As the year winds down, the cryptocurrency market is feeling the impact of macroeconomic pressures and substantial profit-taking.
The crypto market is having a bumpy Monday, influenced by weak U.S. economic data and ongoing profit-taking. Bitcoin (BTC) has fallen 1.8% in the last 24 hours, dropping to $91,800 — a level not seen since Dec. 5, when it first surpassed the $100,000 mark. This marks a 14% decline from its all-time high of $108,278 on Dec. 17.
Ether (ETH) has shown a smaller decline, dropping 0.7% to $3,320, though it remains 17% below its December peak and has yet to break its 2021 high of $4,820. Solana (SOL) has shown slightly more strength than Bitcoin, with the SOL/BTC ratio increasing by 0.35% today.
The CoinDesk 20 index, which tracks the 20 largest cryptocurrencies by market capitalization (excluding stablecoins, memecoins, and exchange tokens), is also in the red, down by 3.74%. Ripple (XRP) and Stellar (XLM) have been hit the hardest, losing 6% and 6.3%, respectively, while Litecoin (LTC) has been the most resilient, down only 1.9%.
Crypto-related stocks are also seeing losses. MicroStrategy (MSTR) saw a 7% drop, Coinbase (COIN) fell 5.3%, and major Bitcoin mining companies such as MARA Holdings (MARA) and Riot Platforms (RIOT) each saw declines of more than 7%.
The current selling pressure is largely driven by profit-taking, as many investors are cashing out after Bitcoin’s impressive 117% surge this year. The seven-day moving average for profit-taking has reached $1.2 billion, although this is significantly less than the $4.0 billion peak seen on Dec. 11. Nonetheless, profit-taking is still elevated, with long-term Bitcoin holders taking the lion’s share of profits.
Macroeconomic factors are also weighing heavily on the market. The U.S. Chicago PMI, which tracks manufacturing and non-manufacturing activity in the Chicago area, posted its lowest reading since May, pointing to a potential slowdown in economic growth.
Adding to the uncertainty is the Federal Reserve’s stance on interest rates for 2025, as the central bank has indicated it will hold off on rate cuts until at least March. The upcoming inauguration of President-elect Donald Trump on Jan. 20 may also be contributing to market unease. The S&P 500, Nasdaq, and Dow Jones have all dropped by more than 1%.
“2024 exceeded expectations, but the market is showing signs of exhaustion, suggesting that consolidation is necessary,” said Joe Carlasare, partner at Amundsen Davis. “Looking ahead to 2025, I’m optimistic but expect some divergence from consensus, as markets often behave unpredictably. Bitcoin’s adoption continues to increase, and I expect it to generally move in sync with traditional markets. If the U.S. economy avoids a sharp slowdown, Bitcoin should perform well, but it may face more volatility than in 2024.”
