Bitcoin Declines, Crypto Stocks Slide Amid Year-End Tax-Loss Selling
Bitcoin led a dip in crypto markets on Tuesday, falling about 1% over the past 24 hours to just below $88,000. The decline came even as gold, silver, and copper surged to record highs earlier in the day before easing slightly in afternoon trading. U.S. equities were modestly higher, with the Nasdaq up 0.45%.
Crypto-related stocks suffered sharper losses than Bitcoin’s movement suggested. Digital asset treasury firms were hit hardest: Strategy (MSTR) fell 4.2%, XXI (XXI) dropped 7.8%, ETHZilla (ETHZ) tumbled 16%, and Upexi lost 9%. Other notable decliners included Gemini (GEMI), Circle (CRCL), and Bullish (BLSH), each down roughly 6%.
Analysts at hedge fund QCP Capital pointed to year-end tax-loss harvesting as a driver of volatility, especially in illiquid markets. This practice involves selling losing positions to realize losses and reduce tax liabilities.
“Portfolio managers often trim exposure to risk assets at year-end, not only for holidays but also to manage taxable events and balance sheets that may prefer not to show cryptocurrency holdings,” said Paul Howard, senior director at trading firm Wincent.
QCP also noted falling open interest in BTC and ETH perpetual futures—down roughly $3 billion and $2 billion, respectively—reducing leverage and leaving markets vulnerable to sharp swings. “Friday’s record Boxing Day options expiry, representing over half of Deribit’s total open interest, adds to the market’s sensitivity,” the firm said. Despite easing downside positions, $100,000 calls indicate cautious optimism for a Santa rally.
Looking ahead, QCP expects short-term volatility to fade in January as liquidity returns, while Howard forecasts continued consolidation with no immediate catalyst to regain early-October highs.
Trump Pushes for Lower Fed Rates Despite Strong Economy
President Donald Trump on Tuesday reiterated his call for the next Federal Reserve chairman to cut interest rates even amid strong economic growth.
“I want my new Fed Chairman to lower Interest Rates if the Market is doing well, not destroy the Market for no reason whatsoever,” Trump wrote on Truth Social.
The comments follow data showing inflation-adjusted GDP growth at a 4.3% annualized pace in Q3. “In the past, good economic news lifted markets. Today, it fuels concerns of immediate rate hikes,” Trump said.
Despite gains for the S&P 500 and Nasdaq on Tuesday, inflation concerns and limited expectations for rate cuts in 2026 continue to weigh on investors.
