Bitcoin and Cryptocurrency Market Enters the New Year with a Downward Trend! Here are the factors that triggered the decline!

Bitcoin (BTC) markets continued their downward trend late Monday, with prices falling below $92,000 by Tuesday morning.

Bitcoin Balances Expectations as ETFs Record $420 Million Outflow Ahead of the New Year

Despite MicroStrategy’s end-of-year Bitcoin purchase and the market’s expectations for US President-elect Donald Trump’s policy changes, investors and analysts are predicting sluggish activity heading into 2025.

Investors at Singapore-based QCP Capital said in a Telegram post that they are “skeptical of any New Year boom” as funding rates remain stable. They highlighted January’s historical average return of +3.3%, similar to December’s +4.8%, suggesting that price action may remain limited into February.

“Option flows reflect similar sentiments; Volatility on the front end is decreasing and risk-reversal quotes are coming in for most call options in March,” they said, referring to rising call options that prices will rise in March.

Exchange-traded funds (ETFs) containing Bitcoin have experienced significant outflows, with $420 million withdrawn on December 30 alone.

Fidelity’s FBTC led the decline with an outflow of $154 million, followed by Grayscale’s GBTC ($130 million) and BlackRock’s IBIT ($36 million).

ETFs have recorded net outflows of more than $1.5 billion since Dec. 19, marking a sharp turnaround from the nearly $2 billion in inflows seen earlier in the month.

Analysts interpret this trend as a potential shift towards a more cautious or bearish view on Bitcoin’s short-term performance.

Bitcoin is preparing to close December with a monthly loss of 4%, its worst performance since 2021.

This decline followed a 117% year-on-year increase as retail investors and long-term holders took profits. The decline in Bitcoin prices also affected major altcoins; ether (ETH), XRP, Solana’s SOL, and Cardano’s ADA fell as much as 3% before a slight rebound.

MicroStrategy Acquisition Failed to Improve Sentiment

MicroStrategy, a leading bitcoin development company, announced its eighth consecutive week of BTC buying on December 29, adding 2,138 BTC for $209 million. Thus, its total assets reached 446,400 BTC.

However, the announcement failed to boost market sentiment. Following the news, BTC prices fell further and MicroStrategy shares fell 8%, hitting their lowest level since November.

*This is not investment advice.