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Today, cryptocurrency prices experienced a downward trend as global risk appetite diminished, with Bitcoin and leading altcoins drifting amidst rising liquidations and fragile liquidity conditions.
Summary
- Today’s crypto prices are declining due to weak sentiment, increasing liquidations, and thin liquidity affecting the market.
- Bitcoin is trading within a range, with traders cautious of macroeconomic risks and a possible interest rate hike from the Bank of Japan.
- Analysts are split; some caution about further declines while others believe current levels represent a holding or accumulation opportunity.
The overall cryptocurrency market capitalization dipped by 1.1%, settling around $3.1 trillion. Bitcoin was trading at approximately $89,690 at the time of writing, reflecting a 0.7% decrease for the day. Among major cryptocurrencies, XRP remained near $2 after a 0.8% drop, Cardano decreased by 1.2% to $0.4034, Chainlink fell 0.6% to $13.69, and Hyperliquid dropped roughly 0.7% to $29.
Investor confidence continues to wane. The Crypto Fear & Greed Index fell by five points to 16, firmly placing sentiment in the extreme fear zone. Market data indicates an increase in forced liquidations.
According to Coinglass data, approximately $295 million in crypto positions were liquidated in the last 24 hours, with most of the losses stemming from long positions. Despite the heightened uncertainty, traders seem to be active, as evidenced by a 1.2% rise in total open interest across crypto derivatives, reaching around $135 billion.
Macro pressures keep traders wary
The recent pullback followed a downturn in traditional markets. U.S. stocks, particularly in the tech sector, have been under selling pressure, and digital assets have mirrored this trend.
In addition, uncertainty regarding Federal Reserve policy, including a recent 25 basis point rate cut overshadowed by hawkish signals and mixed opinions on future cuts, has led investors to reduce risk. With generally lower liquidity in mid-December, even small sell orders can significantly affect prices.
Further caution is stemming from Japan, where traders are anticipating the Bank of Japan’s meeting on December 18-19. Markets widely expect a 25 basis point increase to 0.75%.
An interest rate hike could bolster the yen and unwind carry trades that often flow into risk assets like cryptocurrencies. Previous rate changes by the BOJ have coincided with steep declines in Bitcoin.
Short-term outlook and analyst perspectives
Analysts caution that failing to maintain support in the mid-$80,000 range could lead to accelerated selling, particularly if leverage is reduced in a low-liquidity environment. A decisive drop below this level may prompt further forced exits, potentially pushing Bitcoin down to the $75,000-$80,000 range.
CryptoQuant CEO Ki Young Ju stated that the current market is neutral and uncertain, suggesting that maintaining existing positions might be a prudent choice until clearer direction is observed. He also mentioned that the recent price drop has not resulted from aggressive leverage buildup.
Moreover, significant Ethereum holders continue to accumulate, as indicated by on-chain data referenced by LD Capital founder Jack Yi. This implies that some long-term investors are increasing their spot exposure instead of selling amid the downturn.
