On the last day of 2024, Bitcoin briefly plummeted to $92,000, with $277 million liquidated across the network in the past 24 hours, including $185 million in long positions and $92.16 million in short positions. Meanwhile, US stocks opened lower, with crypto-related stocks and the 'Big Seven' all declining, the Dow Jones fell 1.04%, S&P 500 dropped 1.13%, and Nasdaq fell 1.33%.
Since entering the Christmas market in late December, Bitcoin has experienced multiple sharp declines. Below are the market reasons compiled by BlockBeats for Bitcoin's drop, for readers' reference.
The US dollar is strengthening, making US stocks and the crypto market less appealing.
According to Bank of America data, the US stock market experienced an outflow of about $35 billion in the past week, the highest weekly outflow since December 2022. Additionally, Goldman Sachs' trading department estimates that given the trends in stocks and bonds, US pension funds will sell $21 billion in US stocks and purchase an equivalent amount in bonds before the end of December this year.
Last Friday, the yield on the 10-year US Treasury bond rose nearly 1% to 4.629%, approaching a seven-month high. The US stock market may still face the risk of a massive sell-off. Wall Street analysts believe that in the absence of major news, data, and with thin trading, the 10-year Treasury yield, as an anchor for asset pricing, will impact the stock market—the higher the yield, the greater the pressure on stocks.
Due to the strength of the US dollar suppressing global currencies and assets, including Bitcoin, assets priced in dollars become more attractive compared to cryptocurrencies when the dollar strengthens. Investors prefer traditional investments like US Treasury bonds or stocks, which yield returns in a strong dollar environment. Additionally, the decline in liquidity and profit-taking by investors at year-end further diminishes the likelihood of sustained increases in cryptocurrencies.
Bitcoin Spot ETF Net Outflow
The Bitcoin Spot ETF data has shifted from a net inflow status during Trump's market to a net outflow, with a cumulative net outflow of $377.6 million last week, and a net outflow status yesterday as well. On December 27, Fidelity's FBTC saw a net outflow of $208 million, setting a new record for the highest single-day net outflow.
Options expiration, quarterly end volatility sell-off
On December 17, QCP indicated that the options market was sending some cautious signals. Despite spot prices continually hitting new highs, the options market has shown a persistent skew towards put options relative to call options—perhaps reflecting that investors are more inclined to hedge risks rather than actively chase price increases.
On December 28, nearly $20 billion in nominal value of BTC and ETH options will expire, which accounts for almost half of Deribit's total open interest. Meanwhile, Bitcoin's price dropped from $97,000 to $94,000 on the same day. QCP believes this is typical of quarterly end volatility sell-offs, especially considering the continued fluctuations in the spot market and the ongoing position closures by options sellers.
Greeks.live analyst Adam also expressed on social media that the differences in options skew across various durations have been amplified. Since the bull market at the end of this year, the skew across durations has remained close, fluctuating around 5%, with most differences not exceeding 1%. However, with the recent adjustments, the differences have started to widen, with a significant drop in short-term skew. These data indicate a clear decline in market enthusiasm, and options market participants' optimism for January has weakened.
Stablecoin minting volume has declined, and USDT FUD is affecting market confidence.
Since December, stablecoin minting has significantly decreased. Specifically, on the 13th, Tether minted 1 billion USDT on Ethereum, and USDC's minting volume in December was only 200 million. However, since November 6, Tether has minted 21 billion USDT on the Ethereum and Tron blockchains.
Today, the EU's MiCA legislation officially takes effect, but Tether's USDT has not yet received compliance certification, raising concerns about its future in the EU market. MiCA imposes strict requirements on stablecoin issuers, and major stablecoins like Tether face capital reserves and liquidity requirements, which may lead to their exit from the EU market. Some EU trading platforms have begun to take measures to comply with the new regulations, with Coinbase Europe delisting USDT and other stablecoins.
Nevertheless, Tether's substantial market capitalization and global adoption make it unlikely to suffer immediate financial shocks. Tether CEO Paolo Ardoino stated on social media, 'Don't believe the FUD. Competitors are just eager to make you believe in things that don't exist. USDT is safe.'
It is worth noting that Tether itself has not encountered any financial problems or legal issues. Tether will focus on supporting new stablecoin projects, such as the launch of stablecoins EURQ and USDQ that comply with MiCA standards. However, considering the historical stablecoin collapses from the previous cycle, short-term USDT FUD will still affect market confidence.
