Bitcoin attempted a late weekend rally, but even those small gains were largely reversed in early U.S. action Monday, with the price settling quietly near the $90,000 zone for the rest of the day.
Trading around $90,500 as U.S. stocks closed, bitcoin is down about 1% in the past 24 hours.
Altcoin majors have also struggled to hold on to their gains. Ethereum Ether fell slightly, but slightly outperformed and climbed to its highest relative price against BTC in over a month. Other notable outperformers have been privacy-focused Zcash. and the institution-focused Canton Network (CC) blockchain, both seeing double-digit gains. The broader crypto market, as measured by the CoinDesk 20 Index, fell 0.8%.
While crypto action remained subdued, yields on long-duration government bonds soared on concerns that Japan’s bond problems would spill over into other markets. The yield on the 10-year U.S. Treasury rose to 4.19%, its highest level in about three months, while government debt in the U.K. and other European countries was also sold off. Meanwhile, the yield on Japan’s 10-year bonds continued to climb toward 2%, a level not seen in nearly two decades.
US stocks also fell on the day, with the S&P 500 down 0.5% and the Nasdaq down 0.3%, weighing on risk appetite overall.
The key event this week will be the final Federal Reserve meeting of the year. Even if a 25 basis point cut is fully priced into expectations, messages about the future trajectory or other liquidity metrics could stoke volatility on Wednesday.
“Any easing of financial conditions or further weakening of the U.S. dollar could bring tailwinds, while any hawkish surprises regarding the pace or scale of the Federal Reserve’s accommodative policy could amplify downward pressure on crypto markets,” Joel Kruger, LMAX market strategist, said in a note.
BTC faces structural headwinds
Despite Bitcoin’s recent rebound from November lows, Bitfinex analysts have warned that the largest cryptocurrency is struggling with structural weakness and weakening spot demand.
While the S&P 500 trades near record highs, BTC remains stuck in a range, highlighting a growing divergence between crypto assets and traditional risk assets that indicates relative weakness, they pointed out in a Monday report.
Bitfinex highlighted several key signals reinforcing this view:
- Persistent outflows from US-listed spot Bitcoin ETFs, with traders selling heavily instead of accumulating, as evidenced by sharply negative cumulative volume delta (CVD) on major exchanges.
- More than seven million BTC are now experiencing an unrealized loss, echoing bearish sentiment similar to that of the 2022 consolidation period.
- Although capital inflows remain slightly positive at $8.69 billion per month (measured by the net realized change in the cap), they are far from peak levels, providing only a modest buffer against downside risks.
According to Bitfinex analysts, all these factors add up to a fragile setup until the end of the year.
“With spot demand weakening, the market now faces a significantly lighter buying environment,” the report said. “This reduces immediate price support and increases sensitivity to external shocks, macroeconomic-driven volatility and any further tightening of financial conditions.”
