Market Reversal Hits Crypto Sector
That brief moment of optimism in crypto markets seems to have evaporated rather quickly. Bitcoin, which had pushed above $90,000 earlier today, has now retreated to around $86,500. That’s a drop of about 3.9% in just the past hour, and it’s dragging everything else down with it.
I think what’s interesting here is how quickly sentiment can shift. One minute there’s excitement about breaking through that psychological barrier, and the next, we’re seeing broad declines across the board. It’s not just Bitcoin either – ether fell 5.3% to about $2,850, and XRP slipped 4.1% to roughly $1.89. The wider market, as measured by the CoinDesk 20 index, is now down 1.5% for the day.
Mining Stocks Take a Hit
The pullback hit mining companies particularly hard. MARA Holdings erased its earlier gains and is now 4.8% lower on the day. Core Scientific slid 6%, which is quite a move. CleanSpark, which had been one of the better performers earlier, gave back all of its gains and is now down 0.38%. Riot Platforms lost 0.7% as well.
What strikes me about this is how sensitive these mining stocks are to Bitcoin’s price movements. They tend to amplify whatever direction Bitcoin is moving in, both up and down. When Bitcoin rallies, they often outperform, but when it pulls back, they can really suffer.
Trading and Services Stocks Cool Off
The cooling effect spread to trading and crypto services companies too. Circle Internet, which issues the USDC stablecoin, fell 3.2%. Strategy, the largest corporate holder of Bitcoin, dropped 2%. Galaxy Digital slipped 1.9%, and even Coinbase dipped 0.55%.
There was one notable exception though – Hut 8 surged 20% in early trading after announcing a 15-year, $7 billion lease agreement with AI infrastructure firm Fluidstack. It remains up more than 12% on the day, which is quite impressive given the broader market conditions.
Market Context and Interest Rates
This reversal happened even as Fed Governor Chris Waller, who some see as a potential replacement for Jerome Powell, discussed interest rate policy. He talked down the neutral stance on rates and mentioned that job growth appears close to zero.
But here’s the thing – prediction markets like Polymarket and Kalshi both show odds of more than 70% for no rate reduction in January. The CME’s FedWatch tool points in the same direction. So perhaps the market is already pricing in this hawkish stance, or maybe there are other factors at play.
What I’m noticing is that crypto markets remain incredibly sensitive to broader economic signals, even as they try to establish their own independent narrative. The connection to traditional finance, through stocks and interest rate expectations, seems stronger than some might want to admit.
It’s worth watching how this plays out over the next few days. Will Bitcoin find support around current levels, or could we see further declines? And how will mining stocks respond if volatility continues? These are the questions traders are probably asking themselves right now.
