Santa Rally Hopes Fade as Bitcoin Jumps to $90K, Then Falls Even Harder

A brief Bitcoin rally to $90,000 early Wednesday sure seemed like a nice confirmation of an incoming Santa rally—but then it took a naughty turn to nearly $85,000.

Users on Myriad, a prediction market platform owned by Decrypt parent company Dastan, have started losing faith that BTC will see six figures before it falls to $69,000. Just a day ago, participants in the market thought there was a 69% chance Bitcoin would reclaim $100,000, but that’s dropped to 57% as of this writing. And odds of a Santa rally sit at less than 4%, according to Myriad users.

Bitcoin was recently changing hands for $85,921 after having dropped 2% in the past day, according to crypto price aggregator CoinGecko. A total of $155 million worth of Bitcoin derivatives contracts have been liquidated in the past day, according to blockchain analytics platform CoinGlass, with BTC dipping as low as $85,373 earlier in the day.

Other major assets followed Bitcoin’s lead, rising earlier Wednesday before posting sharper losses. Ethereum is down 4% over the last day to a recent price of $2,824 after rising above $3,000 earlier. It’s now down 16% over the last week, leading losses among the top 10 crypto assets by market cap.

The rally fake-out was preceded by two straight days of outflows from Bitcoin ETFs. Already this week, BTC funds have lost $634 million worth of funds, according to Farside Investors.

Just yesterday, Bitcoin and Ethereum wobbled as the U.S. Bureau of Labor Statistics delivered two months worth of jobs data showing that unemployment has climbed to the highest it’s been since 2021.

Meanwhile, Bitcoin traders have been bracing for the Bank of Japan to raise rates on Friday. If it does, it could reverse the lucrative yen “carry trade,” a major source of global liquidity that has historically fueled rallies in risk assets like Bitcoin. Usually when liquidity dries up, that results in fewer dollars flowing into risk-on assets like Bitcoin and equities.

But Bitwise Chief Investment Officer Matt Hougan told Decrypt earlier Wednesday that the rate hike won’t create a lot of volatility, adding that it’s fully anticipated and therefore should be priced into markets.

“That said, it’s a scary headline—Japanese interest rates at a 30-year high!—and in the current market environment, you could see short-term downward pressure as investors react to that headline,” Hougan said.