A pullback in crypto markets continued on Wednesday, as the overall capitalization fell below $3 trillion for the third time in a month, testing a level that may 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 widespread retail capitulation.
bitcoin fell 1.5% to $86,580, partially reversing Tuesday’s gain. The weakness weighed on the broader crypto market, halting XRP (XRP)’s recovery at around $1.90. Ether fell to $2,930 from the overnight high of around $2,980, CoinDesk data shows.
These major tokens, which benefited the most from institutional inflows earlier in the year, are now leading the decline as sentiment cools.
According to Alex Kuptsikevich, chief market analyst at FxPro, major currencies are increasingly “victims of changing institutional sentiment” as investors reassess risk exposure towards the end of the year.
BTC’s weak tone contrasted with muted gains in major Asian stock indices such as Hang Seng, Shanghai Composite, Kospi and IDX, which strengthened mainly from expectations of fiscal stimulus from Beijing after a series of weak November economic data.
Meanwhile, the dollar index has recovered to 98.30 from a two-and-a-half-month low of 97.87 hit on Tuesday after US employment data showed the economy added 64,000 jobs in November (above the 50,000 forecast), while unemployment unexpectedly jumped to 4.6%, its highest level since 2021.
A strengthening dollar typically weighs on BTC and other dollar-denominated assets like gold, although at the time of writing, the yellow metal is trading above $4,300 per ounce.
Crypto Sentiment Deteriorates
Market sentiment has deteriorated sharply along with price action. The cryptocurrency fear and greed index has fallen to 11, its lowest reading in exactly a month, firmly within the fear zone.
Unlike the short-lived pullbacks of February and April, the current decline shows signs of being more than a routine correction, with multiple large-cap assets breaking intermediate technical support levels.
From a technical perspective, the next notable support zone lies near $81,000, where the November lows converge with the March consolidation levels. A deeper pullback would expose the broader $60,000 to $70,000 region, a historically significant zone that previously acted as resistance during the 2021 and 2024 cycles.
Low liquidity
Liquidity conditions increase pressure. FlowDesk data shows decreasing market depth as the end of the year approaches, and leverage remains moderate as traders close positions and reduce exposure. Lower liquidity has amplified price movements, particularly during US trading hours, while overall exchange volumes remain historically weak.
On-chain data presents a mixed context. CryptoQuant suggests that Bitcoin’s recent rally may have exhausted itself, opening the door to a deeper corrective phase before the next sustained advance.
At the same time, Glassnode notes that long-term accumulation continues among corporations and financial firms, expanding beyond miners alone. Strategy’s latest purchase of 10,624 BTC (nearly $1 billion) is indicative that selective accumulation persists even as near-term price momentum weakens.
