XRP led cryptocurrencies’ losses on the second-last day of this year as a rising dollar weighed on global currencies and assets including Bitcoin, with Asian stock markets falling on Monday.
XRP is down more than 5% in the past 24 hours, with Dogecoin (DOGE), Solana’s SOL, Ethereum (ETH), and BNB all down as much as 2%. The overall market cap fell 3%, while the broad-based CoinDesk 20 (CD20), an index that tracks the largest cryptocurrencies, excluding stablecoins, fell 3.5%.
US stocks fell on Friday as investors trimmed their positions amid uncertainty heading into the end of the year. The Asia-Pacific index reversed 5 days of gains, while futures on the US S&P 500 and Nasdaq indexes pointed to losses in the US session as of the Asian afternoon hours.
Bitcoin has historically moved in the opposite direction to the US Dollar Index (DXY), which measures the US currency’s exchange rate against major fiat currencies, including the euro.
Strength in the dollar This largely comes before President-elect Donald Trump took office in late January, promising several policies to help the economy in the coming years.
When the dollar rises, dollar-denominated assets become more attractive compared to cryptocurrencies. Investors prefer traditional investments such as US Treasuries or stocks, which generate returns in a strong dollar environment.
However, this has dampened hopes for a continued rally in cryptocurrencies amid low liquidity and year-end profit-taking among investors. The “Santa Rise,” a colloquial term referring to the bullish seasonality seen in December, has failed, with Bitcoin prices down nearly 4% this month (they are still up 47% last quarter, Show data).
elsewhere, Reducing expectations Ongoing interest rate cuts by the Federal Reserve have contributed to a decline in Bitcoin and cryptocurrency prices in the past month.
However, some remain optimistic about long-term cryptocurrency policies helping to boost the market despite the lack of interest rate cuts or a strong dollar.
“Contrary to what many believe, Bitcoin and altcoins have not reached their price highs despite ongoing consolidations fueled by last week’s interest rate cuts,” WeFi co-founder Maxim Sakharov told CoinDesk in a message on Telegram. “The recorded sell-off stems from the market’s knee-jerk reaction to uncertainties linked to macroeconomic policies. The Fed is preparing for higher numbers next year despite inflation approaching the 2% annual benchmark. This may change the direction of monetary policy and influence the market.
“But when US President-elect Donald Trump takes office next year, more companies will enter the bitcoin ecosystem as regulations become favorable,” Sakharov added. “If these predictions come true, the price of bitcoin may also decouple from macroeconomic factors that generally lead to… “Extreme fluctuations.”
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