Crypto proceeds where 2021 ends Crypto proceeds where 2021 ends Crypto proceeds where 2021 ends

Crypto proceeds where 2021 ends

Cryptocurrencies 6 minutes to read

Summary:  The crypto market has been off to a rough start this year, effectively starting the year where it ended in 2021. We are looking at multiple sources to answer the question of why.

On 10 November, the crypto market hit an all-time high in terms of the combined market capitalization of close to $3trn, according to TradingView. Fast forward, the remainder of 2021 was surrounded by fatigue in the crypto market, leading to high volatility alongside similar declines in particular technology and bubble stocks.

Close to 7 days into the new year, the crypto market has so far shown a similar path to where it ended 2021. From its all-time high in November of 69,000 (BTCUSD), Bitcoin declined to the price on 46,200 at New Year’s Eve before further declining to its current level of 42,200. Respecting price actions, Ethereum has followed in the footsteps of Bitcoin. At the same time as Bitcoin, Ethereum hit an all-time high of around 4,850 (ETHUSD) in November. The delight was somewhat short as Ethereum celebrated New Year at 3,750 before declining to its current level of 3,230.

The question remains why the arguably positive market sentiment turned negative after November while it has continued into the new year. To find the answer, we must turn our attention to multiple sources.

Realizing profit

First of all, 2021 was a great year for the crypto market. With gains magnified many times for about every involved in the space, profits must be realized at some point. Substantial profit realization in a highly leveraged market can quickly turn it around as traders are getting their long positions liquidated, thus making the downside worse. Looking at funding rates for crypto perpetual futures, they have arguably stabilized since November, meaning there is now a more reasonable distribution of longs versus shorts, whereas longs previously dominated the futures.

Correlated to speculative stocks

Last year was also good in terms of equities. In December, though, the equity market experienced a steep selling pressure with particularly technology and bubble stocks tumbling. These stocks have historically been partially correlated to crypto, and by all means, it shows an altered risk appetite without any doubt impacting the highly speculative crypto market. We know that individuals trading cryptocurrencies are often drawn into meme stocks or other highly speculative stocks like GameStop as well. This effectively results in similar price movements, so when one goes down, the other likely follows.

The rate hike is likely coming

On top of this, the market has started to expect a possible rate hike. This expectation was further boosted yesterday after the United States Federal Reserve released the minutes of its December meeting, which shows that the FED wants to accelerate the rate hike. This has caused uncertainties for crypto traders on the matter by what means the increased interest rate will impact the market, comparable to its impact on technology stocks. Our Head of Equity Strategy, Peter Garnry, wrote an article yesterday covering the topic of interest rate and technology stocks. The same will likely be the case with the crypto market.

Source: Saxo Group
Source: Saxo Group

Quarterly Outlook 2024 Q3

Sandcastle economics

01 / 05

  • Macro: Sandcastle economics

    Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.

    Read article
  • Bonds: What to do until inflation stabilises

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.

    Read article
  • Equities: Are we blowing bubbles again

    Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.

    Read article
  • FX: Risk-on currencies to surge against havens

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.

    Read article
  • Commodities: Energy and grains in focus as metals pause

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.

    Read article


The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (
- Full disclaimer (

40 Bank Street, 26th floor
E14 5DA
United Kingdom

Contact Saxo

Select region

United Kingdom
United Kingdom

Trade Responsibly
All trading carries risk. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more
Additional Key Information Documents are available in our trading platform.

Saxo is a registered Trading Name of Saxo Capital Markets UK Ltd (‘Saxo’). Saxo is authorised and regulated by the Financial Conduct Authority, Firm Reference Number 551422. Registered address: 26th Floor, 40 Bank Street, Canary Wharf, London E14 5DA. Company number 7413871. Registered in England & Wales.

This website, including the information and materials contained in it, are not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in the United States, Belgium or any other jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation.

It is important that you understand that with investments, your capital is at risk. Past performance is not a guide to future performance. It is your responsibility to ensure that you make an informed decision about whether or not to invest with us. If you are still unsure if investing is right for you, please seek independent advice. Saxo assumes no liability for any loss sustained from trading in accordance with a recommendation.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc. Android is a trademark of Google Inc.

©   since 1992