Bitcoin and leading cryptocurrencies experienced a downturn as the overall crypto market capitalization decreased by 1.4%, settling at $2.97 trillion. Global stocks have hit new peaks, as MSCI’s All Country World Index climbs for the fifth straight session. Investors are exhibiting heightened risk aversion, as evidenced by substantial outflows from crypto investment products in the past week. Bitcoin and major tokens experienced a decline on Wednesday, with the total crypto market value decreasing by 1.4% to $2.97 trillion. This drop pushed the market back below the $3 trillion threshold following yet another unsuccessful attempt to maintain a rebound.
Bitcoin hovered near $86,900, unable to maintain a breakthrough above $90,000 for the third consecutive day, while ether dipped 1.5% to approximately $2,927. XRP, Solana, and Dogecoin experienced significant declines, with Solana dropping nearly 3% and XRP falling almost 2%. The pullback occurred despite some stock indexes reaching new highs, highlighting a trend where capital appears to favor safety over high beta investments. Global stocks reached a new high as traders responded positively to robust US growth data, bolstering the argument for stronger corporate earnings.
On Wednesday, MSCI’s All Country World Index climbed for the fifth consecutive session, bringing its year-to-date increase to 21%. Asian equities saw a modest increase of 0.2%, driven by gains in technology shares following the S&P 500’s record close on Tuesday. Trading volumes remained subdued as the Christmas holiday approached, with futures indicating a lackluster start for European markets. Alex Kuptsikevich noted that the market is exhibiting indications of increased seller dominance, as multiple rebounds struggle to sustain momentum. “The market was unable to repeat the robust rebound from the local bottom, indicating increased pressure from sellers,” Kuptsikevich stated. He noted that as crypto remains distant from recent peaks, major players are increasingly acting as though the market is entering a bear phase, opting for cautious selling instead of abrupt moves driven by retail investors. Kuptsikevich highlighted the wider risk landscape.
Bitcoin experienced another sell-off after momentarily surpassing the $90,000 mark earlier this week, even as gold and other precious metals saw a significant rally alongside a declining dollar. That combination, he noted, indicates that investors are reevaluating their risk appetite and that the risk-off sentiment could potentially extend further. “In the coming weeks, we can expect an even more pronounced decline in cryptocurrencies, as well as the spread of risk aversion to stocks and currencies of developing countries,” he stated. Flows data indicates that investors are pulling back. Reports says that global investment products experienced outflows totaling $952 million last week, marking the end of a three-week inflow streak. Bitcoin products experienced outflows totaling $460 million, whereas ethereum funds faced a reduction of $555 million. XRP and Solana funds stood out as exceptions, recording inflows of $63 million and $49 million, respectively.