Total market capitalization fell to $2.96 trillion by the end of the week, while Bitcoin’s dominance declined to 58.6%. At the same time, Bitcoin ETF balances decreased by $338.8 million, and Ethereum ETF balances fell by $568.0 million.
Initial pressure on the sector came from the outcome of the US Federal Reserve meeting. The regulator cut the interest rate by 25 basis points to 3.75% and announced the start of US Treasury bond purchases totaling $40.0 billion. However, this decision failed to support asset prices, as it had already been priced in, while officials did not provide a clear signal regarding further rate cuts next year. The so-called dot plot pointed to the possibility of only one adjustment, and Fed Chair Jerome Powell reiterated the potential for a pause to assess the impact of the measures already taken on the US economy.
In this environment, traders have preferred to remain cautious and reduce exposure to risk assets. Nevertheless, sentiment improved slightly toward the end of the week following the release of fresh macroeconomic data. In November, the unemployment rate rose to 4.6%, the highest level since 2021, while nonfarm payrolls increased by 64,000 jobs. At the same time, consumer price inflation slowed to 2.7% year over year. As a result, the balance of economic risks is shifting toward a cooling labor market, implying a continuation of the Fed’s dovish cycle and additional pressure on the US dollar.
Additional support for digital assets came from the outcome of the latest Bank of Japan meeting. For decades, low interest rates made the yen a preferred funding currency for carry trades, with cheap yen-denominated borrowing flowing into higher-yielding and riskier assets, including US technology stocks and cryptocurrencies. Although traders are concerned that this strategy could lose relevance amid tighter monetary policy, officials noted that even after raising the policy rate to 0.75%, it remains effectively negative in real terms, thereby continuing to support financial activity.
However, the current price correction does not appear sustainable, as overall sentiment across the sector remains negative. This is confirmed by continued outflows from exchange-traded funds and the Crypto Fear & Greed Index remaining in the “extreme fear” zone at a reading of 16. Moreover, total market capitalization has fallen to an eight-month low of $2.96 trillion, erasing most of last year’s gains. The market is down 33.0% from its all-time high of $4.4 trillion reached in early October and 14.0% since the beginning of the year, prompting analysts to point to the start of a prolonged bearish cycle.
Meanwhile, analysts at Barclays Plc. believe that spot market volumes will continue to decline in 2026 due to the lack of major catalysts, such as Donald Trump’s return to power in the United States or the launch of fundamentally new exchange products. At the same time, economists suggest that the potential adoption of the Digital Asset Market Clarity Act (CLARITY), which would clearly define the boundary between commodities and securities, could support long-term interest from large market participants.
Overall, conditions in the crypto market remain challenging and investor sentiment subdued. Under these circumstances, most major digital assets may resume their decline or move into consolidation in the coming week.