Thoughts from Themes: December Doves

Markets head into December minding shifting Fed expectations, a recovering crypto landscape, and the usual year-end market patterns. A big driver of sentiment is the growing speculation around who will succeed Jerome Powell in 2026, a debate that matters less for who is chosen than for what the front runners share: a clear lean toward easier policy. That dovish tilt is already shaping market behavior, from equity futures to rate-cut probabilities.

Crypto’s response has been just as telling. Bitcoin has recouped much of its November slide, supported by improving on-chain data and steady institutional inflows, suggesting the downturn functioned more as a reset than a breakdown.

Layer in December’s thinner liquidity and an important Fed meeting ahead, and markets enter the final month of the year with momentum building but conviction still fragile. How these forces converge could define early 2026 positioning.

Macro Minute

As December 2025 unfolds, financial markets brace for a cocktail of seasonal quirks and macro catalysts, amplified by holiday slowdowns. With NYSE and Nasdaq closing fully on Christmas Day (Dec. 25) and early at 1 p.m. ET on Christmas Eve (Dec. 24). Trading volumes are poised to thin dramatically, historically dipping 20-30% in late December, as wall street traders trade their bro-vests for bathing suits and head to warmer climates down south. Heightened volatility from even modest flows and liquidity crunches could exaggerate moves.

Equities eye the perennial “Santa Claus Rally,” the last seven trading days of December plus first two of January—averaging 1.3% S&P 500 gains since 1950, fueled by year-end tax selling (peaking mid-month) and portfolio rebalancing.  November’s 3% S&P dip sets up potential rebounds, but thin crowds may mute conviction. The Fed’s December meeting looms largest, with the CME

FedWatch prices an 83% shot at a 25-bps cut to 3.75-4%, signaling easing amid 3% inflation, potentially lifting risk assets post-announcement.

Crypto’s Bitcoin, nursing November’s 17% bleed to ~$91,500, faces dual-edged seasonality: tax-loss harvesting pressures through mid-month could drag toward

$80K support, but historical Q4 upside (e.g., +50% in 2024) and dovish Fed bets hint at a “Santa” surge to $100K-$110K by year-end. Holiday gifting trends—Bitcoin wallets and merch—may inject retail inflows, though low volumes risk whipsaws.

Broader tailwinds include Trump-era tariff talks boosting industrials and crypto-friendly policies, but risks like government shutdown echoes or inflation surprises could sour sentiment. Overall, December tilts bullish for patient traders: low rates and FOMO could trump festive fog, targeting equity highs and a Bitcoin rebound, barring liquidity traps.

Potential After Powell

People have become obsessed with prediction markets and probabilities of future life events, so much so that the speculation becomes more important than the eventuality of the event. Regarding the speculation around who will be the next Federal Reserve Chairman, it truly doesn't matter; all the final candidates share the viewpoint that current policies are too restrictive and that rates need to be reduced to neutral and beyond.

That said, speculation has recently intensified that Kevin Hassett, President-elect Donald Trump’s Director of the National Economic Council, is the leading candidate to replace Jerome Powell as Federal Reserve Chair when Powell’s term ends in May 2026. Reports from Bloomberg and The New York Times indicate Hassett has surged ahead of other contenders like Fed Governors Christopher Waller and Michelle Bowman, with prediction markets like Polymarket assigning a 57% probability to his nomination. This buzz stems from Trump’s desire for a Fed leader more aligned with his aggressive economic agenda, including rapid rate cuts to fuel growth amid proposed tariffs and deregulation.

Hassett, 63, is a veteran economist with deep Republican ties. A former senior Federal Reserve economist in the 1980s, he chaired Trump’s Council of Economic

Advisers from 2017 to 2019, where he championed tax cuts and supply-side policies. Post-White House, he served as a distinguished fellow at the Hoover

Institution and American Enterprise Institute, authoring works on capital taxation and energy economics. Known for his intellectual rigor, Hassett’s career includes

advisory roles for Mitt Romney and George W. Bush, blending traditional GOP fiscal conservatism with pragmatic populism.   

His policy stance is decidedly dovish, prioritizing low interest rates to stimulate expansion over inflation vigilance. Hassett has publicly advocated for deeper cuts, echoing Trump’s criticisms of Powell’s “high rate” approach as a drag on growth. He views monetary easing as essential for countering trade disruptions, even at the risk of overheating the economy – a shift from his earlier balanced views on entitlements and taxes. Notably crypto-friendly, Hassett holds over $1 million in Coinbase stock and co-chairs the White House’s digital assets working group, signaling potential openness to integrating blockchain into policy.

Financial markets are reacting with cautious optimism to Hassett’s rise, interpreting it as a green light for looser policy. U.S. equity futures climbed 0.5% on November 26, buoyed by bets on accelerated rate reductions, now at 83% for a December quarter-point cut and Bitcoin surged above 90K with analysts eyeing $200,000 potential under dovish leadership.  Critics warn of politicization risks, but for now, markets bet on a “Trump put” boosting risk assets into 2026.

Bitcoin Bounces Back

People continue to ask whether Bitcoin is heading to new highs. My answer is unequivocally YES; I believe it’s just a matter of time.

