The price of Bitcoin dropped approximately 4% to around $85,940 on Tuesday, coinciding with a decline in Asian stocks at the open, as investors cut risks ahead of a series of U.S. economic data that could determine the next move for interest rates. Japanese indices fell, while Australian stocks rose slightly, following a second consecutive drop in the S&P 500 overnight. Futures linked to the S&P 500 and Nasdaq 100 were weaker in early Asian trading, suggesting potential additional pressure on Wall Street as traders await signals on growth, inflation, and the Federal Reserve's path.
In a quick snapshot of the market, the price of Bitcoin reached $85,719, down 4.1%, Ethereum at $2,930, down 6.1%, and XRP at $1.87, down 6.2%, with the total market capitalization of cryptocurrencies declining to $3.02 trillion, down 3.7%.
Despite this decline, some analysts maintain medium-term optimism. The research team at Bitfinex expects next year to be marked by improved global liquidity conditions, making Bitcoin 'more resilient than ever', paving the way for a new all-time high close to $126,110 in 2026. This expectation is supported by a more accommodative monetary policy, increased liquidity, and continued adoption of cryptocurrencies.
Bitfinex also points to structural changes in the market, with the annual Bitcoin issuance rate now below 1%, the impact of gradual halving fading, and recent declines becoming less severe. Additionally, inflows from ETFs, corporations, and government-linked entities absorb several times the annual metal supply, creating a market dominated by patient long-term capital.
However, not everyone is ready to increase risk. Lynn Tran, chief market analyst at XS.com, stated that Bitcoin's failure to hold above the psychological level of $90,000 after being rejected near $100,000 reflects a continuing cautious tone. Investors are reducing exposure as the year-end approaches, preferring to preserve capital after the previous strong rally in the cycle.
Risk appetite stalled as investors sought clarity from upcoming indicators. The Japanese yen strengthened against the dollar to around 154.85, with expectations for the Bank of Japan to raise the key interest rate to its highest level in three decades on Friday. The dollar gauge fell for the second day, trading near early October levels, with a tendency towards expectations of additional cuts from the Federal Reserve in the medium term.
The general backdrop is a neural consolidation in a data-rich week, where the U.S. jobs report for November is expected to show a softer labor market, including updated payroll estimates for October. The Consumer Price Index will be released on Thursday, along with retail sales figures, business activity, and inflation that may reinforce or challenge the current narrative.
Federal Reserve officials were divided on the appropriate policy for 2026, with differing views on whether the current policy is unnecessarily restrictive or well-placed.
In Japan, investors are watching the balance between the government's need for cheap financing and pressures from a weak yen. The yield on 10-year government bonds reached 1.97%, prompting the Bank of Japan governor to warn of rapid increases.
Wall Street closed lower on Monday, as traders digested Federal Reserve comments and prepared for data, amid fears of inflation and investments in artificial intelligence, making credit markets and cryptocurrencies sensitive to any surprises.
