed relative semi-independence from the Russian military bureaucracy.D

While Russia seeks centralized control, Western armies are offering different tactics. Every British and American army platoon will now have a drone operator. The 75th Ranger Regiment at Fort Benning is being trained in using the RQ-28A short-range reconnaissance (SRR) quadcopter drone.  “The SRR RQ-28A capability will provide game-changing technology to Army platoons, enhancing both soldier lethality and survivability,” said Carson L. Wakefield.

Peaceful Drones 

Drones have incredible value in the civilian world. They assist in humanitarian and disaster response, engineering, construction, crop monitoring, weather forecasting, and search and rescue. They even have drones that can clean high-rise windows.

Despite all the remarkable innovations above, drones are not as destructively effective on the battlefield as artillery, missiles and landmines. However, drones are what captures the public imagination. Now imagine drones that are not operated by humans at all, but by AI programmed robots. Are you ready for that?

Patrick Drennan is a journalist based in New Zealand, with a degree in American history and economics.

Authored by Ana Paula Pereira via CoinTelegraph.com,

The year 2024 will be remembered as a landmark chapter in crypto history. From surging mainstream demand for Bitcoin-regulated financial products to an expected crypto-friendly White House, the Web3 industry has made significant strides despite facing notable challenges along the way.

With its resilience finally paying off, the industry is now setting its sights on another promising year as hopes for regulatory clarity converge with years of innovation and development.

Experts are closely watching emerging trends poised to not only redefine the crypto landscape but also affect the world as a whole. To explore what lies ahead, Cointelegraph has compiled a list of key crypto trends expected to take center stage in the months to come.

RWAs: The use case to watch in 2025

If you have never heard about it, make a note of this word: tokenization. It refers to the art of turning traditional assets into tokens, making them tradable, even in small fractions. 

Developers, investors and companies from a range of industries were enraptured by the tokenization of real-world assets (RWAs) fever in 2024, as it unlocks liquidity for traditionally nonliquid assets, such as real estate, and allows people around the world to access investments not always accessible to small investors. 

“RWAs are the use case to watch in 2025. The value of tokenized assets will double in the year,” predicts Sergey Gorbunov, CEO of Interop Labs and co-founder of Axelar Network. 

Gorbunov’s view is followed by venture capital firm a16z. In its annual report on trends in the crypto and blockchain industry, the VC said that “tokenizing unconventional assets could redefine income generation in the digital age.”

According to data from RWA.xyz, the total value of tokenized assets now stands at nearly $13.9 billion, a 67% jump from $8.3 billion in January.

Real-world assets onchain are now worth over $13.8 billion. Source: RWA.xyz

Financial institutions are now looking at risk frameworks for tokenized assets. In other words, they want to ensure compliance with legal requirements, security risks and market volatility issues are addressed. According to Gurbunov:

“Multiple major financial institutions will develop the risk frameworks needed to issue RWAs that can move across interconnected, public blockchains.”

ID checks by AI agents

Several protocols have been working on ways to provide ID verification onchain over the past few years. 

One of the advancements in this field is undoubtedly the emergence of zero-knowledge (ZK) proofs, a technology that allows a human to prove themselves without revealing any personal information. Startups developing this technology include Worldcoin, ONCHAINID and RisedID, to name a few. 

Moving forward, onchain biometric verification is expected to be increasingly powered by artificial intelligence. In other words, you will be checked for your identity autonomously onchain by an AI. This may sound like something out of a sci-fi movie, but it’s just an example of AI and blockchain coming together.

“We expect to see automated biometrics and/or government ID checks become the norm, not the exception,” said Civic CEO Chris Hart. He continued: 

“As AI agents increasingly act on behalf of users, robust identity verification and authorization frameworks will be crucial for controlling what these agents can do and for how long — especially in financial transactions.”

DePINs to take off

Community-driven energy services, online storage and internet connectivity are already a reality through decentralized physical infrastructure networks, or DePINs. 

DePINs allow users to become stakeholders in the network, meaning they can own a piece of the infrastructure they use, thus creating new opportunities for financial inclusion.

Borderless Capital, a venture firm pouring millions of dollars into DePIN protocols, claims the sector holds “the most compelling opportunity” in Web3.

“It is the only Web3 vertical generating revenue and fundamentals with zero correlation to the crypto market, delivering real-world value,” Álvaro Gracia, partner at Borderless, told Cointelegraph.

According to data aggregated by DePIN.Ninja, the market capitalization of DePIN protocols has exceeded $50 billion.

More yields from Bitcoin

Finally, it is impossible to discuss 2025 without mentioning Bitcoin. Once a discredited asset, Bitcoin has made significant strides over the past decade, earning adoption within Wall Street and solidifying its position in the financial landscape.