Bitcoin has clawed back from a brutal November correction, surging 12% from its cycle low of $80,822 to hover around $90,954 at the time of this writing. The downturn erased over 33% from its October peak of $126,000, triggered by a “perfect storm” of factors including leveraged liquidations exceeding $1.85 billion, a confirmed “death cross” on November 16 (50-day MA dipping below 200-day), and broader market jitters over Fed rate decisions and AI hype fatigue. Extreme fear

gauges hit multi-month lows, with the crypto market cap shedding $500 billion in days, far outpacing the S&P 500’s mild 3% dip.

Yet, mounting evidence suggests the correction has run its course. On-chain metrics show capitulation exhaustion—long-term holders accumulated 50,000 BTC during the dip—while relative strength in altcoins like ZEC (up 1,000%) and

RWA tokens signals capital rotation rather than exodus. Institutional inflows persist, with SOL ETFs netting $70 million daily, underscoring a “maturing” market shaking out weak hands. Bears counter with cycle fatigue claims, but historical patterns of 25% drawdowns are “normal” mid-bull, favoring bulls.

Looking ahead, prospects for a fresh ATH gleam brightly. Analysts forecast a rally to $120,000–$130,000 in early 2026, fueled by a more dovish Federal Reserve Chair and potential Fed cuts. Short-term, $95,000 resistance looms amid policy uncertainty, but a December relief bounce could test the psychologically important $100,000 mark. This downturn in Bitcoin was never the bull run end; it was more like a wildfire clearing debris for taller trees to grow. With structure intact and seasonality bullish, Bitcoin’s eyeing $150,000 plus in 2026, provided we get a macro wind and easy monetary policy.

This Week’s Major US Economic Reports & Speakers

Monday, December 1

9:45 AM S&P final US manufacturing PMI

10:00 AM ISM manufacturing

8:00 PM Fed Chair Jerome Powell speaks

Tuesday, December 2

10:00 AM Fed Vice Chair for Supervision Michelle Bowman speaks

TBA Auto sales

Wednesday, December 3

8:15 AM ADP employment

8:30 AM Import price index (delayed report)

8:30 AM Import price index minus fuel

9:45 AM S&P final US services PMI

10:00 AM ISM services

Thursday, December 4

8:30 AM Initial jobless claims

8:30 AM US trade deficit

12:00 PM Fed Vice Chair for Supervision Michelle Bowman speaks

Friday, December 5

8:30 AM Personal income (delayed report)

8:30 AM Personal spending (delayed report)

8:30 AM PCE index (delayed report)

8:30 AM PCE (year-over-year)

8:30 AM Core PCE (delayed report)

8:30 AM Core PCE (year-over-year)

10:00 AM Consumer sentiment (prelim)

12:00 PM Consumer credit

Disclosures:

All data sourced from Bloomberg as of November 28, 2025, unless otherwise cited.

Views expressed in this newsletter are the current opinion of the author (Paul Marino). The author’s opinions are subject to change without notice. Information contained in this report was received from sources believed to be reliable, but accuracy is not guaranteed. Past performance is not indicative of future results.

Investing always involves risk, and you may incur a profit or loss. No investment strategy can guarantee success.

Themes Management Company LLC serves as an adviser to the Themes ETFs Trust. The funds are distributed by ALPS Distributors, Inc (1290 Broadway, Suite 1000, Denver, Colorado 80203). Themes ETFs are not sponsored, endorsed, issued, sold, or promoted by these entities, nor do these entities make any representations regarding the advisability of investing in the Themes ETFs. Neither ALPS Distributors, Inc, Themes Management Company LLC nor Themes ETFs are affiliated with these entities.

This report is provided for informational purposes only and is not intended to be, and should not be construed as, an offer, solicitation or recommendation with respect to any transaction and should not be treated as legal advice, investment

advice or tax advice. Recipients should not rely upon this information as a substitute for obtaining specific legal or tax advice from their own professional legal or tax advisors. References to specific securities and their issuers are for

illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities. Indices and trademarks are the property of their respective owners. Information is subject to change based on the market or other conditions.

Certain information contained herein has been obtained from third party sources and such information has not been independently verified by Themes. No representation, warranty, or undertaking, expressed or implied, is given to the accuracy or completeness of such information by Themes or any other person. While such sources are believed to be reliable, Themes does not

assume any responsibility for the accuracy or completeness of such information. Themes does not undertake any obligation to update the information contained herein as of any future date.

Certain information contained herein constitutes “forward-looking statements,” which can be identified by the use of forward-looking terminology such as “may,” “will,” “should,” “expect,” “anticipate,” “project,” “estimate,” “intend,” “continue,” or “believe,” or the negatives thereof or other variations thereon or comparable terminology. Due to various risks and uncertainties, actual events, results or actual

performance may differ materially from those reflected or contemplated in such forward-looking statements. Nothing contained herein may be relied upon as a guarantee, promise, assurance or a representation as to the future.

Past Performance: There is no guarantee that the investment objectives will be achieved. Moreover, the past performance is not a guarantee or indicator of future results. Benchmarks: Any indices and other financial benchmarks shown are provided for illustrative purposes only, are unmanaged, reflect reinvestment of income and dividends and do not reflect the impact of advisory fees. Investors cannot invest directly in an index. Comparisons to indexes have limitations because indexes have volatility and other material characteristics that may differ

from a particular hedge fund. For example, a hedge fund may typically hold substantially fewer securities than are contained in an index.

The S&P 500® index includes 500 leading companies and covers approximately 80% of available market capitalization.