Bitcoin made a late weekend push to rally, attempting to gain momentum, but encountered challenges as early U.S. trading commenced on Monday. The cryptocurrency had briefly approached the $90,000 mark, with the trading price hovering around $90,500 as U.S. stock markets closed. However, this represented a decline of about 1% over the previous 24 hours, reflecting a broader struggle within the crypto market.
Major altcoins also faced challenges in maintaining their recent gains. Ethereum’s ether dropped slightly to approximately $3,132.92, yet managed to outperform other cryptocurrencies by reaching its peak value relative to Bitcoin in over a month. Privacy-focused Zcash and the institutional-centered blockchain Canton Network were among the few notable successes, each registering double-digit gains. Conversely, the CoinDesk 20 Index, which monitors the broader cryptocurrency landscape, saw a slight decline of 0.8%.
The muted activity in cryptocurrencies coincided with a sharp rise in long-duration government bond yields, driven by concerns over turmoil in Japanese bonds that could potentially impact global markets. The U.S. 10-year Treasury yield surged to 4.19%, a peak not witnessed in approximately three months, while government debt in the U.K. and other European countries also experienced sell-offs. Additionally, the Japanese 10-year bond yield continued to climb toward the 2% threshold, a level not reached in nearly two decades.
U.S. stock markets reacted accordingly, with the S&P 500 dipping by 0.5% and the Nasdaq down 0.3%, influencing overall market sentiment and risk appetite. The week’s focal point will be the Federal Reserve’s final meeting of the year. While expectations are widespread for a 25 basis-point rate cut, communications regarding future policies could introduce volatility, particularly as analysts speculate about the potential impact on various asset classes, including cryptocurrencies.
One market strategist highlighted that any softening of financial conditions or weakness in the U.S. dollar could benefit cryptocurrency markets, while any unexpected hawkish stance from the Fed might heighten downward pressure.
Despite a recent rebound from November’s lows, analysts from Bitfinex raised concerns about Bitcoin’s structural vulnerabilities, pointing out that the leading cryptocurrency is contending with signs of weakening demand. They noted that while the S&P 500 approaches record highs, Bitcoin finds itself in a performance rut, raising concerns about a growing disconnect between the cryptocurrency and traditional risk assets.
Key signals that reinforce this cautious outlook include ongoing outflows from U.S.-listed Bitcoin ETFs, where traders are appearing to sell into price strength rather than accumulating more. An alarming trend reveals that over seven million Bitcoin are currently at unrealized losses, reminiscent of the bearish sentiment seen during the 2022 consolidation period. Additionally, while capital inflows remain slightly positive at $8.69 billion per month, this figure is significantly lower than peak levels, creating only a modest cushion against potential downside pressures.
Taken together, these factors create a precarious environment as the year draws to a close. Analysts assert that weakening spot demand puts the market in a “meaningfully lighter buy-side backdrop,” which not only diminishes immediate support for Bitcoin’s price but also increases sensitivity to external shocks and macroeconomic volatility.
