Global markets are closing the year with growing macro clarity, yet risk assets — and Bitcoin in particular — are struggling to reflect it. Central banks continue to tilt dovish: the Bank of England cut rates this week, following the Federal Reserve, while nearly 90% of global central banks have either eased or held policy steady over the past year. Japan remains the outlier, with the Bank of Japan preparing to tighten policy even as fiscal stimulus expands — reviving concerns over a potential unwind of yen-funded carry trades that have weighed on global risk sentiment.
In the U.S., macro data has softened meaningfully. Labour market figures surprised to the downside, with underemployment rising as more workers re-entered the labour force. Excluding healthcare and social assistance, payroll growth appears particularly weak, suggesting a broader cooling in labor demand. Inflation data also undershot expectations, with CPI now running close to the Fed’s 2% target on a three-month annualized basis. Together, these data points reinforce the case for continued rate cuts, even if the Fed remains cautious about moving too aggressively.
Bitcoin is lagging
Despite this improving macro backdrop, Bitcoin prices have continued to lag. Our cross-asset risk sentiment indicator — which aggregates signals across global asset classes — rebounded sharply in December, while Bitcoin remained depressed. Macro valuation models show a growing residual between Bitcoin’s price and what macro factors would imply, suggesting the weakness is driven more by crypto-specific dynamics than by broader economic conditions.
Sentiment remains a headwind. The Crypto Fear & Greed Index has stayed in fear or extreme fear territory since early November, an unusually prolonged stretch. Selling pressure from long-term holders, a large share of short-term investors sitting underwater, seasonally weak liquidity, and a slowdown in ETF inflows have all contributed to volatile price action. That said, a steady rise in long positions on Bitfinex over the past two months — historically a leading indicator — hints that positioning may be quietly improving beneath the surface.
Why it matters
The current disconnect between macro conditions and Bitcoin pricing is notable. While traditional risk assets and macro indicators point toward easing financial conditions, crypto sentiment remains deeply negative, a setup that has historically preceded sharp regime shifts. Whether this divergence resolves through higher crypto prices or prolonged consolidation will be a key question heading into the new year.
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