Market overview: red screens, thin liquidity
The crypto market is in a risk-off phase, shedding roughly 3–4% overnight. Bitcoin is testing the $85,000 support zone, igniting a wave of liquidations as traders brace for critical U.S. macro data. Ethereum has dropped below $3,000, marking a third consecutive day of outflows from ETH ETFs. Meanwhile, altcoins are amplifying the downturn.
This situation isn’t driven by panic but rather a notable lack of liquidity. Exchange reserves sit at near-cycle lows, and inter-exchange flows have turned negative. Consequently, even small market orders trigger exaggerated price movement. Furthermore, potential shifts in the Bank of Japan rate could unwind the yen carry trade. Such patterns historically coincide with significant drawdowns of 20–30% for Bitcoin, leaving investors wary. The upcoming Dec. 20 options expiry for Bitcoin and Ethereum looms on the horizon, serving as an added gravitational pull influencing prices into the weekend.
Macro rotations: Bitcoin vs gold, and whales vs retail
On the relative value front, an unusual signal has emerged. The BTC/gold RSI has dipped below 30 for only the fourth time, a level historically linked to major Bitcoin cycle lows in 2015, 2018, and 2022. While history doesn’t guarantee a repeat, it suggests that gold may be overextended when compared to Bitcoin.
Flow data highlights a subtle rotation taking place. Whales seem to be trimming their Bitcoin holdings while accumulating Ethereum, evidenced by a reported ~$120 million ETH buy on Binance. Conversely, retail traders appear to be selling into weakness, contributing to the market’s downward pressure.
Regulation watch: Korea’s stablecoin bill hits a wall
The regulatory news from South Korea is significant. The nation’s stablecoin bill, part of its broader Basic Digital Asset Act, has missed its deadline for submission on December 10, leaving the framework in limbo.
The regulatory debate is not about whether to regulate but rather who controls the process:
- The Bank of Korea (BOK) advocates for a bank-led model, where issuers would need to be majority-owned by bank consortia, granting them extensive veto and approval powers for financial stability.
- The Financial Services Commission (FSC) favours a MiCA-style model similar to the EU and Japan, where issuers are typically fintech firms rather than banks, and a market supervisor oversees operations.
As a result, the timeline for a comprehensive stablecoin law has come under pressure, leaving Korea—an active trading hub—without clear regulations for won-pegged tokens. This uncertainty affects exchanges and stablecoin projects just as global entities, like Visa, are ramping up their stablecoin initiatives elsewhere.
Stablecoins go “prime time”: Visa, SBI and tokenized banks
While Korea debates stablecoin issuance, traditional finance is integrating them into its operations.
Visa has launched a dedicated stablecoin advisory practice, focusing on corporates and financial institutions keen on implementing USDC-like frameworks for payments and treasury operations. The message is clear: stablecoins are evolving into a mainstream product category.
In Japan, SBI Holdings has partnered with Web3 firm Startale to develop a yen-backed stablecoin, emphasising a fintech-centric issuance model that contrasts sharply with the BOK’s vision. Simultaneously, European banks are exploring tokenized funds and deposits, exemplified by JPMorgan’s recent launch of a $100 million tokenized fund on the Ethereum mainnet.
This trend suggests that the regulatory landscape is shifting toward frameworks supporting stablecoin infrastructure. Jurisdictions that articulate clear regulations—like the EU, Japan, Singapore, and the UAE—are defining the market, while slower movers risk adopting standards from more proactive regions.
DeFi and infrastructure: custody, privacy and L2 experiments
Today’s headlines in the DeFi space collectively signal that DeFi is institutionalising while keeping self-custody at the forefront.
- DEX user experience. Recent research highlights that DEXes maintain their core value proposition: users control private keys while smart contracts eliminate the need for exchange middlemen. This shift means that professional traders must now navigate contract risks, putting a premium on audits and governance.
- Cardano’s institutional push. Apex Fusion has launched VECTOR, an institutional expansion chain aimed at providing dedicated throughput for larger players, continuing the trend of “app-chains” tailored for regulated environments.
- TON fiat bridges. The TON Foundation has partnered with OpenPayd to enhance its fiat on/off-ramp infrastructure, making crypto flows within Telegram more accessible and user-friendly.
