Bitcoin edges lower while crypto stocks post steep losses, driven by tax-loss selling, analysts note.

Bitcoin Slides as Crypto Stocks Tumble Amid Year-End Tax-Loss Selling

Bitcoin led a pullback in crypto markets on Tuesday, falling roughly 1% over 24 hours to just under $88,000. The decline came even as gold, silver, and copper reached record highs before easing slightly later in the day. U.S. equities gained modestly, with the Nasdaq up 0.45%.

Crypto-related stocks, however, fell more sharply than Bitcoin, with digital asset treasury companies hit the hardest. Strategy (MSTR) dropped 4.2%, XXI (XXI) slid 7.8%, ETHZilla (ETHZ) plummeted 16%, and Upexi lost 9%. Other notable decliners included Gemini (GEMI), Circle (CRCL), and Bullish (BLSH), all down around 6%.

Analysts at hedge fund QCP Capital pointed to year-end tax-loss harvesting as a key driver of market action, particularly in illiquid conditions. The strategy involves selling losing positions to realize losses and reduce tax liabilities.

“The end of the year often sees portfolio managers trimming exposure to risk assets, not only because of the holidays but also to manage taxable events and balance sheets that in some cases prefer not to display cryptocurrency holdings,” said Paul Howard, senior director at trading firm Wincent.

QCP also highlighted declining open interest across BTC and ETH perpetual futures—down approximately $3 billion and $2 billion, respectively—reducing leverage and leaving markets more vulnerable to price swings.

“Friday’s record Boxing Day options expiry, representing over 50% of Deribit’s total open interest, adds to market sensitivity,” QCP noted. “While downside positioning has eased, $100,000 calls suggest residual optimism for a Santa rally.”

Looking ahead, QCP expects short-term volatility to fade in January as liquidity returns, while Howard predicts continued market consolidation, with the crypto sector unlikely to regain its early-October highs in the near term.

Trump Calls for Lower Fed Rates Despite Strong Economic Growth

President Donald Trump reiterated his call for the next Federal Reserve chairman to lower interest rates even as the economy performs well.

“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 remarks come after data showed inflation-adjusted GDP grew at a 4.3% annualized pace in Q3, signaling a hot economy. “In the old days, when there was good news, the Market went up. Nowadays, good news drives concerns of immediate rate hikes,” Trump said.

On Tuesday, the S&P 500 and Nasdaq posted gains, but inflation and limited expectations for rate cuts in the new year continue to weigh on investor sentiment.