On Sunday, the crypto markets experienced a downturn as the broader pullback in risk assets continued into the last full trading week of the year. Investors are exercising caution due to concerns about technology valuations, diminishing momentum in U.S. equities, and mixed signals from the Federal Reserve.
Bitcoin declined roughly 0.5%, trading around $89,600 and remaining slightly above last week’s lows. Meanwhile, ether saw a slight dip to around $3,120. Many major tokens faced losses, with XRP, Solana, and Dogecoin dropping up to 2%, according to market data.
This decline followed a modest rebound in U.S. equity-index futures after last week’s tech-driven sell-off, which was ignited by renewed scrutiny over hefty artificial intelligence expenditures and sustainability of earnings.
As futures for the S&P 500 and Nasdaq 100 rose about 0.2% during the Asian morning hours on Monday, investors’ risk appetite remained delicate as they reassess whether high valuations of technology stocks can be justified into 2026.
This caution has seeped into crypto markets, which have found it difficult to regain momentum post-October’s sharp downturn. Trading volumes have noticeably decreased in recent sessions, amplifying price fluctuations and strengthening a defensive market tone.
“Currently, investors are reluctant to dive into cryptocurrencies, given the dip in October, worries about an overvalued U.S. stock market, and conflicting signals from the Fed,” indicated Jeff Mei, chief operating officer at crypto exchange BTSE, via a Telegram message.
“Nonetheless, Bitcoin ETF inflows remain net positive, and the Fed has begun purchasing securities in the market, adding liquidity that could benefit stocks and crypto,” he added.
Mei noted that year-end positioning is likely contributing to the ongoing weakness. “As the year closes, traders are likely securing profits now and will reassess their intentions to initiate new crypto positions at the start of 2026,” he stated.
Others pointed out that thin liquidity might magnify downward moves in the coming weeks.
“This morning’s crypto sell-off continues the negative trend from Friday, and we anticipate the major tokens to lead the decline,” explained Augustine Fan, head of insights at SignalPlus. “With trading volumes significantly dropped since the 10/10 event and sentiment shifting largely negative, we expect BTC and ETH to serve as a hedging proxy for other tokens as traders adjust their positions.”
Fan advised caution against over-analyzing short-term price fluctuations. “We wouldn’t overinterpret short-term movements in these thin conditions, but the general sentiment remains decidedly negative, likely leading to softer prices heading into year-end,” he stated.
Despite the near-term pressures, U.S.-listed bitcoin exchange-traded funds, coupled with continued liquidity support from central banks, could create a more favorable environment once markets fully reopen in early 2026.
