Crypto’s 2025 U-turn

0:02Good morning from the Financial Times. Today is Tuesday, November 18th, and this is your FTNeed briefing. The buzz over cryptocurrency is starting to fizzle and HSBC is struggling to fill a key role. Plus, a massive infrastructure project in Saudi Arabia is nearing the end of the line. They found they were going to need like 60 percent of the world's recycled steel every year. They were going to need more cement than France produced every year. It became a very, very difficult project to do. I'm Mark Filippino, and here's the news you need to start your day.

0:38The cryptocurrency industry has been dreaming of a golden era during U.S. President Donald Trump's second term. But some of that luster might be coming off. That's because Bitcoin and other digital currencies have lost all of the gains they've made since Trump's inauguration in January. Here to explain what's going on is George Steer. He's the FT's U.S. markets correspondent. Hi, George. Hello. So what is going on? What's soured sentiment on these digital coins? So the global cryptocurrency market hit a fresh high on October the 6th, when the total value peaked at around$4.2,$4.3 trillion. And then it slipped a little over the next few days.

1:20But the sell-off really intensified on October the 10th, when Trump came out and threatened massive tariffs on China. And that was at a point in time when the market had kind of assumed that the worst of the tariff back and forth had passed. So there was a big sell-off. And that sell-off kind of spilled over into the crypto ecosystem and sparked this huge sell-off for a lot of the kind of mid-tier and lower quality coins, some of which shed like half of their value within 24 hours. And then you add on the fact that the Federal Reserve at the end of October said that a December rate cut might not be a foregone conclusion.

1:55And you have like all of the ingredients for kind of profit taking among some of the more speculative assets that have soared and had soared earlier this year. So just for context, a whopping$1 trillion has been wiped from the board since October 6th. George, what's going on? I thought Trump and the peelback of regulation was supposed to make for ideal conditions for crypto traders. Yeah, we had the Genius Act went through in the summer, which was designed to regulate and kind of legitimize stablecoins, which act as a sort of intermediary. So people who want to buy one token in exchange for another token often have to buy a stablecoin to kind of facilitate that trade.

2:30I think just the kind of it's all about vibes, the crypto market. And so just Trump, who has been very, very pro crypto since his return to office this year, I think him coming in at the beginning of the year sparked this huge rally, not just for Bitcoin, but for a lot of the smaller coins below it, because the Trump administration has reversed a lot of the regulations that the former head of the Securities and Exchange Commission had enacted under Joe Biden. So there's a kind of like a light touch feel to the regulatory environment in the US right now. And that has kind of underwritten some of the surge in the broader market.

3:04George, how are other parts of the market doing? And is this fear that we're seeing in cryptocurrencies bleeding over to equities and bonds? So the S &P 500 has hit almost 40 record highs this year. So it's not doing badly. It's up 15 or 16%. But it's fallen a bit, maybe 2 % in the last two weeks or so. It's always hard to say exactly what has driven this kind of broad sell-off. There were jitters building about some of the valuations attached to some of the huge AI names like NVIDIA, OpenAI. So, you know, there's been a bit of concern about all of the big, big tech stocks that have led the market higher for years and years now.

3:43So as those kind of jitters kind of came to a head, they've taken money out of some of the more speculative bets that have been put on this year. Crypto is almost the most speculative of assets. So it makes sense that while traders have cut their positions in tech and other kind of AI-related names, they've at the same time cut their positions in a lot of the cryptocurrency tokens, which had done very well earlier this year. As you pointed out, crypto is notoriously volatile. And, you know, just to put this all into perspective, Bitcoin is still up like 400 % over the past five years. So with that in mind, what should we be keeping an eye out for as we head into the end of this year?

4:20Well, Bitcoin is now below, at the time that we're recording this, it's around$93 ,000 per token. So it's fallen below 100k for the first time in a while. That kind of threshold was seen as a sort of an important one, psychologically. If Bitcoin falls below another arbitrary threshold, say$90 ,000 per token, it will be interesting to see whether retail investors who are notorious for buying market dips, If they don't pile in, if they don't see this kind of dip as an opportunity to buy, then that could signal there's something fundamental perhaps in risk appetite perspective assets. Maybe something has shifted there.

4:57But it's notoriously hard to call the direction of Bitcoin. It could easily be back up above 120 ,000 by the 1st of January. Who knows? By this time tomorrow. Yeah, exactly. There's no point trying to predict where it could go. George Steers, the FT's U.S. markets correspondent. Thanks, George. Thank you.

