Cryptocurrency prices plummet amid doubts, Bitcoin trapped by precious metal attraction effect

Entering the first week of 2026, the crypto market continues its downward trend. According to the latest data, Bitcoin’s price fluctuates around $91,370, rebounding from the historical high of $126,080, but short-term bullish momentum still appears insufficient. The shadow of a sharp decline in virtual currencies looms over the market, with mainstream coins like Bitcoin and Ethereum collectively under pressure.

Market participants have observed an interesting phenomenon behind this wave of crypto declines: when traditional precious metals (gold and silver) hit new all-time highs, digital assets instead fall into a trough. What forces are driving this opposite trend?

Precious Metals Attracting Capital Continues, Bitcoin Faces “Capital Rotation” Impact

According to the latest research from ICAP’s technical analysis team, the answer points to a key phenomenon: funds are flowing from the virtual currency decline camp into precious metals.

Since peaking in October last year, Bitcoin has fallen over one-third, while gold has risen about 15% and reached new highs, with silver surging even more—up to 50%. This is no coincidence—analysts note that investors are reallocating their portfolios, favoring traditional safe-haven assets during periods of rising uncertainty.

Market observers say that the increasing macroeconomic uncertainty at year-end has intensified this phenomenon. Central bank policy signals are mixed, with institutions led by the Federal Reserve showing clear caution. In this context, Bitcoin, positioned as a risk asset, is being marginalized, while gold and silver are favored for their classic safe-haven properties.

Behind the Virtual Currency Plunge: Weak Demand and Institutional Retreat

Deeper issues lie in the waning confidence in demand for virtual currencies. According to CryptoQuant’s analysis, Bitcoin is currently facing a triple dilemma:

First, ongoing capital outflows. As of December 22, Bitcoin ETFs recorded over $140 million in net outflows. As the year-end approaches, the phenomenon of early capital exit is prominent, becoming a significant driver of the crypto decline.

Second, accumulation of short positions. Open interest has risen above $28 billion, but its growth is synchronized with Bitcoin’s price decline, indicating that new funds are not coming from longs but rather from increasing short positions. Institutional investors are turning cautious toward virtual currencies at year-end.

Third, market sentiment collapse. The Crypto Fear & Greed Index hovers around 27, in the “fear” zone. As long as this index cannot rebound to a neutral zone, the downward momentum of virtual currencies will be difficult to reverse.

Mainstream Coins Weakening Collectively, Volatility Increasing

The crypto decline is not exclusive to Bitcoin. Ethereum is priced at $3,140, with a 24-hour change of +1.32%. XRP has risen 3.48% over the past 24 hours but still shows weakness. Solana is up 2.50%, and Dogecoin has surged 7.89%. Overall, market enthusiasm is dispersed, lacking sustained bullish momentum.

More notably, year-end low trading activity has led to decreased liquidity, further amplifying volatility during the decline. An exchange experienced abnormal fluctuations—BTC/USD1 once spiked to $24,111 before quickly pulling back above $87,000. Market participants point out that such extreme volatility often stems from low liquidity in certain trading pairs, with fewer market makers and less tight quoting for newly issued or less traded stablecoins, resulting in insufficient order book depth. A large market sell order or forced liquidation can rapidly wipe out buy orders, causing the transaction price to momentarily fall far below the true market level.

Technical Perspective: Bearish Trend Still Dominant

From a technical standpoint, the structural weakness behind the crypto decline has not improved.

Long-term downtrend line has persisted since the all-time high and remains a major reference on Bitcoin charts. Although short-term rebounds have occurred multiple times, they lack enough strength to effectively break through this structure.

RSI indicator maintains a downward slope, with readings below 50, indicating that the average momentum over the past 14 trading days remains skewed toward the sellers. If this continues, the decline in virtual currencies could be further reinforced.

MACD indicator histogram is gradually approaching zero. If it continues to decline and enters negative territory, it will signify increasing bearish momentum in the short-term moving averages, further confirming the downward trend.

Key Levels and Future Outlook

In the current environment, the following levels are critical:

92,292 USD - Key Resistance Level
This level aligns with the long-term downtrend line and the 50-period simple moving average. If Bitcoin can sustain a breakout and hold above this zone, the bearish structure may weaken, opening space for a rebound. Currently, Bitcoin is around $91,370, still below this resistance.

85,430 USD - Near-term Support/Resistance Zone
This area corresponds to recent weekly lows. As long as the price remains above this level, the market may form a short-term range-bound structure, which is crucial for the evolution of the crypto decline.

80,413 USD - Major Support Level
Close to the 2025 lows and near a psychological threshold. If broken, the crypto decline could evolve into a stronger bearish dominance.

Outlook: Demand Recovery Is the Key to Turning Point

Despite the ongoing decline, there is still hope for a turnaround. CryptoQuant believes that, under the baseline scenario where safe-haven assets continue to be supported, Bitcoin’s upside potential will remain limited until sustainable new demand emerges. This means the market is waiting for a catalyst: either macroeconomic uncertainty diminishes and funds flow back into risk assets, or the crypto sector experiences new application breakthroughs or policy incentives.

Until then, the downward momentum in cryptocurrencies is unlikely to reverse immediately. Traders should remain vigilant about abnormal volatility caused by low liquidity at year-end, and closely monitor market sentiment indicators such as the Fear & Greed Index and ETF capital flows. Only when these indicators show clear signs of improvement can Bitcoin be expected to recover from its current fatigue.