Bitcoin’s rally was cut short on Tuesday as a surge in selling pressure wiped out most of the year’s gains. Experts suggest this pullback is a short-term hurdle to a long-term recovery.
According to CoinGecko. Continuous push over the past week Altcoin hikethe market capitalization of cryptocurrencies will increase by approximately $250 billion.
Easing the liquidity crunch at the end of the year and rising expectations for a 2026 rate cut by the U.S. Federal Reserve are two key factors driving the rise.
“The convergence of these two factors triggered a recovery in risk assets.Bitcoin also benefited accordingly, with ETF inflows returning to net inflows,” said Tim Sun, senior researcher at Hashkey Group. decryption.
However, Sun noted that this rally has been structurally conservative, with leverage and volatility remaining low. decryption Previously reported.
“The market has not yet entered the ‘aggressive state’ caused by sentiment resonance and high leverage,” he said. “This lack of further upward momentum is what caused Bitcoin to stall after reaching $94,000.”
What followed was a 3% plunge to the $91,544 that Bitcoin is currently trading at, followed by a subsequent recovery to $92,618, causing a $440 million liquidation and placing the brunt of the brunt on hardcore bulls.
Follow MSCI announcement On Tuesday, it decided not to remove MicroStrategy and other crypto stocks from the index.
The index provider noted that feedback from its consultations “confirmed institutional investors’ concerns that some digital asset treasury companies exhibit characteristics similar to investment funds.”
MSCI is currently initiating a broader consultation on the treatment of non-operating companies.
“MSCI’s decision effectively removes a significant source of potential selling pressure,” Sun said, explaining that exclusion would force passive funds to sell, creating a negative narrative for institutional allocations.
What’s next?
“In the first half of this year…the short-term trend is likely to be strengthened, albeit unstable, driven by specific events rather than a unilateral rise,” Hashkey analysts noted.
Looking further ahead, he expects institutional allocation through spot ETFs to remain the main driver, absorbing long-term capital and reducing price dependence on short-term movements.
“The broader market will continue to weed out speculative projects…assets related to infrastructure, payments and real-world applications are likely to benefit most,” Sun said.
