Inflation Cools and Stocks Rise, So Why Is Bitcoin Still Floundering?

Ethereum is currently experiencing significant selling pressure, with its price dropping to $2,933 after a 9% decline in just eight hours. This downturn has led to the liquidation of over $670 million in long positions, reflecting a broader market struggle characterized by fear and uncertainty. Analysts are increasingly predicting a prolonged bear market extending into 2026, as Ethereum remains below critical structural levels.

The U.S. Federal Reserve has revised its guidance on how banks can engage with cryptocurrency, allowing for greater participation in digital asset trading. This change reverses previous restrictions that limited the activities of uninsured state-chartered banks, enabling them to access core payment systems and Federal Reserve membership.

Bitcoin's price has plunged to approximately $84,500 following a series of aggressive sell-offs, raising concerns about its stability and potential further declines. This significant drop comes amid a broader bearish sentiment in the cryptocurrency market, with analysts warning of a possible retest of the $70,000 support level.

Bitcoin's price briefly reached $90,000 following the November Consumer Price Index report, which indicated a decrease in US inflation. However, the cryptocurrency's ability to sustain this rally remains uncertain as key market indicators are lacking.

Recent data indicates that the anticipated impact of the Bitcoin mining crackdown in China, particularly in Xinjiang, has been overstated, with hashrate losses being temporary and influenced by external factors such as power curtailments in the US.

Bitcoin's recent price movement saw a brief bounce above $90,000, but this was short-lived due to ongoing market volatility, leading to a significant decline in profits from on-chain transactions. The current trading environment reflects a shift from high reward opportunities to tighter margins for investors.

Bitcoin's 'realized cap' has reached a record high of over $1 trillion, indicating a significant valuation metric for the cryptocurrency, despite ongoing skepticism regarding its traditional four-year price cycle. This situation has been highlighted by Bitwise's Andre Dragosch, who notes that the current macroeconomic environment is being overlooked by investors.

Bitcoin's price has fallen back to $86,000, relinquishing gains made following the release of softer-than-expected inflation data. This decline reflects ongoing volatility in the cryptocurrency market, where Bitcoin has struggled to maintain its value amid bearish signals and increased selling pressure.