Bitcoin's price experienced significant volatility right after Christmas 2024 due to unforeseen anomalies and regulatory pressures, leading to notable shifts in its market performance.
On December 26, Bitcoin (COIN:BTCUSD) faced dramatic fluctuations, primarily triggered by a TradingView error which inaccurately showed Bitcoin's market dominance dipping to 0%. According to reports from Cointelegraph, this glitch prompted automatic selling actions among investors, resulting in approximately 4% loss and interrupting what had been stable trading during the Christmas holiday.
Despite the swift rectification of the error, the incident triggered liquidations totaling around $33 million on long positions. Bitcoin opened trading on December 26 with losses and was recorded at approximately $95,700, down by 3.61% as of 8:30 AM (Brasília time), which reflects the broader downturn affecting major cryptocurrencies after Christmas.
The decline was also influenced by new regulations concerning cryptocurrency mining in Russia. Set to take effect on January 1, 2025, the ban on mining across ten regions of Russia aligns with laws signed by President Vladimir Putin earlier this year, extending until March 15, 2031.
Investor apprehension lingered, especially with recent comments from the Federal Reserve (Fed) signaling uncertainties about U.S. monetary policy. Analysts mentioned on December 18, the Fed outlined expectations for only two 0.25 percentage point cuts during 2025, disappointing investors who had predicted more aggressive easing.
Despite adverse market conditions, Beto Fernandes, an analyst at Foxbit, suggested the cryptocurrency markets might escape substantial losses due to typical declines during the Christmas trading week, which tend to reduce both liquidity and trading volumes. He pointed out, “This reduction opens up possibilities for volatility, as large offers or demands may not find enough buyers or sellers.”
January is projected to renew demand for Bitcoin with anticipated political changes in the United States, with the cryptocurrency showing impressive year-to-date gains of 116.35%, even as uncertainties continue to shape investor sentiment.
On December 26, Bitcoin’s price dropped below $96,000 after peaking over $99,000 on Christmas day. At around 10:43 AM (Brasília time), the cryptocurrency was down 2.9% to $95,471, paralleled by Ethereum's (ETH) decline of 3.8% to $3,349 as reported by CoinGecko. The total market capitalization for all cryptocurrencies fell below $3.46 trillion.
These recent fluctuations and market behaviors have been influenced by broader macroeconomic factors. The Bitcoin market faced harsh corrections following the Federal Open Market Committee (FOMC) meeting, as prices plummeted from $108,000 to below $92,000 just days before the holiday. Although the asset attempted recovery leading to Christmas, it faced resistance at the $100,000 mark on Christmas night, resulting again in downward pressure.
Ayron Ferreira, senior analyst at Honey Island Capital, emphasized the dwindling liquidity and trading volume approaching year-end, indicating the market would likely settle with minor adjustments. He noted, “The atmosphere is one of price rest with tendencies for corrections following the recent rally.”
With the current dynamics, the Bitcoin market shows mixed behaviors, with heavy corrections seen not just for Bitcoin but also across altcoins. Ethereum was reported as being unable to maintain $3,500, recently falling below $3,400 with higher daily declines than Bitcoin.
This whistle of turmoil has fueled declines for several major altcoins, with XRP, Solana, and BNB recording notable setbacks, some experiencing declines as much as 9% within the last 24 hours. While only select altcoins saw upward trends, the total market capitalization of cryptocurrencies shrank by over $100 billion, leading to increasing investor caution.
Overall, as seen from trading data and expert evaluations, the post-Christmas volatility of Bitcoin underlines the underlying fragility and reactiveness of the cryptocurrency market to simultaneous technical errors and regulatory shifts. With liquidity shrinking and investor apprehension dominating sentiment, the path moving forward remains fraught with uncertainty but is colored with cautious optimism for renewed demand as policy landscapes shift.
