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. At the same time, US stocks opened lower, with crypto-related stocks and the seven 'giants' of the US stock market all declining. The Dow fell 1.04%, the S&P 500 index fell 1.13%, and the Nasdaq fell 1.33%.
Since entering the Christmas market in late December, Bitcoin has experienced multiple rapid declines. Below are the market reasons compiled by BlockBeats for Bitcoin's decline, for readers' reference.
The US dollar is strengthening, making US stocks and the crypto market less appealing.
According to Bank of America data, approximately $35 billion flowed out of the US stock market in the past week, the highest weekly outflow since December 2022. Additionally, Goldman Sachs' trading department estimates that, given stock and bond trends, US pensions will sell $21 billion of US stocks and buy an equivalent amount of bonds by the end of December this year.
Last Friday, the yield on the 10-year US Treasury bond rose nearly 1%, reaching 4.629%, close to a seven-month high. The US stock market may still face the risk of a frantic sell-off. Wall Street analysts believe that in the absence of major news, data, and thin trading, the 10-year Treasury yield, as the anchor for asset pricing, will impact the stock market. The higher the yield, the greater the pressure on the stock market.
The strengthening of the US dollar has depressed global currencies and assets, including Bitcoin. When the dollar strengthens, assets priced in dollars become more attractive compared to cryptocurrencies. Investors prefer traditional investments like US Treasuries or stocks, which yield returns in a strengthening dollar environment. Meanwhile, decreased liquidity and investors taking profits at year-end further weaken the likelihood of sustained increases in cryptocurrencies.
Bitcoin spot ETF net outflow
The data on Bitcoin spot ETF has shifted from a net inflow state due to Trump’s market to a net outflow state, with a cumulative net outflow of $377.6 million last week, and a net outflow for the single day yesterday. On December 27, Fidelity FBTC had a net outflow of $208 million, setting a historical record for the highest single-day net outflow.
Options expiration, end-of-quarter volatility selling
On December 17, QCP stated that the options market sent some cautious signals. Even as spot prices continued to hit new highs, the options market still showed a persistent skew towards put options relative to call options—perhaps reflecting that investors are more inclined to hedge risks rather than actively chase upward trends.
On December 28, BTC and ETH options with a nominal value of nearly $20 billion expired, accounting for almost half of Deribit's total open interest. Meanwhile, the price of Bitcoin fell from $97,000 to $94,000 that day. QCP believes this is typical end-of-quarter volatility selling, especially considering that spot continues to fluctuate, and options sellers continue to close positions.
Greeks.live analyst Adam also posted on social media stating that the differences in options skew across maturities have been magnified. Since the bull market began at the end of this year, the skew across maturities has remained close, fluctuating around 5%, with most differences not exceeding 1%. However, as we recently entered an adjustment, the differences began to widen, with short-term skew declining significantly. This data indicates that the market's enthusiasm has clearly decreased, and participants in the options market have become less optimistic about January.
The minting volume of stablecoins has declined, and USDT FUD is affecting market confidence.
Since December, the minting volume of stablecoins has significantly decreased. On the 13th, Tether minted 1 billion USDT on Ethereum, while USDC's minting volume was only 200 million in December. However, since November 6, Tether has minted 21 billion USDT on Ethereum and Tron blockchains.
Today, the EU's MiCA legislation officially came into 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 reserve 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, and Coinbase Europe has delisted USDT and other stablecoins.
Despite this, Tether's large market capitalization and global adoption make it unlikely to suffer immediate financial shocks. Tether CEO Paolo Ardoino posted on social media stating, '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 issues or engaged in any illegal activities. Tether will focus on supporting new stablecoin projects, such as launching stablecoins EURQ and USDQ that comply with MiCA standards. However, given the previous cycle’s history of stablecoin collapses, short-term USDT FUD will still affect market confidence.
