XRP led crypto losses on the penultimate day of this year, as a stronger dollar weighed on global currencies and assets including bitcoin, with Asian stock markets falling on Monday.
XRP has fallen more than 5% in the past 24 hours, with dogecoin (DOGE), Solana SOL, ether (ETH), and BNB falling as much as 2%. The overall market cap fell 3%, while the CoinDesk 20 (CD20), a broad-based index that tracks the largest tokens, minus stablecoins, lost 3.5%.
US stocks fell on Friday as investors reduced their positions amid uncertainty heading into the end of the year. An Asia-Pacific index reversed 5-day gains, while U.S. S&P 500 and Nasdaq index futures pointed to losses in the U.S. session from the Asian afternoon.
BTC has historically moved in the opposite direction to the US Dollar Index (DXY), which gauges the greenback’s exchange rate against major fiat currencies including the Euro.
Dollar strength This comes well ahead of President-elect Donald Trump’s inauguration in late January, where he promised several policies aimed at helping the economy in the coming years.
When the dollar strengthens, dollar-denominated assets become more attractive compared to cryptocurrencies. Investors prefer traditional investments like U.S. Treasuries or stocks, which generate returns in a strong dollar environment.
However, this dampened hopes of a continued crypto rally amid dwindling liquidity and year-end profit-taking among investors. A “Santa Rally,” the colloquial term for the bullish seasonality seen in December, failed with a nearly 4% drop in BTC prices this month (they are still up 47% last quarter). the data shows).
Elsewhere, reduced expectations of continued interest rate cuts by the Federal Reserve have contributed to a decline in bitcoin and crypto prices over the past month.
Some, however, remain optimistic that long-term crypto policies will help boost the market despite the lack of a rate cut or a strong dollar.
“Contrary to what many believe, Bitcoin and altcoins have not reached their peaks despite the ongoing consolidation fueled by falling interest rates last week,” said Maksym Sakharov, co-founder of WeFi, to CoinDesk in a Telegram message. “The massive sell-offs recorded stem from the market’s knee-jerk reaction to macroeconomic policy uncertainties. The Fed is preparing for higher figures next year despite inflation near the annual benchmark of 2%. This could change the direction of monetary policy and impact the market.
“But when US President-elect Donald Trump takes office next year, more companies will enter the Bitcoin ecosystem as regulations become favorable. If these projections come true, the price of Bitcoin could also decouple from the macroeconomic factors that typically trigger its intense volatility,” Sakharov added.
