The last week in the cryptocurrency market has seen the largest cryptocurrency, Bitcoin, moving sideways without a clear trend, with the price rising about two percent during the week. In contrast, the price of the second-largest cryptocurrency, Ether, fell about five percent, and the overall value of the rest of the cryptocurrency market (excluding the largest stablecoins) declined by about four percent.
As Bitcoin’s price developed significantly stronger than the rest of the market, Bitcoin dominance increased by as much as four percent (approximately 2.3 percentage points). Meanwhile, as Ether’s price developed weaker than the rest of the market, the ETH/BTC ratio fell by over seven percent in a week.
Among the tokens on the Kvarn X trading service, the biggest weekly declines were made by BEAM (-26%), DYDX (-26%), and WIF (-25%). The few gainers during the bearish week were Bitcoin (+2%) and ONDO (+1%).
FOMC Shook Markets
The most significant market events of the past week were Bitcoin’s new all-time high of about $108,000 on Tuesday and the sharp price drop below $100,000 immediately following on Wednesday.
The most significant market events of the past week were Bitcoin’s new all-time high of about $108,000 on Tuesday and the sharp price drop below $100,000 immediately following on Wednesday.
The trigger for Wednesday’s price drop was the meeting of the U.S. Federal Reserve’s Federal Open Market Committee (FOMC). At this meeting, the U.S. Federal Reserve announced another 0.25 percentage point rate cut.
The rate cut itself was entirely in line with market expectations and thus did not cause any market reactions. Instead, reactions were driven by comments from Federal Reserve Chair Jerome Powell, who stated that the central bank currently anticipates only two 0.25 percentage point cuts in 2025.
This is clearly less than the market had priced into the rates, triggering a sharp downward move in both the stock and cryptocurrency markets. The S&P 500 Index, the Nasdaq Composite Index, and the price of Bitcoin all dropped rapidly by more than three percent.
The decline hit the altcoin market particularly hard, which fell by over 10 percent.
What’s Next?
A relatively dramatic daily drop naturally raises questions about what to expect from the market next.
First, it may be useful to place one-day market movements in a slightly broader context.
Before yesterday’s price dip, Bitcoin’s price had just risen to a new all-time high. On a daily timeframe, the price had clearly moved outside the Bollinger Bands, which is often seen as a sign of overextension and an increased risk of a correction.
During the price dip, the price fell slightly below $100,000, remaining clearly higher than the dip a week earlier when it touched about $94,000. The day after the drop, the price had already returned above its 20-day moving average.
The purpose of these observations is to illustrate that so far, the events of the past few days appear primarily as a typical dip in a bull market, possibly representing a buying opportunity.
The days following a sharp drop are often quite informative, showing whether buyers who have been waiting for a dip seize the opportunity or whether market confidence has been more severely shaken. The first 24-hour reaction has been calm so far, but the outlook should become much clearer by the end of the week.
As an interesting detail from the past week, we highlight Bitcoin’s relative strength compared to the stock market. Over the past week, the Dow Jones Industrial Average and the Russell 2000 Index, which tracks smaller companies, have declined sharply.
It is particularly interesting that under these circumstances, Bitcoin’s price did not decline before yesterday but instead reached a new all-time high on Tuesday. In our view, this indicates idiosyncratic strength in the cryptocurrency market.
It will be interesting to see how the cryptocurrency market reacts if stock indices, after a weak couple of weeks, show some recovery. About a month ago, we saw a similar situation where Bitcoin held steady during a stock market decline and then rose to a new all-time high as stocks recovered.
We see Bitcoin’s price as having fairly good conditions to continue on its bull market path despite the turbulence of the last 24 hours. The previous low at $94,000 should serve as a good base, and further declines up to that point do not cause particular concern.
We are somewhat more cautious about the altcoin market. As seen in the graph below, the OTHERS/BTC ratio has fallen sharply over the past two weeks.
An optimistic interpretation could be that the OTHERS/BTC ratio is now nearing its late-September level, with only about 20 percent left to the November low. This could mean that there may not be much room for further declines and that we might be approaching buying opportunities rather than selling points. However, if one wants to invest in altcoins under these circumstances, it would be particularly important to emphasize the importance of careful token selection, as the general weakness of the altcoin market without a boost from the overall market typically separates the wheat from the chaff.
With these reflections, we leave the reader to follow the cryptocurrency market’s intriguing situation after the FOMC turbulence. Kvarn Pulse wishes you a very Merry Christmas and a peaceful holiday season!
Tax year ends - Check your investments by the end of the year
The last weeks of the year are a good time to review your tax situation and see if there are any unrealised profits and losses that you can still take advantage of this tax year. The Kvarn X profit and loss calculator makes it easy to see where you stand in terms of realised transactions. Also, be sure to update the purchase prices of any crypto assets you have transferred in Kvarn X so that the calculation is accurate.
Kvarn X user interface redesign - Improving the user experience
We are introducing a redesigned and improved user interface for both web and mobile applications. We will do this gradually over the coming weeks for both applications. This will include simplified buy/sell functionality for effortless trading, enhanced tools for the active traders in the form of an advanced trading view, and many other enhancements to improve the user experience of the service.
Ideas for Building a Crypto Portfolio?
If you're wondering how to build a crypto portfolio or how to get started with crypto investing, we offer various theme-based examples in this section as ideas for constructing your portfolio. Please note that nothing in this newsletter constitutes investment advice or should be interpreted as an encouragement to make investment decisions.
Theme Idea: GameFi
GameFi combines gaming, blockchain, and decentralized finance. By integrating crypto tokens, players can own digital assets earned or acquired in-game, creating economic incentives.
Example of a GameFi-Themed Portfolio in Kvarn X:
- Immutable X (IMX)
- Gala Games (GALA)
- Beam (BEAM)
Stay tuned for more portfolio-building ideas in upcoming newsletters!
The material contained in the Kvarn Pulse is produced solely for the purpose of marketing communication. Any information conveyed through Kvarn Pulse should not be construed as an offer or an invitation to make any purchase or sale decisions, or as an encouragement to make investment decisions about any investment object. Copying or borrowing the content of the newsletter without Kvarn's express permission is prohibited. The information presented in the newsletter pertains to the situation prevailing at the time of writing, and the information may or may not have changed. Kvarn Capital Oy does not guarantee the accuracy or completeness of the information contained in the newsletter or referred to in the newsletter.
