Crypto markets weaken, with Bitcoin slipping and related stocks sinking amid tax-loss selling, analysts say.

Bitcoin Falls, Crypto Stocks Drop Amid Year-End Tax-Loss Selling

Bitcoin led crypto markets lower on Tuesday, slipping roughly 1% over 24 hours to just below $88,000. The pullback came despite record highs for gold, silver, and copper earlier in the day, which later eased slightly. U.S. stocks moved higher, with the Nasdaq up 0.45%.

Crypto-related equities were hit harder than Bitcoin’s decline suggested. Digital asset treasury firms faced the steepest losses: Strategy (MSTR) fell 4.2%, XXI (XXI) dropped 7.8%, ETHZilla (ETHZ) plunged 16%, and Upexi lost 9%. Gemini (GEMI), Circle (CRCL), and Bullish (BLSH) each declined around 6%.

Hedge fund QCP Capital flagged tax-loss harvesting as a key factor behind year-end volatility, especially in illiquid markets. This strategy involves selling underperforming positions to realize losses and reduce tax liabilities.

“Portfolio managers typically trim exposure to risk assets at year-end, not only for holidays but also to manage taxable events and balance sheets that may prefer not to show crypto holdings,” said Paul Howard, senior director at trading firm Wincent.

QCP also noted falling open interest in BTC and ETH perpetual futures—down about $3 billion and $2 billion, respectively—reducing leverage and leaving markets more sensitive to swings. “Friday’s record Boxing Day options expiry, representing over 50% of Deribit’s total open interest, adds to market vulnerability,” the firm said. Despite easing downside positioning, $100,000 calls indicate cautious optimism for a Santa rally.

Looking ahead, QCP expects short-term volatility to ease in January as liquidity returns. Howard predicts continued consolidation, with little chance of reclaiming early-October highs in the near term.

Trump Calls for Lower Fed Rates Amid Strong Economy

President Donald Trump reiterated his call for the next Federal Reserve chairman to cut interest rates, even as the economy shows strong 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 post follows data showing inflation-adjusted GDP growth at a 4.3% annualized pace in Q3. “In the past, good economic news lifted markets. Today, it sparks fears of immediate rate hikes,” Trump said.

Although the S&P 500 and Nasdaq gained on Tuesday, inflation concerns and limited expectations for rate cuts in 2026 continue to weigh on investors.