Market Overview
Last week’s market sell-off was primarily driven by a repricing of Fed rate cut expectations rather than a structural collapse. Positions have now been largely cleared, and global easing policies continue. However, stabilizing market sentiment still depends on the performance of major cryptocurrencies.

Macro Context
Fed Chair Powell’s withdrawal of nearly certain December rate cuts caused market expectations to plummet from around 70% to 42%. This shift, amplified by a lack of other macro data, led to a downturn in U.S. risk assets. Cryptocurrencies, as highly sentiment-sensitive assets, were hit particularly hard.

Market Performance
Bitcoin fell below $100,000 for the first time since May, and cryptocurrencies broadly underperformed equities. However, some privacy coins and fee-switching mechanisms showed relative strength.

Digital assets remain among the worst-performing sectors—a trend observed since early summer, partly due to persistent negative skew compared to stocks. Notably, Bitcoin and Ethereum underperformed altcoins, which is rare in a downturn. Two factors explain this:

1. Altcoins have been declining for some time.

2. Certain niches, like privacy coins and fee-switching projects, demonstrated localized resilience.

Sector performance was broadly negative. The GMCI-30 index fell 12%, with AI, DePIN, Gaming, and Meme coins leading the declines. Even typically resilient categories like L1s, L2s, and DeFi saw broad weakness, indicating a risk-off environment rather than sector rotation.

Reasons for the Sell-off
Pressure stemmed mainly from U.S. trading hours and seasonal whale selling. The repricing of rate cut expectations was the core driver, with no fundamental breakdown observed.

Bitcoin had previously held the $100,000 level twice in early November and even briefly rebounded to $110,000. However, selling pressure emerged consistently during U.S. market hours, eventually breaking key support.

Whale selling, typically seasonal from Q4 to Q1, arrived earlier this year as traders anticipated a weaker cycle. This created a self-fulfilling dynamic as de-risking amplified volatility. The sell-off was largely U.S.-driven and macro-induced, not rooted in crypto-specific failures.

Future Outlook
The global easing cycle remains constructive: Japan is preparing a $110 billion stimulus, China continues its monetary easing, and the U.S. will end quantitative tightening next month. Fiscal channels, such as a proposed $2,000 stimulus, also remain active.

The current adjustment is about timing—how quickly liquidity will flow into speculative risk assets—rather than direction. Crypto markets are now almost entirely macro-driven, lacking fresh data to anchor rate cut expectations.

For sentiment to improve, Bitcoin must reclaim its range highs. Until then, market breadth may stay limited, and narratives will struggle to gain traction. The next catalysts will likely come from policy and rate expectations rather than internal crypto flows. Once major cryptocurrencies regain momentum, a broader recovery is expected.

Summary
The sell-off appears to be a macro-driven shock rather than a structural collapse. Positions have been cleared, U.S.-led pressure is well-understood, and seasonal whale dynamics explain much of the volatility.

The broader backdrop remains supportive: global easing continues, U.S. QT ends soon, and liquidity conditions may improve in Q1. However, sentiment stabilization hinges on major cryptocurrencies, particularly Bitcoin, regaining strength. The next leg up will likely be fueled by policy and rate expectations, with a broader market recovery expected once leadership is reestablished.