Bitcoin Slides as Crypto Stocks Tumble on Year-End Tax-Loss Selling
Bitcoin led a pullback in crypto markets on Tuesday, falling about 1% over 24 hours to just below $88,000. The drop came even as gold, silver, and copper reached record highs earlier in the day before easing slightly. U.S. stocks edged higher, with the Nasdaq up 0.45%.
Crypto-related equities fell more sharply than Bitcoin, with digital asset treasury companies among the worst hit. Strategy (MSTR) dropped 4.2%, XXI (XXI) slid 7.8%, ETHZilla (ETHZ) plunged 16%, and Upexi fell 9%. Gemini (GEMI), Circle (CRCL), and Bullish (BLSH) each lost roughly 6%.
Hedge fund QCP Capital cited year-end tax-loss selling as a key factor in short-term volatility, especially in illiquid conditions. The practice involves selling underperforming positions to realize losses and reduce tax liabilities.
“Portfolio managers often trim risk exposures at year-end, both for holidays and to manage taxable events, sometimes avoiding cryptocurrency holdings on balance sheets,” said Paul Howard, senior director at trading firm Wincent.
QCP also noted declining open interest in BTC and ETH perpetual futures—down around $3 billion and $2 billion—reducing leverage and leaving markets vulnerable to swings. “Friday’s record Boxing Day options expiry, over half of Deribit’s total open interest, adds to the risk,” the firm said. $100,000 calls, however, suggest cautious optimism for a potential Santa rally.
Looking ahead, QCP expects volatility to ease in January as liquidity returns, while Howard anticipates continued consolidation with little chance of reclaiming early-October highs in the near term.
Trump Pushes for Lower Fed Rates Despite Strong Economy
President Donald Trump reiterated his call for the next Federal Reserve chairman to cut interest rates, even amid robust economic growth.
“I want my new Fed Chairman to lower Interest Rates if the Market is doing well, not destroy the Market for no reason whatsoever,” Trump wrote on Truth Social Tuesday.
The statement follows data showing inflation-adjusted GDP grew at a 4.3% annualized pace in Q3. “Previously, good economic news lifted markets. Today, it sparks fears of immediate rate hikes,” Trump said.
Although the S&P 500 and Nasdaq rose Tuesday, inflation concerns and limited expectations for rate cuts in 2026 continue to keep investors cautious.
