Contrary to the pattern observed in recent years, when holiday periods were often accompanied by a Christmas rally, investors are currently reducing exposure to digital assets in favor of technology stocks and gold, which continues to post new all-time highs. As a result, low volatility is likely to persist into next week. Price dynamics are also being constrained by growing uncertainty over the future course of U.S. Federal Reserve policy, as reflected in the latest macroeconomic data. In November, unemployment rose to its highest level since 2021 at 4.6%, while non-farm payroll growth slowed sharply to just 64,000. At the same time, the annual Consumer Price Index eased from 3.0% to 2.7%.
These figures allow analysts to argue that risks are shifting toward a cooling labor market, increasing the likelihood of further monetary easing. On the other hand, GDP growth accelerated to 4.3% in the third quarter, raising expectations of renewed inflationary pressure that could be amplified by a more dovish stance from the regulator. Against this backdrop, sentiment in the crypto sector remains negative, as evidenced by continued ETF outflows and the Fear & Greed Index holding in the “Extreme Fear” zone at a reading of 20. Notably, the index has remained in negative territory for fourteen consecutive days, reflecting growing disappointment among retail traders.
In addition, according to data from analytics platform Alphractal, Google search interest in cryptocurrencies, as well as the volume of discussions and posts on online forums, has declined sharply. Overall activity in the sector has returned to levels typically seen during bear market phases. Many experts are also skeptical about the outlook for digital assets over the next twelve months. Most cryptocurrencies started the year with declines, then staged a strong recovery — with Bitcoin reaching record highs near 126,000.00 — before beginning to lose ground again in September, a trend that may persist.
According to forecasts from Barclays Plc, the cryptocurrency market is likely to remain weak in the medium term, while spot trading volumes are expected to contract further due to the lack of major fundamental growth catalysts.
Overall, conditions in the digital asset sector remain challenging and investor sentiment subdued. Under these circumstances, most key cryptocurrencies may continue to consolidate or resume their decline in the coming week.