The virtual currency market, along with various global risk assets, showed signs of weakness as investors held back on spending in anticipation of important economic indicators from the United States. This situation seems to be extending the economic downturn observed in December, which has been marked by reduced liquidity and a general sense of caution throughout the market.
Bitcoin recently dropped to around $85,800 during Asian trading, marking a decline of over 4% in just a week, as the selling pressure affected many major tokens. Ether also took a hit, falling to approximately $2,930, while Solana dropped to near $125.90. Similarly, XRP and Dogecoin saw their values decrease to about $1.8796 and $0.1287 respectively. All these declines indicate a broader market pullback rather than issues specific to individual tokens.
Macro Outlook
This decline reflects a broader weakness in global markets, with Asian stocks declining significantly—the MSCI Asia-Pacific index fell by 1.3%. Meanwhile, U.S. stock futures eased as the market braces for a November jobs report expected to show a cooling labor market.
The U.S. dollar lingered near a two-month low, while the yen strengthened to around 155 to the dollar, as the Bank of Japan is anticipated to raise interest rates later this week.
The total market capitalization of cryptocurrencies has decreased slightly to approximately $3.06 trillion, down 0.2% in the last 24 hours and over 2% for the week. Although the market has managed to maintain the $3 trillion mark over the last ten days, analysts indicate that current sideways movement suggests a weakening momentum rather than an emerging strength.
“A shift from an uptrend to horizontal support isn’t a good sign for buyers,” commented Alex Kupczykevich, chief market analyst at FXPro, in an email. He pointed out that the short-term market structure has broken down due to increased selling pressure starting in late November. Currently, the market appears to be in a correction phase, with lingering downside risks.
Overall sentiment seems anxious, with the cryptocurrency fear and greed index dropping to 16—the lowest level seen in nearly three weeks. Prolonged periods in the fear zone without any clear positive catalysts could signify the cyclical downturns observed at the end of previous market cycles.
$81,000 as Baseline
Earlier in the week, Bitcoin dipped briefly below $87,500, but has since climbed back towards $90,000, even as the broader tech landscape worsens. Analysts from FxPro suggest that a return to the $81,000 level now stands as the base case, though if selling pressure decreases, this period of consolidation might last a bit longer.
However, broader trends indicate the market might be entering a deeper correction. Binance Research reports that the cryptocurrency market capitalization has plummeted by about 15% over the past month. December is traditionally associated with low liquidity, which contributes to the volatility risk as traders adjust their exposures at year’s end.
Prediction markets also reveal a more cautious stance, with most users on Karshi forecasting that Bitcoin will finish the year below $100,000. Only a mere 23% believe it has a chance of surpassing that threshold.
