1. MARKET OBSERVATIONS

NCI Performance (Weekly): The Nasdaq Crypto IndexTM (NCITM) experienced sharp two-way volatility this week. After testing major lows on Monday's flash crash, the index staged a V-shaped recovery, driven by Vanguard's reversal on crypto ETFs and improved liquidity conditions after the Fed ended quantitative tightening.

Yen Carry Trade Unwind Triggers Flash Crash

Japan's 10-year government bond yield surged to 1.84%, its highest level since 2008, strengthening the yen and triggering forced liquidations globally.¹ The NCITM dropped sharply as over $640 million in leveraged positions were liquidated — the worst single-day performance since March.²

Fed Ends QT and Injects Liquidity

The Federal Reserve officially concluded its three-year quantitative tightening program, freezing its balance sheet at $6.57 trillion.³ The NY Fed injected $13.5 billion via repo operations, easing liquidity pressures and providing support for risk assets including NCI constituents.⁴

Vanguard Opens Platform to Crypto ETFs

The world's second-largest asset manager ($11 trillion AUM) reversed its longstanding anti-crypto stance, allowing 50 million brokerage customers to trade Bitcoin, Ethereum, XRP, and Solana ETFs.⁵ The news boosted market sentiment and drove a sharp rebound in the NCITM.

V-Shaped Recovery and Stabilization

The NCITM staged a V-shaped recovery, rebounding over 10% in two days and reclaiming key moving averages.6 Markets began pricing in a ~90% probability of a 25 bps Fed rate cut at the December 9-10 meeting.7 The index closed the week in consolidation with reduced volatility.