Crypto market experienced a significant downturn on Monday, tumbling more than 8% from approximately $91,000 to $84,000 amid growing concerns about global monetary policy shifts. The sharp decline triggered substantial losses across major crypto-market-related stocks. Casting doubt on prospects for a year-end rally despite increasing expectations of Federal Reserve rate cuts. This volatility highlights the persistent sensitivity of digital assets to macroeconomic factors and investor sentiment shifts.
Japanese Monetary Policy Concerns Drive Sell-Off
The primary catalyst for Monday’s decline appears to be mounting speculation that Japan’s central bank could raise interest rates, potentially triggering a reversal of the popular “carry trade” strategy. Investors have extensively borrowed low-yielding Japanese yen to purchase higher-yielding assets like US stocks and Bitcoin. Nic Puckrin of Coin Bureau noted that similar conditions in August 2024 precipitated an 18% Bitcoin decline. “Suggesting current market dynamics could lead to extended volatility”. Despite this immediate pressure, Puckrin maintained longer-term optimism, citing the favorable macro backdrop of potential Fed easing.
Crypto Stock Rout and ETF Outflows
The Bitcoin sell-off produced widespread losses across cryptocurrency equities, with trading platform Coinbase falling roughly 20% over the past month and stablecoin issuer Circle declining 38%. Bitcoin-focused company Strategy experienced the most severe impact. Dropping approximately 40% amid concerns about its ability to service debt obligations during prolonged price declines. Meanwhile, Bitcoin exchange-traded funds recorded their second-worst monthly performance in November with $3.5 billion in outflows. Reflecting deteriorating institutional sentiment toward digital assets.
Bitcoin: Market Analysis and Future Outlook
Analysts offered mixed perspectives on the current downturn and future trajectory. Bernstein analysts noted they’re “still looking for clear signs for bitcoin to bottom out,” while 10X Research suggested a “sustained rally still appears unlikely in the near term.” However, some strategists expressed confidence that fears about Strategy’s financial stability are exaggerated. Benchmark’s Mark Palmer noting the company would only face default risk if Bitcoin experienced an unprecedented 86% collapse to approximately $12,700. Despite current weakness, many analysts maintain that institutional adoption and evolving regulatory frameworks could support recovery in 2026.
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