Bitcoin fell below the $90,000 mark last night (8) and although it attempted to launch a counterattack, the bullish momentum was difficult to sustain, currently hovering around $90,000. Analysts at the cryptocurrency exchange Bitfinex warned that Bitcoin's weak performance compared to U.S. stocks reflects insufficient spot buying momentum, making Bitcoin susceptible to fluctuations in the overall economy.
Despite the subdued trend in the cryptocurrency market, concerns among investors that turmoil in the Japanese bond market could trigger spillover effects have led to a surge in global long-term government bond yields. The U.S. 10-year government bond yield soared to 4.19%, reaching its highest level in nearly three months; U.K. and other European government bonds faced sell-offs; at the same time, the Japanese 10-year government bond yield continued to climb, approaching 2%, reaching its highest level in nearly 20 years.
Bond market turbulence has dragged down US stocks, with the S&P 500 index falling 0.5% on Monday and the Nasdaq index down 0.3%, further suppressing the overall market's risk appetite.
This week, the market is focused on the Federal Reserve's (Fed) last interest rate decision meeting of the year. Although the market has fully priced in a '25 basis point cut in December', discussions from the Fed regarding the subsequent rate cut path and whether to accompany liquidity measures could still trigger market volatility on Wednesday.
LMAX market strategist Joel Kruger analyzed: 'Any easing of financial conditions or a weakening dollar will be favorable; conversely, if the Fed unexpectedly adopts a hawkish stance or scale on easing policies, it could exacerbate downward pressure on the currency market.'
Despite Bitcoin's moderate rebound from its November low, Bitfinex analysts still remind that the market is facing a dual impact of 'structural weakness' and 'declining spot demand.'
Bitfinex points out that as the S&P 500 index approaches historical highs, Bitcoin has instead fallen into narrow fluctuations, indicating an increasing 'divergence' between the two and suggesting a relative weakness in the cryptocurrency market.
Bitfinex has listed several key signals to support this viewpoint:
1. Heavy selling pressure: Bitcoin spot ETFs listed in the US continue to face redemptions, and traders tend to 'sell on rallies' rather than accumulate positions. The 'Cumulative Volume Delta (CVD, which measures changes in buying and selling strength)' of major exchanges is significantly negative, indicating a market dominated by sellers.
2. Significant pressure from trapped positions: Currently, over 7 million Bitcoins are in an 'unrealized loss' state, and this pessimistic sentiment regarding positions is reminiscent of the consolidation phase in 2022.
3. Insufficient fresh capital: Although capital flows remain positive, with a monthly net inflow of approximately $8.69 billion (measured by realized changes in market value), this is far from the peak period and can only provide a thin buffer against downside risks.
Bitfinex analysts summarize that the above factors intertwine to create an extremely fragile market structure at the end of the year. The report points out:
As spot demand weakens, the market faces a significant thinning of buying support, which undermines the immediate support for prices and increases market sensitivity to external shocks, macroeconomic fluctuations, and a tightening financial environment.
"Bitcoin is in a $90,000 defense battle! Bitfinex analysts warn that 'the market structure is fragile and susceptible to shocks.'" This article was first published on (BlockCast).
