Bitcoin Falls Below $80,000 as Fed Meeting Begins and Altcoins Extend Losses
Bitcoin fell below $80,000 on Tuesday as cryptocurrency markets weakened despite a rally in Asian technology stocks, with investors watching the Federal Reserve's latest policy meeting and preparing for major technology earnings later this week.
Bitcoin declined 0.4% from midnight UTC to approximately $79,700. Ether, the largest altcoin by market capitalization, slipped 0.5% to around $2,490. The DeFi index (DFX) recorded the steepest decline among CoinDesk indexes, falling 1.8% after leading the market higher on Monday.
Federal Reserve Meeting Puts Interest Rates in Focus
The Federal Reserve began a two-day policy meeting on Tuesday, with its interest-rate decision scheduled for Wednesday. CME's FedWatch tool indicated that traders saw approximately a 90% probability of rates remaining unchanged.
Market participants are looking for signals about whether another interest-rate increase could occur before the end of the year. Meanwhile, U.S. stock index futures edged lower ahead of major technology company earnings due later in the week.
Asian technology shares moved in the opposite direction. South Korea's Kospi rose 3.1%, but the gains did not translate into stronger cryptocurrency prices. Oil also advanced, with U.S. crude approaching $102 per barrel.
U.S. spot Bitcoin exchange-traded funds recorded $110 million in net inflows on Monday, according to Farside Investors, ending a two-day run of outflows.
Crypto Futures Activity Increases as Prices Decline
Trading activity in cryptocurrency derivatives picked up over the preceding 24 hours. Futures volume increased 18% to $152 billion after declining the previous day, while open interest rose just 0.95%. Liquidations fell 13% to $133 million.
The taker long-to-short ratio stood at 49.54% versus 50.46%, indicating that market orders were split almost evenly between buyers and sellers.
Bitcoin and ether each declined approximately 1.1% over 24 hours, while Solana fell 1.91%. Their futures open interest increased by around 1%, 0.8% and 3.6%, respectively. Solana recorded the largest increase, suggesting capital entered its futures market as prices weakened.
Funding rates remained positive for Bitcoin, ether and Solana, indicating that long positions continued to pay a premium. However, Solana's cumulative volume delta ended in negative territory, pointing to net selling through market orders.
Leveraged Semiconductor Contracts and Oil Positioning Shift
Trading data showed a change in positioning for SOXL, a contract linked to a triple-leveraged semiconductor exchange-traded fund. Its futures open interest fell 7.4% even as its perpetual futures price gained 8%. The combination suggested that the price increase was driven predominantly by short positions being unwound rather than a broad expansion in open positions.
A similar, smaller move occurred in SKHYNIX, a contract tied to chipmaker SK Hynix. Its funding rate declined to 0.0221% from 0.0516%.
Oil remained the only market on the reported list with a negative funding rate. The rate deepened to -0.0115% from -0.0077%, indicating a continued bias toward short positions. Oil open interest rose 2.18% as its price increased 0.86%, suggesting capital was returning after the previous day's outflow.
Bitcoin Options Traders Maintain Downside Protection
The most actively traded Bitcoin options position over the previous 24 hours was a $72,000 put expiring on December 25. The other four contracts in the top five by volume were call options.
Bitcoin's 25-delta put-call skew remained positive across different maturities, indicating continued demand for downside protection. Ether options showed a similar pattern, reflecting cautious positioning in the derivatives market.
Privacy Coins Outperform as DeFi Tokens Retreat
Privacy-focused cryptocurrencies held up better than much of the broader market. Dash rose 1.8%, while Zcash gained 0.5%.
Zcash co-founder Sean Bowe proposed ending the allocation of 8% of newly created coins to the network's community grants program. Bowe argued that the project's treasury, valued at approximately $125 million, could finance several years of spending.
Decentralized finance tokens moved lower after Monday's gains. Aave declined 3.6%, while Sky, the token associated with the project formerly known as MakerDAO, fell 3.9%. Aave's decentralized autonomous organization had not conducted token buybacks since April, according to the source report.
AI and Other Altcoins Face Selling Pressure
AI-related tokens also weakened despite the gains in Asian technology stocks. Render, a GPU computing network, and The Graph, a blockchain data protocol, each lost more than 2%.
Celestia, Starknet and pump.fun each fell approximately 3%. Celestia also faced a scheduled unlock of 5.58 million TIA tokens on Saturday, according to Tokenomist.
CoinMarketCap's Altcoin Season Index rose to 57 out of 100 from 53 on Monday, even as declines across several altcoin sectors highlighted the uneven performance of the cryptocurrency market.
source: coindesk
Writer: Ethan Collins
Crypto Journalist
Ethan Collins reports on developments across the cryptocurrency and blockchain sector. His work covers market movements, protocol updates, regulatory changes, and emerging trends in digital assets.
He focuses on presenting complex topics in a clear and accessible manner for a broad readership.
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