A pullback across crypto markets continued on Wednesday as total capitalization fell below $3 trillion for the third time in a month, testing a level that could open the door to further weakness.
Selling pressure was concentrated in large-cap assets, particularly those with active ETF exposure, suggesting a shift in institutional positioning rather than broad retail capitulation.
Bitcoin fell 1.5% to $86,580, partially reversing Tuesday’s gains. The weakness weighed on the broader crypto market, halting XRP’s (XRP) rally around $1.90. Ether fell back to $2,930 from an overnight high of around $2,980, CoinDesk data shows.
These major tokens, which benefited the most from early-year institutional inflows, are now leading lower as sentiment cools.
According to Alex Kuptsikevich, chief market analyst at FxPro, major coins are increasingly “victims of changing institutional sentiment” as investors reassess year-end risk exposure.
BTC’s weak tone contrasted with moderate gains in major Asian stock indexes such as the Hang Seng, Shanghai Composite, Kospi and IDX, which drew strength mainly from expectations of fiscal stimulus from Beijing after a string of weak economic prints from November.
Meanwhile, the dollar index has recovered to 98.30 from a 2.5-month low of 97.87 hit on Tuesday after US jobs data showed the economy added 64,000 jobs in November – above the 50,000 forecast – while the unemployment rate unexpectedly rose to 4.6%, the highest since 2221.
A strengthening dollar typically weighs above BTC and other dollar-denominated assets such as gold, although at the time of writing the yellow metal was trading above $4,300 per ounces.
Crypto sentiment worsens
Market sentiment has deteriorated sharply alongside price action. The Crypto Fear and Greed Index has fallen to 11, its lowest reading in exactly one month, firmly in the fear zone.
Unlike the short-lived pullbacks in February and April, the current decline is showing signs of being more than a routine correction, with several large-cap assets breaking intermediate technical support levels.
From a technical perspective, the next notable support zone lies near $81,000, where the November lows converge with the March consolidation levels. A deeper retracement would reveal the broader $60,000-$70,000 region, a historically significant zone that previously served as resistance during the 2021 and 2024 cycles.
Thin liquidity
Liquidity conditions increase the pressure. FlowDesk data shows decreasing market depth as year-end approaches, with leverage remaining muted as traders close positions and reduce exposure. Lower liquidity has amplified price movements, particularly during US hours, while overall currency volumes remain historically weak.
On-chain data presents a mixed background. CryptoQuant suggests that the recent Bitcoin rally may have exhausted itself, opening the door to a deeper corrective phase before the next sustained advance.
At the same time, Glassnode notes that long-term accumulation continues among companies and financial firms, expanding beyond miners alone. The strategy’s recent purchase of 10,624 BTC — nearly $1 billion — is a sign that selective accumulation continues even as short-term price momentum weakens.
