Bitcoin has demonstrated its resilience by maintaining a position above $95,000 despite a drop in global stock indices. This trend emerges as the markets evaluate the aftermath of the Federal Open Market Committee (FOMC) meeting on December 18, during which Fed Chair Jerome Powell indicated a slower pace of quantitative easing until 2025.
Nevertheless, the leading cryptocurrency by market capitalization is not impervious to broader market influences. Over the course of a week, Bitcoin, along with major stock indexes, has experienced a decline, resulting in a negative return of 11% over two weeks, as reported by K33 Head of Research Vetle Lunde. Meanwhile, Ethereum (ETH) has faced a more severe downturn, falling by 15% during the same period, leading to the ETH/BTC ratio reaching 0.036.
In a report released today, K33 Research emphasized Bitcoin’s strong correlation with global equity markets, particularly the Nasdaq. The 30-day correlation between BTC and the Nasdaq has surpassed 0.50, marking the first instance of such a correlation since late September.
Furthermore, the December 18 FOMC meeting was characterized as a crucial turning point for risk assets, including Bitcoin. During the meeting, the Fed adjusted its 2025 rate reduction projections from four to two. While rate cuts generally stimulate markets, the reduced number of anticipated cuts has diminished optimism for risk assets.
Additionally, Powell’s remarks during the press conference hinted at potential inflationary pressures in the event of a Trump presidency, deviating from the Fed’s message in November. Lunde noted, “Despite the Fed’s 100-basis-point interest rate reduction since September, the 10-year Treasury note has increased by the same margin, indicating the market anticipates an inflationary impact.”
Bitcoin’s momentum was further disrupted by significant outflows from exchange-traded funds (ETFs) and decreased purchasing activity from major entities like MicroStrategy. Since mid-December, the digital asset has struggled to reclaim its previous upward trajectory, finding support at $91,000, a recent low recorded on November 26.
The lackluster performance of Bitcoin mirrors the prevailing market sentiment, with the S&P 500 and Nasdaq each registering their third 1% decline within eight sessions amid uncertainties surrounding global trade in 2025. Concurrently, trading volumes on prominent crypto exchanges have dwindled, with the seven-day average daily spot volume plummeting to $3.4 billion, the lowest level since November 5, according to K33 Research.
Lunde attributed this slowdown to the customary seasonality of the holiday period, exacerbated by reduced activity in ETFs and the Chicago Mercantile Exchange (CME). “The diminished Bitcoin acquisitions by MicroStrategy further contributed to the decline in trading volumes,” he emphasized.
(*This translation is not investment advice.)