Fed leadership uncertainty, tax-driven selling, and “whale” activity weigh on crypto sentiment
Bitcoin (BTC) hovered near $86,000 on Wednesday, struggling to find momentum as investors remain cautious heading into the final weeks of the year. Despite periodic rebounds, the world’s largest cryptocurrency has failed to mount a sustained recovery, reflecting a broader risk-off mood across financial markets and a growing list of headwinds unique to digital assets.
One source of unease stems from renewed volatility in technology stocks, particularly those tied to artificial intelligence, which have been a major driver of speculative appetite in 2025. At the same time, uncertainty over the future leadership of the Federal Reserve has added another layer of complexity. While markets had previously assumed that Kevin Hassett, viewed as relatively dovish, was the leading candidate to succeed Fed Chair Jerome Powell next year, that expectation has shifted. Kevin Warsh, considered a more hawkish contender, is now emerging as the frontrunner, according to Nic Puckrin, co-founder of Coin Bureau. A more hawkish Fed outlook could limit liquidity and dampen enthusiasm for risk assets like bitcoin.
Seasonal factors are also pressuring prices. December typically brings an uptick in tax-loss harvesting, as investors sell losing positions to offset capital gains elsewhere. Cryptocurrencies, where many holders are still underwater after recent declines, are particularly exposed to this dynamic. Puckrin warned that these combined forces could result in a lackluster close to 2025, with the possibility that bitcoin could slide below $80,000 if selling accelerates.
Another key overhang is the behavior of long-term holders, often referred to as “HODLers.” According to Compass Point analysts, roughly 60% of bitcoin’s supply remains in wallets holding more than $85 million worth of the token. While spot bitcoin ETFs and digital asset treasury companies now control about 13% of total supply, the majority is still concentrated in the hands of large, long-term investors capable of influencing market cycles.
Since July 2025, this cohort has increased selling activity, contributing to bitcoin’s pullback from its early October high near $126,000. That decline was amplified by forced liquidations of leveraged positions as prices fell. Analyst Ed Engel noted that until selling by these large holders normalizes, near-term caution remains warranted.
Bitcoin is now down about 6% year to date and is on track for its first meaningful decoupling from the S&P 500 since 2014. The divergence underscores how crypto-specific factors — rather than broader equity market trends — are increasingly driving price action as the year draws to a close.
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