Key Takeaways
- •The sell-off was a macro repricing event, not a crypto-driven breakdown.
- •Bitcoin and Ethereum dropped harder because institutional derisking targeted the most liquid assets first.
- •Wintermute expects conditions to improve as global stimulus and easing shift liquidity upward into early 2026.
What looked like panic selling, the firm says, was simply the crypto market reacting to shifting interest-rate expectations — the same way equities and bonds periodically do when macro conditions realign.
From their perspective, traders misread a repricing event as a trend reversal.
Risk Assets Took the Hit in the Same Pattern
The firm tracked where the selling took place and found that the most aggressive moves happened during U.S. market hours, not during Asia or Europe sessions. That detail matters: when the pressure originates in New York, it is typically macro-driven rather than crypto-specific.
Another detail that stood out was relative performance. Altcoins did not crater as hard as Bitcoin and Ethereum — something that almost never happens during a true market breakdown. Instead, the two largest assets dropped more sharply than the rest of the market, indicating that traders were derisking from the most liquid positions first.
In simple terms: capital didn’t abandon crypto — it rotated out of its biggest holdings while rate expectations were shifting.
Why the Market Reacted the Way It Did
Only after the dust settled did the conversation turn to what triggered the repricing. The chain moved backward: institutional selling → hours of U.S. market stress → rate-cut expectations repriced → Powell’s comments scrutinized → individual FOMC members’ outlooks examined.
The collapse in December rate-cut odds — from roughly 70% to 42% within days — forced investors across asset classes to adjust positioning rapidly. Crypto, as the most rate-sensitive sector, adjusted faster and harder than stocks.
Temporary Pressure — Not Trend Damage, Says Wintermute
To support their stance, Wintermute points to global monetary conditions rather than short-term price action. Liquidity support is still building for 2025 and early 2026.
The firm highlights:
- •Japan moving forward with a $110B stimulus program
- •China keeping easing policies active
- •The U.S. ending quantitative tightening next month
- •Additional U.S. fiscal measures — including a $2,000 stimulus proposal — still under discussion
The broader picture, according to Wintermute, hasn’t changed direction. The market didn’t lose confidence in crypto. It simply reacted to faster-than-expected adjustments in monetary expectations.
In their view, the correction was not a message about Bitcoin — it was a message about interest rates.