While developers still struggle with possible upgrades to a network that now has more stakeholders than ever before, startups are exploring alternative ways to unlock yield generation for holders.

“This is the natural need for holders, including the retail and institution. This is the native demand for holders,” said Kevin He of Bitlayer, a Bitcoin layer-2 protocol backed by asset manager firm Franklin Templeton.

According to He, not only investors but also large holders of BTC, such as MicroStrategy, are looking for additional sources of revenue through the fusion of Bitcoin and decentralized finance. 

According to He, Bitcoiners could soon generate annual returns of up to 40% on their holdings.

Authored by Irina Slav via Oilprice.com

• Focus on China’s oil demand, predicted to peak in 2025 or 2027, is expected to keep a lid on oil prices next year.

• Supply disruptions from OPEC+ or renewed sanctions on Iran could challenge price stability in 2025.

• India’s rising oil demand and potential for a supply glut are other factors to consider in the 2025 oil price outlook.

This year in oil has been marked by chronic trader pessimism about Chinese demand and an equally chronic downplaying of supply disruption risks. This has made for a rather stable year in prices—and the stability could continue in 2025, on a few conditions.

Brent crude and West Texas Intermediate appear set to end the year at nearly the same levels that they started. WTI started 2024 at a little over $70 per barrel and is about to end a little below that. Brent crude looks like it will post a little more noticeable loss, starting the year at $77 per barrel and ending at a bit over $74 at the time of writing.

The biggest reason for this somewhat unnatural stability in oil prices has been the focus on China. Every single report on oil prices this year has featured Chinese economic data or oil import figures in its lead. This is set to continue in 2025 amid a flurry of reports predicting peak oil demand growth for the world’s biggest importer.

China’s very own state oil giants are saying it. CNPC said earlier this month that it expected demand growth to peak in 2025, moving the peak year from 2030, which was its prediction in 2023. The company cited electric vehicle adoption and LNG truck growth as reasons for its predictions, even though the record share of EVs in total car sales this year has failed to reverse China’s oil demand growth.

Sinopec was next, publishing a report a week ago saying that oil demand growth in China was about to reach its peak in three years in 2027. The peak will occur at a daily demand level of some 16 million barrels or a total of 800 million metric tons, the Chinese state oil major said. A year ago, Sinopec saw Chinese oil demand peaking at around 800 million metric tons sometime between 2026 and 2030. China’s oil demand this year is seen reaching 750 million metric tonnes, according to Sinopec.

So, focus on China and pessimism about its demand has kept a lid on prices this year and is likely to keep that lid in place in 2025 as well—unless all the stimulus that the government in Beijing is throwing at the economy doesn’t spur greater demand for the key commodity. As one analyst from Brokerage Pepperstone put it to the Wall Street Journal, “The apparent calm in the oil market hides a complex interplay of macroeconomic factors that could trigger sharp movements at any moment.”

“Attention is focused on the evolution of macroeconomic data and future OPEC+ decisions, which will determine the market’s direction in the coming months,” Quasar Elisundia told the WSJ. In macroeconomic data, the focus will remain on China but also on India, which is shaping up as the next leading demand driver globally. Indeed, S&P Global Commodity Insights recently forecast that India’s oil demand growth rate was set to exceed China’s this year.

“India will be the leading driver, along with Southeast Asia and other parts of South Asia, of the region’s future oil demand growth,” SPGCI’s global head of macro and oil demand research, Kang Wu, said.

But even weaker growth markets such as the European Union, continue to see growth in oil demand, as suggested by import figures. The latest available, for the second quarter of the year, showed a decline in natural gas imports but a pickup in what the EU categorizes as “petroleum oils”. The EU is not the oil market traders look to for insight into demand trends, but this may be an oversight.

On the supply side, the focus, of course, remains on OPEC+, even as forecasters keep repeating how they expect great production growth things from non-OPEC majors such as the United States, Guyana, Canada, and Brazil. These forecasts have started to moderate with regard to the U.S., however, as the industry gives repeated signs that there will be no drilling at will just because there is a pro-oil president in the White House.

The situation with OPEC+ is quite similar. Forecasters have been making traders nervous and bearish for months, reminding them of all that spare capacity that OPEC could bring back online when it decides to roll back its output cuts. What they’ve consistently forgotten to mention is that OPEC and its OPEC+ partners made it clear from the start of the cuts that output would only be brought back online when prices rose high enough. This basically means that several price routs this year were entirely the result of unrealistic expectations, with zero relation to actual oil fundamentals.

In the current context, fundamentals appear to be largely in balance. Many expect a supply glut next year, but that’s based on assumptions about EV adoption that have consistently tended to disappoint. Trump sanctions on Iran could tighten supply from the Middle East further and lend some upward momentum for prices, but chances are that the idea of that big spare capacity cushion of 5 million bpd or more is going to play the role of a market blowout preventer once again.