XRP Leads Crypto Losses: Dollar Strength Drives Broader Crypto Market Losses
On the second-to-last day of the year, XRP led cryptocurrency losses as Asian equities markets fell on Monday due to a stronger dollar that pushed down global currencies and assets, including bitcoin. On the last day, XRP fell 5.15%, while Dogecoin (DOGE), Solana’s SOL, and BNB all had declines of up to 2%. While the broad-based CoinDesk 20 (CD20), an indicator that tracks the largest tokens minus stablecoins, lost 3.5%, the overall market capitalization fell 1.24%.
Year-End Market Turmoil: U.S. Stocks and Bitcoin Decline as Dollar Rises
Friday saw a fall in US stocks as investors reduced their holdings due to uncertainty as the year came to a close. While futures contracts on the U.S. indexes S&P 500 and Nasdaq indicated losses in the U.S. session as of Asian afternoon hours, an Asia Pacific index reversed five-day advances. The U.S. Dollar Index (DXY), which measures the value of the dollar relative to other major fiat currencies, such as the euro, has historically moved in the opposite direction of Bitcoin.
A major factor in the dollar’s strength is that President-elect Donald Trump, who has pledged several plans to boost the economy in the upcoming years, will take office in late January. In contrast to cryptocurrencies, dollar-denominated assets gain appeal when the dollar appreciates. Traditional investments that generate returns in a strong dollar environment, such as stocks or U.S. Treasuries, are preferred by investors.
However, in the face of reduced liquidity and year-end profit-taking by investors, this has tempered expectations of a sustained cryptocurrency boom. With a 3.26% decline in Bitcoin prices this month, a Santa rally, a term used to describe optimistic seasonality observed in December, has failed.
For more up-to-date crypto news, you can follow Crypto Data Space.
Leave a comment