5:22HSBC is struggling to figure out who will be the next chair of its board. Mark Tucker stepped down as chair in September after eight years on the job, and it took a lot of people by surprise. Now the bank's leadership is squabbling over qualifications. Specifically, who can satisfy two key parts of the role, financial services experience and deep knowledge of Asia? Sources tell the FT that HSBC leadership is going back to candidates it had discounted earlier. Former UK Chancellor George Osborne is one of them. So is Goldman Sachs executive Kevin Sneader. Those involved in the process say that HSBC kicked this whole thing off too late, and now the bank is playing catch-up with a limited number of candidates.

6:10Saudi Crown Prince Mohammed bin Salman is going to meet with the U.S. President Donald Trump at the White House today. It's part of MBS's long-standing push to open ties with the Western world and open up Saudi Arabia's economy. Now, one of the ways MBS wanted to do that was to build a vast new complex in the desert called Neom. And there would be a ton of stuff, a coastal marina, a desert ski resort, in a city 500 meters tall, 200 meters wide, and 170 kilometers long. It would be called The Line, but the city never materialized. FT reporter Alison Killing has been investigating what went wrong, and she joins me now.

6:50Hi, Alison. Hi, Mark. So, Alison, tell me a little bit more about what MBS wanted with Neom and The Line in the first place. Sure. The idea with Neom was that it was going to be this new kind of free zone in the northwest of Saudi Arabia, where they could attract a load of new investment and a load of new industries. And there was also going to be a lot of people who were going to go and live there, 9 million of them. And the line was the main project within that. And what did it look like? As I described, it was supposed to be massive. What were some of the wildest plans for the city? So the line, it was going to be 170 kilometers long.

7:27And it was divided up into a series of modules, 800 meters long. So they were just going to build three of them in the first phase. And these three modules were going to be pretty spectacular. Some of the concept work for them had been done by a Hollywood set designer. It was going to be organized around this thing called the Hidden Marina. It was going to be big enough for the world's largest cruise ships to visit. And these cruise ships would arrive and And they would sail through this gate in the line that was 300 meters high. And it was going to be the width of the Thames River in London. Yeah, it looks like there's a boat going into the Hoover Dam, right?

8:03It's a wild concept. Yeah, the renders are pretty spectacular. Other things that they showed was like this building that they called the Chandelier, which was like the size of the Eiffel Tower in Paris. And that was going to be hanging from a bridge in this gateway. And then above that, they were going to have a 45 ,000 seat soccer stadium. And that was going to be for the Football World Cup that is being hosted by Saudi Arabia in 2034. So some really pie-in-the-sky ideas, and we'll get to whether or not those were actually feasible in a little bit. But how much is this thing costing the government, and where is it getting the money from?

8:39Well, when Neom was first unveiled, it had a budget of$500 billion. A lot of that was coming from the PIF, which is Saudi Arabia's sovereign wealth fund. And then the idea was that a lot would also come from foreign investors. Since the designs for NEOM, for the different projects have progressed, the costs have really ballooned. I was told that at 2021, that executives were told it was going to cost$1.6 trillion. And then just a few months later, someone estimated that it would cost$4.5 trillion. And I think it was just really difficult to make some of those cost estimates. And the reasons were that the project was just absolutely huge.

9:18And when they came to calculate the number of the amount of materials they needed, for example, they found they were going to need like 60 % of the world's recycled steel every year. They were going to need more cement than France produced every year. And just trying to get all of those quantities made the prices go up. It became a very, very difficult project to do as soon as you started to look into the details of exactly how you were going to do it. So what do things look like for this project now? I mean, we don't know fully what's happening yet. Originally, the first phase of the line was going to be finished by 2030.

9:52That's what Neom announced. They're now talking about it as a generational project that may need more than 100 years to complete. Sorry, did you say 100 years? Yeah, it's a gigantic thing that is going to need decades to complete. But it's unlikely that that will ever happen simply because the project is just too difficult to build. Because it's all contained in a single megastructure, It becomes so complex just to plan anything at all that it becomes very, very difficult to build. The quantities of materials, the cost, all of this means that investors are very reluctant to put money into this.

10:28And all of those things together mean that it's very, very unlikely to happen. Alison Killing is an investigative reporter for the FT. Thanks so much, Alison. Yeah, thank you.

10:42We might be one step closer to seeing the Jeffrey Epstein files. The U.S. House of Representatives will vote on whether to compel the Justice Department to release documents related to the late sex offender. A growing number of Republicans have been signaling their support for the release. And on Sunday, President Trump said he backed making the Epstein files public. That's a U-turn from his previous attempts to keep the documents private. If they're released, it could deliver him a damaging reputational blow. Last week, some files were published which included emails from Epstein that alleged Trump, quote, knew about the girls.

11:17The president posted on social media on Sunday saying, quote, we've got nothing to hide. You can read more on all these stories for free when you click the links on our show notes. This has been your daily FT News briefing. Check back tomorrow for the latest business news.

11:37Thank you.