Year-End Crypto Volatility Surges as BTC and ETH Swing Amid Thin Liquidity

Quick Breakdown 

• Bitcoin and Ethereum see sharp swings over the weekend amid thinning liquidity and low retail participation.
• Institutional accumulation continues as BTC and ETH leave exchanges, tightening available supply.
• Fed’s upcoming rate decision and balance sheet guidance seen as potential catalysts for major market moves.

Crypto markets experienced notable volatility over the weekend, signalling early turbulence as the year-end holiday period approaches and liquidity thins, according to Asia Colour. Bitcoin fluctuated sharply between $88,000 and $92,000, while Ethereum moved from around $2,910 to $3,150 within hours, clearing leveraged longs and shorts. Despite these swings, total liquidations were relatively modest at $440 million, reflecting lower retail positioning and fading market participation. Google search interest for “crypto” and “BTC” has fallen back to bear-market levels, and perpetual futures open interest has declined significantly, with Bitcoin down more than 44% and Ethereum over 50% since October peaks.

Retail activity declines while institutions accumulate

As retail trading cools, institutional investors and whales appear to be quietly accumulating. Over the past two weeks, about 25,000 BTC have left centralized exchanges, signalling a shift toward long-term custody and tightening the available supply. Ethereum is following a similar pattern, with exchange balances falling to decade lows. These trends indicate that market depth is limited, and even modest trading flows can drive outsized price movements. Institutional buyers continue to purchase on dips rather than chase price rallies, particularly as a sustained break above $100,000 for Bitcoin could trigger renewed treasury demand.

Markets await Fed guidance amid liquidity challenges

Traders are also eyeing the Federal Reserve’s upcoming FOMC meeting, where a 25-basis-point rate cut is expected. Markets will focus on any signals regarding the Fed’s balance sheet strategy, which could influence both equities and risk assets, including crypto. Bitcoin remains range-bound, with key levels at $84,000 and $100,000 likely to determine the next major trend. Options markets reflect positioning for significant price moves once liquidity returns, with investors anticipating a potentially sharp directional shift in the weeks ahead.

Meanwhile, QCP Trading, the firm’s OTC arm, also confirmed it has received a Major Payments Institution (MPI) license from MAS, granting full authorization to offer digital payment token services to institutional clients.

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