Gold Surges as Risk Aversion Impacts Cryptocurrencies: Market Analysis

The Crypto Daybook Americas will be taking a temporary break starting Wednesday, with regular updates resuming on January 5, providing an overview of overnight market developments and upcoming events. Warmest wishes for a joyous holiday season. By Omkar Godbole (all times ET unless otherwise specified). The mood in the crypto market remains subdued ahead of the impending U.S. GDP report, which is anticipated to reveal that the world's largest economy maintained its momentum in the third quarter. Following its inability to sustain gains above $90,000 on Monday, Bitcoin, the largest cryptocurrency by market value, plummeted to $87,500. All 16 CoinDesk indexes have declined over the past 24 hours, with the DeFi Select index experiencing a 4% drop and the metaverse index losing over 3%. Notably, HASH and RAIN are the only top-100 tokens by market capitalization to have achieved gains exceeding 6% in the past 24 hours. The overall market sentiment is puzzling, given the ongoing decline of the dollar index, which typically favors risk assets, including cryptocurrencies. The DXY has fallen below 98.00 and is on the cusp of reaching its lowest level since early October. According to Alex Kuptsikevich, chief market analyst at FxPro, 'This development is particularly noteworthy, as it occurred against the backdrop of a significant rally in gold and other precious metals, coupled with the weakening dollar. This once again underscores the shift in the underlying risk attitude, also reflected in the sell-off of global bonds.' Kuptsikevich further stated, 'In the coming weeks, we can anticipate an even more pronounced decline in cryptocurrencies, as well as the spread of risk aversion to stocks and currencies of developing countries.' At 8:30 a.m., the U.S. Bureau of Economic Analysis is set to release its preliminary estimate for the third-quarter gross domestic product. The majority of economists predict an annualized growth rate of 3.2% for the period, with some anticipating a figure as high as 3.5%. These projections indicate a slowdown from the second quarter's 3.8% pace, yet still comfortably surpass the 2.6% average maintained since late 2021. A weaker-than-expected print could potentially reignite demand for BTC, although it will be intriguing to observe whether it can sustainably propel prices above $90,000, a level that has acted as a ceiling recently. In traditional markets, futures tied to the S&P 500 and Nasdaq are relatively unchanged, indicating a lack of clear direction at the opening bell. Historically, these indexes have performed well during the final days of the year. Gold's rally persists, with the metal approaching $4,500 per ounce. Meanwhile, the yen has strengthened against the dollar on speculation that the Bank of Japan may intervene in FX markets to stall the currency's recent decline. For in-depth analysis of today's activity in altcoins and derivatives, see Crypto Markets Today. For a more comprehensive list of events this week, refer to CoinDesk's 'Crypto Week Ahead'.