A pronounced pullback in the cryptocurrency markets persisted on Wednesday, as total market capitalization fell below $3 trillion for the third occasion this month. This dip could signal potential further declines, raising concerns among investors. The primary selling pressure was concentrated on large-cap cryptocurrencies, particularly those associated with active exchange-traded funds (ETFs). This trend indicates a shift in institutional investment strategies rather than a broad capitulation among retail investors.
Bitcoin, the leading cryptocurrency, saw a slight decrease of 1.5%, trading at approximately $86,580, which reversed some of the gains recorded the previous day. This decline negatively impacted XRP, halting its recovery around the $1.90 mark. Similarly, Ether experienced a setback, falling back to $2,930 from a peak of approximately $2,980 overnight, according to CoinDesk data. These major digital assets, which have previously benefited from significant institutional inflows during the early part of the year, are now facing downward pressure as market sentiment shifts.
Expert analysis from Alex Kuptsikevich, chief market analyst at FxPro, suggests that these major cryptocurrencies are becoming “victims of changing institutional sentiment.” Investors appear to be reassessing their risk exposure as the year draws to a close. This contrasting performance of Bitcoin with gains seen in major Asian equity indices, such as the Hang Seng and Shanghai Composite, highlights a bifurcation in market trends. The gains in equities are primarily driven by expectations of fiscal stimulus from Beijing, following a series of disappointing economic reports for November.
In the broader economic landscape, the dollar index saw a recovery, climbing to 98.30 after reaching a two-and-a-half-month low of 97.87 previously. This was influenced by the release of U.S. jobs data, which reported an addition of 64,000 jobs in November—exceeding the anticipated 50,000—despite an unexpected rise in the unemployment rate to 4.6%, the highest level since 2021. The strengthening dollar generally exerts downward pressure on Bitcoin and other assets priced in dollars, although gold showed resilience, trading above $4,300 per ounce.
Market sentiment towards cryptocurrencies has significantly soured. The crypto fear and greed index plummeted to 11, its lowest reading in a month, placing it firmly in the fear zone. Unlike previous market corrections seen in February and April, this particular decline appears more substantial, with numerous large-cap assets breaching important technical support levels. Analysts highlight that the next critical support zone is around $81,000, where the lows from November coincide with previous consolidation levels from March. A deeper market correction could lead to a test of the $60,000–$70,000 range, which has historically acted as a resistance level in past market cycles.
Compounding these pressures are liquidity issues within the market. Data from FlowDesk reveals a decrease in market depth as the year-end approaches, with traders opting to close positions and minimize exposure, resulting in thinner liquidity conditions. This lack of liquidity has intensified price fluctuations, especially during U.S. trading hours, while overall exchange volumes remain at historically low levels.
On-chain analytics present a mixed picture. CryptoQuant’s data suggests that recent upward momentum in Bitcoin may have exhausted itself, paving the way for a more significant corrective phase before potential renewed advances. Conversely, Glassnode indicates that long-term accumulation trends are continuing among institutional investors beyond just miners. A notable purchase of 10,624 BTC—valued at nearly $1 billion—highlights ongoing selective accumulation despite the current weaknesses in short-term price momentum.
