Trading volumes have thinned noticeably in recent sessions, amplifying price moves and reinforcing a defensive tone, some market watchers say.
What to know:
Crypto markets slipped on Sunday as a broader pullback in risk assets extended into the final full trading week of the year, with investors remaining cautious amid concerns over technology valuations, fading momentum in U.S. equities and mixed signals from the Federal Reserve.
Bitcoin fell about 0.5% to trade near $89,600, hovering just above last week’s lows, while ether edged slightly lower to around $3,120. Most major tokens traded lower on the day, with XRP, Solana and Dogecoin posting losses of upto 2%, according to market data.
The move came as U.S. equity-index futures rebounded modestly after last week’s tech-led selloff, which was triggered by renewed scrutiny over heavy artificial intelligence spending and earnings sustainability.
While futures for the S&P 500 and Nasdaq 100 rose about 0.2% in Asian morning hours Monday, risk appetite remained fragile as investors reassess whether elevated valuations in technology stocks can be justified into 2026.
That caution has spilled over into crypto markets, which have struggled to regain momentum following October’s sharp drawdown. Trading volumes have thinned noticeably in recent sessions, amplifying price moves and reinforcing a defensive tone.
“Right now investors are hesitant to invest in cryptocurrencies given October’s dip, concerns of an overvalued U.S. stock market, and mixed signals from the Fed,” said Jeff Mei, chief operating officer at crypto exchange BTSE, in a Telegram message.
“That being said, Bitcoin ETF inflows are still net positive and the Fed has started buying back securities in the market, adding liquidity that could flow towards stocks and crypto,” he added.
Mei added that year-end positioning is likely driving the current weakness. “Given it’s the end of the year, traders are likely taking profits now and will re-evaluate if they want to initiate new crypto positions in the beginning of 2026,” he said.
Others warned that thin liquidity could exaggerate downside moves in the coming weeks.
“This morning’s crypto sell-off is a continuation of the negative bias from Friday and we would expect the majors to continue to lead the way lower,” said Augustine Fan, head of insights at SignalPlus. “As trading volumes have dropped significantly since the 10/10 event, and sentiment has turned widely negative, expect BTC and ETH to act as a hedging proxy for every other token as traders adjust exposures.”
Fan cautioned against over-interpreting short-term price swings. “We wouldn’t read too much into the day-by-day or hour-by-hour in these thin conditions, but the overall sentiment remains deeply negative and the path of lower resistance likely points to softer prices into year-end,” he said.
Despite the near-term pressure, U.S.-listed bitcoin exchange-traded funds and ongoing liquidity support from central banks could provide a more constructive backdrop once markets reopen fully in early 2026.