- DeFi liquidity. The mETH Protocol is reducing ETH exit times by leveraging an Aave-powered buffer pool, streamlining staking and liquidity processes.
- High-leverage trading. Aster has introduced Shield Mode for high-leverage trades, designed to conceal strategies from public order books, catering to an emerging market for selective opacity.
ETFs and flows: Solana, XRP and the new favorites
The ETF narrative has expanded beyond Bitcoin:
- Solana. The Bitwise Solana ETF recorded its first outflow since its late-October launch, aligning with a broader retreat in high-beta altcoins as SOL struggles below $130.
- XRP. XRP spot ETFs have seen 30 consecutive days of inflows approaching $1 billion, amidst capital outflows from BTC and ETH products. XRP ETF holdings have surpassed $1 billion, hinting at potential yield opportunities that could amount to up to $15,000 a day for sizeable holders.
- Macro products. CME has also quietly introduced spot-quoted XRP and SOL futures, indicating their growing acceptance in institutional derivatives markets.
For investors, this evolving ETF landscape offers fresh ways to articulate relative-value views within crypto and TradFi.
Retail manias and landmines: memecoins, AI agents and leverage
No day in the crypto arena is quite complete without reminders of the dangers lurking amid the excitement, particularly for retail investors.
- AI agent fallout. An autonomous trading setup has reportedly suffered a 90%+ loss from the fire sale of illiquid tokens, emphasising that algorithmic trading cannot replace sound risk management.
- Soulja Boy token scandal. Jesse Pollack of Base faces scrutiny after associating with a memecoin linked to rapper Soulja Boy, now widely viewed as a scam. Such events highlight the reputational risks for public-facing developers.
- Presales and dog coins. The Husky Inu pre-launch has seen the token priced at around $0.00023840, defying wider market downturns and proving that meme tokens can sometimes diverge from fundamental valuation.
- High-risk leverage. A Bitcoin veteran is grappling with an unrealised loss of around $54 million from approximately $674 million in leveraged long positions, in the wake of a broader market pullback that wiped out around $381 million in leveraged positions overall.
This turbulence is a crucial signal for sophisticated traders: leverage continues to shape intraday momentum, and pockets of illiquidity are substantial enough to wipe out positions during rapid liquidation events.
Politics and enforcement: from Samourai to the SEC
The U.S regulatory landscape is increasingly intertwined with political dynamics.
- Samourai Wallet. Co-founder of the privacy-centric Samourai Wallet is seeking a presidential pardon as the Trump administration reviews key crypto cases, which could recalibrate the definition of financial privacy.
- SEC scrutiny. There are claims that the SEC is “turning a blind eye” to certain crypto-related issues, especially connected to Trump allies, leading to deprioritised cases, including Ripple’s criticisms of media framing surrounding post-Gensler regulatory shifts.
- U.S. market structure bill. The Senate has deferred comprehensive crypto market structure legislation to early 2026, delaying clarity on responsibilities between CFTC and SEC. As a result, uncertainty regarding U.S. crypto policies persists.
How to trade and invest this tape: a brief guide
1. Respect liquidity, not just narratives
- Size positions with the understanding of thinner order books and the potential for rapid price movements, especially around key data releases.
- Monitor funding, open interest, and liquidation points, as derivative flows are dominating price action.
2. Use the regulatory map as an edge
- Categorise exposure by jurisdiction: focus on regions like Europe and fast-moving Asia, while being cautious about the U.S. market and slower-moving areas such as Korea.
- Prioritise stablecoin venues and issuers progressing towards stringent oversight frameworks.
3. Differentiate structural from cyclical trades
- Identify structural trends like ETF expansions and tokenised financial products.
- Recognise cyclical shifts from macro-driven market movements or retail surges.
Align your time horizon with your trading strategy. Structural trades can endure drawdowns; cyclical trades often require swifter exits.
4. On-chain, focus on infrastructure, not just assets
- Identify chains that excel in institutional frameworks or excel in consumer distribution.
- Curate diversified baskets aligned with these themes rather than concentrating on single narratives.
5. Treat memecoins and AI agents cautiously
- Manage them as optional positions, allowing for complete loss without affecting overall portfolio stability.
- Recognise if your strategy can be executed by an “AI agent,” realise that it’s likely replicable by many others; any advantage is temporary.
