The cryptocurrency market has experienced a notable decline, following global risk asset trends as investors exercised caution ahead of key U.S. economic data releases. This downturn, which has characterized December, has been exacerbated by shrinking liquidity and a general sense of unease among traders.
Bitcoin saw a downturn, trading close to $85,800 during Asian market hours, marking a decline of over 4% within the past week. The selling pressure was widespread, affecting many major cryptocurrencies. Ether dipped to about $2,930, while Solana, XRP, and Dogecoin each experienced losses exceeding 5% over the week, indicating a generalized retreat in the market rather than isolated token-specific issues.
The prevailing weakness in the crypto market mirrored broader trends in global equities. The MSCI Asia Pacific Index dropped by 1.3%, and U.S. equity futures softened as traders awaited the November jobs report, anticipated to indicate a cooling labor market. Concurrently, the U.S. dollar remained near two-month lows, while the Japanese yen strengthened, anticipating a potential rate hike by the Bank of Japan later this week.
The total crypto market capitalization has contracted to approximately $3.06 trillion, reflecting a 0.2% decrease over the last 24 hours and more than a 2% decline over the week. Despite attempts to hold the $3 trillion level in the last ten days, analysts suggest the transition from an upward trend to a period of sideways trading signals a weakening momentum rather than a revival in strength.
Market sentiment has turned increasingly cautious, with the crypto fear and greed index dropping to a value of 16, its lowest point in nearly three weeks. This prolonged state of fear, combined with the absence of decisive catalysts, echoes previous cycles of market weakness observed at the end of prior bullish trends.
Bitcoin’s value fluctuated earlier in the week, briefly dropping below $87,500 before making a slight recovery toward the $90,000 mark. However, analysts from FxPro indicate that the technical outlook has deteriorated, with the $81,000 region emerging as a baseline scenario in light of current market conditions. Although there remains a possibility for a period of range-bound consolidation if selling pressure diminishes, indicators suggest a deeper corrective phase may be unfolding.
Furthermore, prediction markets are reflecting a more subdued market sentiment. On the Kalshi platform, many participants anticipate Bitcoin will close the year below $100,000, with the likelihood of surpassing that threshold estimated at only 23%. Market participants are bracing for continued volatility as year-end trading adjusts to the evolving economic landscape.
