XRP led cryptocurrency losses on Dec. 30, falling over 5% as a strengthening U.S. dollar weighed on global currencies and dollar-denominated assets like Bitcoin and gold.
Other major tokens, including Dogecoin (DOGE), Solana (SOL), Ether (ETH), and BNB, also dropped by up to 2%, contributing to a 3% decline in total market capitalization.
The CoinDesk 20 Index, tracking the largest cryptocurrencies excluding stablecoins, fell by 3.5%.
The U.S. Dollar Index (DXY), which measures the greenback’s strength against key fiat currencies, has historically moved inversely to Bitcoin. A robust dollar makes cryptocurrencies less appealing compared to traditional investments like U.S. Treasuries, especially in a high-liquidity environment.
Economic uncertainty ahead of President-elect Donald Trump’s inauguration in January and scaled-back expectations for Federal Reserve rate cuts have further pressured crypto markets. Investors are also engaging in year-end profit-taking, with Bitcoin dropping 4% in December despite a 47% gain in Q4.
Analysts React
Despite the downturn, some analysts remain optimistic about crypto’s long-term potential.
- Maksym Sakharov, co-founder of WeFi, highlighted the potential for favorable regulatory policies under Trump’s administration, which could drive corporate adoption of Bitcoin and decouple its price from macroeconomic pressures.
“Unlike what many believe, Bitcoin and altcoins have not hit their price tops despite the ongoing consolidation fueled by the interest rate cut last week,”
“The selloffs recorded stem from the knee-jerk reaction by the market to uncertainties associated with macroeconomic policies. The Fed is preparing for higher figures next year despite inflation close to the 2% annual benchmark. This might shift the direction of monetary policy and impact the market.
“But when US President-elect Donald Trump takes office in the coming year, more corporate firms will enter the Bitcoin ecosystem as the regulations become favorable. If these projections play out, the price of Bitcoin may also decouple from macroeconomic factors that generally trigger its intense volatility,”, Sakharov stated.
No Santa Rally This year
Santa Rally is a term used to describe the precedence of Bitcoin and some altcoins surging during Christmas period. The phenomenon failed this year as Bitcoin spent Christmas dropping by 4%.
In addition to that scaled-back expectations for continual interest-rate cuts by the Federal Reserve have contributed to a fall in bitcoin and crypto prices in the past month.
What to Know
- Analysts have predicted Bitcoin to rise to $150,000 in the first quarter of 2025. A Donald Trump administration is perceived to be a huge boost in the crypto space reflecting in the price of crypto assets.
- Bitcoin at the moment is exchanging hands for $93,830 dropping by 1.2% in the last 24 hours.
