The CoinDesk 20 (CD20), a broad index tracking the largest cryptocurrencies by market capitalization (excluding stablecoins), fell by 2.7% in the past 24 hours.
Bitcoin (BTC) faced further bearish pressure late Monday, briefly dipping below $92,000 as traders took profits, despite MicroStrategy’s latest Bitcoin purchase. By Tuesday morning in Asia, Bitcoin had recovered slightly, trading just above $92,800.
Many market participants anticipate this choppy price action to continue into February, especially as President-elect Donald Trump prepares to take office and enact policies that could influence the crypto market.
“We remain skeptical about any dramatic market moves at the start of the year, especially given the strong funding conditions,” traders from Singapore-based QCP Capital noted in a Telegram message. “January’s typical returns (+3.3%) have historically been in line with December’s (+4.8%), so we expect Bitcoin to remain in this price range for the near term before any significant shifts in February.”
Options data aligns with this cautious outlook, showing lower implied volatility and an uptick in call options demand for March. These calls, which profit from rising Bitcoin prices, have seen increased activity, particularly in the $120k-$130k range. This suggests a growing belief that Bitcoin may experience upward momentum in March, although traders are pricing in relatively low volatility in the short-term.
Bitcoin is set to end December with a 4% decline, its worst monthly performance since 2021. This follows a year of impressive growth, with BTC rising 117%, as both retail and institutional investors cashed out profits. In addition, economic data from the U.S. Chicago PMI, signaling a slowdown, has added pressure to the crypto market, which has shown correlations with broader economic trends.
MicroStrategy, a Bitcoin-focused software company, made its final purchase of 2024 on Dec. 29, acquiring 2,138 BTC for $209 million. This raised its total Bitcoin holdings to 446,400 BTC, continuing its streak of weekly acquisitions.
Despite the news of this acquisition, Bitcoin prices continued to decline, with shares of MicroStrategy falling by 8%, reaching their lowest point since early November.
The selling pressure spread to other top cryptocurrencies, with Ether (ETH), XRP, Solana (SOL), and Cardano (ADA) losing as much as 3% before showing signs of recovery. BNB Chain’s BNB remained largely unchanged, while memecoins like Dogecoin (DOGE) and Shiba Inu (SHIB) saw losses of approximately 5%.
The CoinDesk 20 index ended the day down 2.7%, reflecting the broader downturn in the crypto market.
Bitcoin exchange-traded funds (ETFs) faced significant outflows, with $420 million leaving these products on the second-to-last day of trading before the new year. Fidelity’s FBTC led the outflows with $154 million, followed by Grayscale’s GBTC at $130 million and BlackRock’s IBIT with $36 million.
Since Dec. 19, Bitcoin ETFs have seen more than $1.5 billion in net outflows, reversing a positive trend earlier in the month that saw nearly $2 billion in inflows. Large outflows often indicate a shift in investor sentiment, pointing to a more cautious or bearish outlook on Bitcoin’s short-term performance.
