Weekly Fundamental Crypto Outlook: Demand Remains Weak

Although some cryptocurrencies attempted to recover value toward the end of the week, global macroeconomic dynamics have not allowed confidence to fully recover, and the weekly balance continues to point to a bearish bias on average over recent sessions. Part of this weakness can be explained by U.S. economic data, particularly employment and inflation, which have reintroduced a global environment of indecision and limited the recovery of risk assets, including the crypto market. As long as confidence fails to stabilize, dominant selling pressure may continue to shape the final market oscillations of 2025.

Demand Continues to Show Weakness

During the week, several key economic indicators were released that influence the outlook for the United States heading into next year. November employment data showed an NFP increase of 64,000 jobs, exceeding expectations of 51,000, while annual CPI surprised to the downside with a 2.7% reading, below the 3.1% forecast. This combination has generated indecision around the Federal Reserve’s future stance, as softer inflation contrasts with a still-resilient labor market, potentially reintroducing inflationary pressures and limiting clarity around a sustained rate-cutting cycle in 2026.

A lower interest rate environment typically supports risk assets by reducing borrowing costs and increasing liquidity. However, the current lack of macroeconomic clarity does not guarantee that the U.S. economy can sustain solid demand for cryptocurrencies in the short term. Adding to this uncertainty is the recent decision by the Bank of Japan to raise interest rates, reinforcing a more aggressive stance that could restore appeal to the bond market and divert demand away from assets such as cryptocurrencies, which do not offer fixed yields.

This global environment of indecision continues to weigh on Bitcoin demand, a dynamic also reflected in indicators such as Open Interest. While BTC ETF open interest showed a modest recovery toward the end of the week, reaching approximately $28 billion, it remains below levels observed in late November and early December. This suggests that position unwinding continues to pressure the market, limiting a sustained recovery in institutional demand.

Source: Cryptoquant

Unless more favorable macroeconomic conditions emerge or a meaningful catalyst directly benefits the sector, current uncertainty may continue to undermine confidence and open the door to additional selling pressure toward the end of 2025.

 

Bitcoin Versus Other Markets

Bitcoin has begun to show a loss of positive correlation with equity markets, particularly the S&P 500. The correlation coefficient has moved back toward neutral territory, indicating a lack of a clear relationship between the two markets over recent sessions. While the S&P 500 has managed to maintain a bullish bias near record highs, Bitcoin has posted mixed price action, pointing to greater relative weakness and failing to mirror the confidence seen in equities. It is important to note that correlation coefficients can change over time.

Source: Data – TVC, StoneX, Tradingview

This suggests that confidence derived from recent economic data has primarily flowed into equity markets, rather than cryptocurrencies. In this context, Bitcoin and the broader crypto market are not currently perceived as attractive risk assets compared to traditional markets, favoring a reallocation of capital flows toward equities. Unless a strong positive correlation with risk assets is restored, potential improvements in global economic confidence may not translate into meaningful support for the crypto market.

 

Confidence Remains in Indecision

The Crypto Fear & Greed Index has posted another notable decline, hovering around 21 points and returning to the boundary between the “fear” and “extreme fear” zones. This behavior reflects a continued deterioration in short-term confidence across the crypto market.

Source: Coinmarketcap

As long as the index fails to move back above the neutral zone, it will be difficult for a sustained bullish bias to take hold and drive solid demand for cryptocurrencies such as Bitcoin. Persistent weakness in sentiment may continue to limit market interest and leave the door open to more pronounced selling pressure in the coming sessions.

 

Written by Julian Pineda, CFA, CMT – Market Analyst

Follow him on: @julianpineda25