Bitcoin and leading cryptocurrencies experienced a downturn on Wednesday, with the total market valuation of crypto decreasing by 1.4% to $2.97 trillion, dipping below the $3 trillion mark after yet another unsuccessful effort to maintain a rally.
Bitcoin was priced around $86,900, unable to hold above $90,000 for the third consecutive day, while ether fell by 1.5% to approximately $2,927. Other cryptocurrencies like XRP, solana, and dogecoin faced steeper losses, with solana declining nearly 3% and XRP dropping close to 2%.
This pullback occurred even as several stock indexes reached new highs, further suggesting that capital is favoring safer investments over high-risk options.
Global stock markets hit another peak as traders responded to robust U.S. growth indicators that bolstered expectations for improved corporate earnings.
The MSCI All Country World Index increased for the fifth straight session on Wednesday, bringing its year-to-date gain to 21%. Asian stocks rose by 0.2%, propelled by technology shares following the S&P 500’s record close on Tuesday.
Trading volumes were low ahead of the Christmas holiday, with futures indicating a subdued opening in Europe.
Alex Kuptsikevich, chief market analyst at FxPro, mentioned signs of increased seller dominance in the market, noting that several rebounds have failed to materialize.
“The market was unable to replicate the strong rebound from the recent low, suggesting heightened seller pressure,” Kuptsikevich stated in an email. He also indicated that the ongoing distance of crypto prices from recent highs leads larger investors to act as though the market is transitioning into a bear phase, opting for cautious selling over volatile, retail-driven movements.
Kuptsikevich highlighted the broader risk environment. Bitcoin was once again sold off after momentarily exceeding $90,000 earlier this week, despite a strong rally in gold and other precious metals accompanied by a weakening dollar.
This scenario implies that investors are reevaluating their risk tolerance, potentially leading to a further spread of risk aversion.
“In the upcoming weeks, we may witness a more significant decline in cryptocurrencies, along with a rise in risk aversion among stocks and currencies of emerging markets,” he added.
Flow data indicates a retreat from investments.
According to CoinShares, global investment products experienced $952 million in outflows last week, ending a three-week influx pattern. Bitcoin-focused products faced $460 million in outflows, while ethereum funds recorded a reduction of $555 million. XRP and Solana funds were exceptions, with inflows of $63 million and $49 million, respectively.
