Cryptocurrency markets continued their pullback on Wednesday, with total market capitalization falling below $3 trillion for the third time in a month, testing levels that could open the door to further weakness.
Selling pressure was concentrated in large-cap assets, particularly those with active ETF exposure, suggesting a shift in institutional positioning rather than broad retail capitulation.
Bitcoin It fell 1.5% to $86,580, partially reversing Tuesday’s gains. This weakness weighed on the broader cryptocurrency market, causing XRP’s (XRP) rally to stall around $1.90. ether It fell back to $2,930 from an overnight high of $2,980, CoinDesk data showed.
These major coins benefited the most from institutional inflows at the beginning of the year, but they are now leading the downward trend as market sentiment cools.
Alex Kuptsikevich, chief market analyst at FxPro, said major currencies are increasingly becoming “victims of changes in institutional sentiment” as investors reassess risk exposure at the end of the year.
Bitcoin’s weak tone contrasts with modest gains in major Asian stock indexes such as the Hang Seng, Shanghai Composite, Kospi and IDX, which have strengthened largely on expectations of Beijing’s fiscal stimulus following a string of weak economic data in November.
Meanwhile, the dollar index recovered to 98.30 from a 2.5-month low of 97.87 hit on Tuesday after U.S. employment data showed the economy added 64,000 jobs in November – above the 50,000 forecast – while the unemployment rate unexpectedly jumped to 4.6%, the highest level since 2021.
A stronger U.S. dollar typically puts pressure on other U.S. dollar-denominated assets like Bitcoin and gold, although gold prices are holding firm above $4,300 an ounce as of this writing.
Cryptocurrency sentiment worsens
Along with the price action, market sentiment deteriorated sharply. The Cryptocurrency Fear and Greed Index has dropped to 11, the lowest reading in a month and firmly within fear territory.
Unlike the brief pullbacks in February and April, the current decline shows signs of more than a routine correction, with multiple large-cap assets breaking through intermediate technical support levels.
From a technical perspective, the next area of notable support lies near $81,000, where the November low intersects with the March consolidation level. A deeper pullback would expose the broader $60,000 to $70,000 area, a historically important area that has previously acted as resistance in the 2021 and 2024 cycles.
Liquidity is thin
Liquidity conditions are exacerbating stress. FlowDesk data shows that market depth continues to decline as the end of the year approaches, and leverage remains low as traders unwind positions and reduce risk exposure. Declining liquidity has amplified price swings, especially during the U.S. session, while overall trading volumes remain at historically low levels.
On-chain data presents a complex background. CryptoQuant says the recent Bitcoin rally may have exhausted itself, opening the door to a deeper correction phase before the next sustained rally.
Meanwhile, Glassnode noted that long-term accumulation continues among corporate and financial firms and is not limited to miners. Strategy’s latest purchase of 10,624 BTC (nearly $1 billion) shows that selective accumulation continues even as short-term price momentum weakens.