Bitcoin and Cryptocurrency

Markets Enter the New Year with a Downward Trend! Here Are the Factors That Triggered the Decline!

Bitcoin (BTC) markets continued their downtrend late on Monday, with prices falling below $92,000 on Tuesday morning.

Bitcoin Balances Prospects as ETFs Record $420 Million Outflows Ahead of New Year.

Despite MicroStrategy's year-end Bitcoin purchase and the market's anticipation of policy changes from US President-elect Donald Trump, investors and analysts are predicting subdued activity heading into 2025.

Investors at Singapore-based QCP Capital said in a Telegram post that they were "skeptical of any New Year's breakout" as funding rates remained steady. They highlighted the historical average return of +3.3% in January, similar to +4.8% in December, suggesting price action could remain limited through February.

"Option flows reflect similar sentiments, with front-end volatility falling and risk-reversal bids mostly for call options in March," they said, referring to rising call options sentiment in March.

Exchange-traded funds (ETFs) containing Bitcoin have experienced significant outflows, with $420 million withdrawn on December 30 alone.

Fidelity's FBTC led the decline with $154 million in outflows, followed by Grayscale's GBTC ($130 million) and BlackRock's IBIT ($36 million).

ETFs have recorded net outflows of more than $1.5 billion since Dec. 19, marking a sharp reversal from the nearly $2 billion inflows seen earlier in the month.

Analysts interpret this trend as a potential shift towards a more cautious or bearish outlook on Bitcoin's short-term performance.

Bitcoin is set to close December with a 4% monthly loss, its worst performance since 2021.

This decline comes after a 117% year- on-year surge as retail investors and long-term holders took profits. The decline in Bitcoin prices also affected major altcoins, with ether ($ETH ), $XRP , Solana's $SOL , and Cardano's ADA all dropping by up to 3% before recovering slightly.